The Future of Regional Economy in Estonia

The central objective of the regional economy research path is to identify the regional economic development scenarios in Estonia.

Urbanisation, or the increase in the number of cities and the proportion of people living in cities, and people concentrating in a limited area, is a relatively universal process accompanying economic development. In most cases this is accompanied by accelerating economic growth of urban settlements.

The pace of growth in the urban areas of Tallinn and also Tartu has indeed for a long time exceeded the growth rate of other Estonian regions, and regional disparities in socio-economic level have been constantly increasing. Although differentiated urbanisation, or the advanced growth of the capital region as compared to other regions is an ordinary phenomenon, the regional development disparities in Estonia are among the biggest in Europe. Restructuring of the economy, decline of jobs in agriculture and processing industry, foreign investments and structural funds concentrating in the capital region, etc. are some of the reasons why regional disparities emerge in Estonia.

The result is higher unemployment outside urban regions, intensive internal migration, and acceleration of urbanisation. In such a situation, it is a great challenge to ensure the availability of basic services in all regions and to secure that local resources – labour force, arable and forest land, infrastructure, green energy and cultural objects – do not remain underused and are still refined to the maximum.

Although there are regions with declining population practically in all European countries, even in those where the total population is growing (Sepp and Veemaa, 2017), these processes have happened very fast in Estonia, and it is a challenge to direct the regional economic development in order to reduce the negative impact on social expenditure growth and the general economic development of the country.

The central objective of the regional economy research path is to identify the regional economic scenarios in Estonia. 

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