Automation of industry has the greatest impact on the future of rural regions of Estonia

The researchers of the University of Tartu analysed the factors influencing the future prospects and development of the Estonian regional economy in the survey commissioned by the Foresight Centre. “Automation of production, internet of things, dispersed energy production, population trends and location-based circular economy are the keywords that will have a significant impact on the regional economy of Estonia in the next 15 years,” Expert and Project Manager of the regional economy research field at the Foresight Centre Uku Varblane pointed out.

Automation of industrial production will provide opportunities for preserving industry in small towns and communities and also for attracting new investments.

“Automation reduces the demand for labour force, and this will raise the competitiveness of rural areas that are located further away from the centres. On the other hand, the requirements on the qualification of workers will increase, and there is a risk that the existing business models of many companies will become exhausted,” Varblane said.

Implementation of the internet of things in production process increases efficiency and flexibility, but the maintenance of servers is energy intensive and requires high operating reliability as well as fast and high-quality internet. It will also bring about new risks in cyber security. 

Dispersed energy systems increase supply security and energy security, and developing of smart energy systems has a positive impact on the companies that are located further away from the centres by providing them with additional income and work.

The researchers of the University of Tartu find that the spread of new forms of working and flexible organisation of work, increase of the international mobility of the people, ageing of population and the growing food demand due to climate change offer additional opportunities for the development of the rural regions of Estonia. For example, the ageing of population and deepening of cultural diversity may be accompanied by counter-urbanisation, when people move from towns to the country.

The study shows that the impact of innovations and socio-economic processes on the regional development in Estonia depends on the characteristics of the region itself, like the settlement system, level of socio-economic development and the existence of natural resources. In the opinion of the researchers of the University of Tartu, location-based regional policy that takes into account the existing economic structure, digitalisation level of industry and services and the skills of the labour force is of great importance to sustainable regional development.

“Implementation of innovative solutions is faster and more realistic in wealthier regions that possess the capacity for research and development. The positive impact of innovation might be the greatest in sparsely populated peripheral regions,” Expert of the Foresight Centre Uku Varblane emphasised.

The central objective of the regional economy research field of the Foresight Centre is to identify the development scenarios of the regional economy of Estonia in 2035 perspective. The study will be completed in November this year.