Friday, June 08, 2012

More Estonian Economic History

In 1990 Estonia had a per capita GDP a few per cent larger than that of South Korea. The collapse of the Soviet Union and the Ruble zone sent it tumbling by about 30%. After 1995, and the adoption of radical free market ideas, the economy grew very rapidly, surpassing its old high in 2001 and nearly doubling that value by 2007, at which point it first stalled and then (2008)underwent another stunning collapse. It hit bottom in 2009 and has again begun to grow, regaining roughly half the loss by Q1 2012.

I would say that the story of Estonia is dominated by two spectacular implosions, interrupted by one period of very good growth. Calling that growth miraculous or Estonia a "Baltic Tiger" seems a stretch. South Korea - remember them - wasn't immune to those busts, but it suffered a lot less, and its per capita economy is now about twice that of Estonia.