What are the main sectors driving Estonia’s economy today?

Energy sector. Estonia is transitioning toward renewable energy and greater energy efficiency. The energy sector development plan focuses on reducing dependence on imported energy, expanding domestic energy sources, and strengthening energy security. Oil shale remains part of the mix, but innovations aim to minimize its environmental impact.

Digital economy. Estonia is widely recognized as a global digital leader. Digitalisation drives economic growth through e-governance, tech entrepreneurship, and strong ICT exports. Maintaining Estonia’s innovation leadership and expanding next-generation digital infrastructure remain top priorities.

Tourism. Tourism continues to be an important contributor to Estonia’s economy, covering accommodation, food services, business travel, conferences, and cultural tourism. Estonia’s clean environment, rich cultural heritage, and reputation as a sustainable destination support continued growth.

Manufacturing. Despite the prominence of the digital and service sectors, manufacturing—especially electronics, machinery, and wood products—remains essential for exports and employment. Industrial policies emphasize competitiveness, automation, and sustainability.

Defence industry. Estonia’s defence industry is expanding rapidly with strong government support. The Defence Industry Policy 2024–2030 sets ambitious targets:

€1.4 billion in export volume by 2030,

€2 billion in annual revenue,

sector contribution of 2% of GDP,

creation of high-tech jobs and strengthened national defence capabilities.

Photo: Jaanus Jagomägi (Unsplash)

Photo: Pixabay

What is the development of foreign direct investments, and are there new incentives for them?

Finland remains Estonia’s largest source of foreign direct investment, and Finnish companies continue to expand their presence in Estonia. At the same time, Estonian companies are investing in Finland—Skeleton Technologies’ new superbattery factory in Varkaus, opened in November, is a good example.

I believe Estonia and Finland have enormous potential to enter new markets together. When we combine Estonia’s speed and technological entrepreneurship with Finland’s thoroughness and long-term planning, we can achieve remarkable results.

New incentives for foreign investors:

Large-Scale Investment Grant (2025–2028), available for investments of at least €100 million

Applied Research Programme: up to €2 million for developing new products and technologies,

Industrial Expansion Grant: up to €3 million for companies with a turnover above €50 million to start or expand manufacturing.

Photo: Unsplash

What are the key challenges facing Estonia’s economy in the 2020s?

High energy prices continue to affect industrial competitiveness. The green transition is essential, but it must be balanced with affordable clean energy and security of supply. Improving cross-border electricity connections and reducing market bottlenecks are crucial.

Administrative burden. Estonia’s goal is to modernize regulation, reduce bureaucracy, and enable the free movement of data to support innovation and exports.

Industrial pressure. Rising input costs, supply chain disruptions, and weaker foreign demand have reduced industrial competitiveness. To reach labour productivity of 110% of the EU average, Estonia must deepen cooperation between the state and the private sector and accelerate automation, digitalisation, and innovation.

Is the transition to green energy happening fast enough in Estonia?

Estonia’s long-term strategy “Estonia 2035” sets the goal of achieving climate neutrality by 2050. Currently, about 63% of Estonia’s electricity is produced from renewable sources.

There are active plans to accelerate clean energy deployment, strengthen legal certainty, and promote innovation. Measures include green public procurement, innovation testing environments, and better use of local resources.

Estonia demonstrates a strong commitment with ambitious goals and legislation. However, permitting and investment bottlenecks pose challenges that can slow large-scale renewable development. The Ministry of Economic Affairs is working to simplify and harmonize the permitting process.

Photo: Pixabay

What are Estonia’s priorities in cybersecurity and defence policy?

Estonia’s defence relies on two pillars: independent national defence capability and NATO collective defence.

Estonia has committed to defence spending exceeding 5% of GDP in the coming years—an unprecedented decision. This enables the development of air defence systems, increased land forces firepower,  drone and counter-drone warfare, and electronic warfare.

A key priority is the regular exercising of NATO defence plans with allied forces. Estonia currently hosts the UK-led NATO battlegroup with France, U.S. rotational troops under a bilateral agreement, and contributes to Baltic Air Policing at Ämari Air Base.

After the 2007 cyberattacks, Estonia significantly advanced its cybersecurity capabilities to protect one of the world’s most digital societies. Estonia hosts major institutions such as the NATO Cooperative Cyber Defence Centre of Excellence and the EU Agency for Large-Scale IT Systems (eu-LISA). Five major NATO cyber exercises—including Locked Shields, Crossed Swords, and Cyber Coalition—are conducted in Estonia.

Estonia will continue to provide military support to Ukraine amounting to at least 0.25% of GDP annually and actively supports Ukraine in the cyber domain through initiatives like the Tallinn Mechanism and the IT Coalition.

Photo: Pixabay

How do you see Nordic-Baltic cooperation developing in the coming years?

The regional security environment has fundamentally changed. All Nordic-Baltic countries face similar challenges: hybrid threats, sabotage, underwater infrastructure vulnerabilities, and global geopolitical tensions. Regional cooperation is therefore indispensable. The importance of Finland’s and Sweden’s accession to NATO cannot be overstated. It was a major development for the  region and for NATO as a whole.

The NB8 partnership strengthens political influence, economic resilience, and collective security. A paradigm shift has taken place—NB8 has become the primary regional format for security policy coordination. Its flexibility and like-mindedness make it highly effective.

NB8 cooperation also supports broader partnerships—such as NB8+Weimar, JEF, and E-PINE—giving the region a stronger voice within the EU and NATO. As we like to say, “Eight voices carry farther.”

Estonia will lead NB8 cooperation in 2026, and our aim is to deepen cooperation across all sectors.

Photo: Pixabay

How do you see connectivity in the Baltic Sea Rim, especially between Finland and the Baltic countries?

Connectivity has many dimensions, but the most transformative initiative is Rail Baltica, the region’s flagship transport project. It will connect Tallinn–Riga–Kaunas–Warsaw, with a link to Finland via ferry. Completion by 2030 would significantly improve regional mobility and logistics.

In energy connectivity, Estonia and Finland rely on two major electricity interconnectors—Estlink 1 and Estlink 2—and the Balticconnector gas pipeline, which are vital for regional energy security. EstLink 3 is needed as soon as possible, as additional connections increase system resilience and reduce the impact of disruptions.

After the 2023 Balticconnector incident, the pipeline was repaired, and in 2024 both countries signed an MoU to improve monitoring and protection of underwater energy infrastructure amid heightened geopolitical risks.

Photo: Pixabay

What is your main aim during your stay in Finland?

The relationship between Estonia and Finland is so broad that one must work across all areas.

The greatest focus today is on Russia’s brutal war of aggression against Ukraine. Estonia, Finland, and the entire Nordic-Baltic region are strong supporters of Ukraine—militarily, economically, and politically. For Estonia, this war is an existential matter.

In our bilateral relationship, key areas include security and defence, economic relations, cooperation in energy, digitalisation, technology. There is also a large Estonian community in Finland.

When President Alexander Stubb visited Estonia on a state visit last year, he said in the Riigikogu:

‘Virolla on erityinen paikka suomalaisten sydämissä. Meillä on yhteinen identiteetti, yhteiset juuret ja samankaltainen kieli.’

(‘Estonia has a special place in the hearts of Finns. We share a common identity, common roots, and a similar language.’)

It is precisely this cultural closeness—the Finnish bridge—that gives our relationship yet another very special dimension.

Questions by FinnCham/Anne Hatanpää
Answers H.E. Janne Jõesaar-Ruusalu