It is natural for people who are not at the helm of the state to idealize others' success and erase what has been done and achieved in Estonia. The grass is not always greener elsewhere, and not all investments pass us by. Work is underway on several fronts to ensure that production and factories come to Estonia and also stay here.

We do not live in isolation, so that we could shift the blame for a difficult economic situation entirely onto the government, as Andrus Kaarelson from Parempoolsed tries to do in his recent piece. There are others who think like this. It is understandable, but it is classic populism. Critical self‑assessment moves us forward; constant, sweeping self‑pounding into the mud does not. 

I do not deny that mistakes have been made, that there have been errors, or that everything is in perfect order, but in the bigger picture, several long‑awaited steps have been taken in recent years to increase the competitiveness of Estonia's economy, specifically to encourage investment. According to revised data from Statistics Estonia, our economy has been on an upward path since 2024, and by now we have reached a solid two percent growth. 

How has the government contributed to this? The planning and permit procedures needed to establish factories and production facilities are becoming shorter, because we reformed the Planning Act, and soon a fast track for strategic investments will be added. With the industrial areas map application, a suitable location can already be selected with just a couple of clicks. For at least two years, a major clean‑up of the bureaucracy machine has been carried out together with entrepreneurs, and this work continues. 

To break NIMBY ("not in my backyard"), a local benefit instrument is in force for the construction of wind farms, meaning additional support for local municipalities. Not to mention support for entrepreneurs in promoting research and development and innovation, or in modernizing the labor market. 

Uncertainty as a factor hindering investment 

Let us look at the overall picture. The last six years have not been easy at all. The main reasons have been external factors, from the coronavirus crisis and the energy crisis, to Russia's full‑scale war in Ukraine, the crisis in the Middle East and the summer heatwaves in Southern Europe, the impact of which is only now reaching us. It would be naïve to think that these will be the last ordeals. 

Instability has hampered the economy and investments not only in Estonia. Across Europe, the geopolitical and economic uncertainty of recent years has made companies more cautious, and major investment decisions have been postponed. 

However, according to Eurostat data, in 2025 gross fixed capital formation in Estonia amounted to 24.2 percent of GDP, placing us fifth in the EU, right after Sweden. The EU average was 21.5 percent. Gross fixed capital formation includes investments made by companies, the state and households in buildings, machinery, equipment, IT solutions, software, and research and development activities — everything that creates economic value. 

The main reason for postponing investments has been uncertainty. In the European Investment Bank's 2025 survey of companies, as many as 83 percent of EU businesses named uncertainty as a factor hindering investment, 79 percent pointed to a shortage of skilled labor, and 75 percent to energy costs. This means that we are not dealing with a phenomenon specific to Estonia, but quite clearly with a Europe‑wide problem. 

The best tax system and a digital state are not enough 

Competition between countries for the few new investments has become fierce. 

I support a market economy in which the market can function on its own, the state does not need to intervene, but creates a competitive environment for companies to operate in. Unfortunately, in the current situation this is not enough; to attract companies, a carrot is needed. 

It is no longer sufficient to have the best and most competitive tax system, which has already been firmly in first place among OECD countries for 12 consecutive years, or the globally known image of a digital state. Do not get me wrong, these are still our pride and joy, but more is needed. 

To remain competitive, a support measure was created to attract large investments of at least one hundred million euros. Three projects with a total volume of 400 million euros, of which 44 million is state support, have received support decisions and are awaiting implementation in order to receive the aid. These are large‑scale projects that require patience. 

Recently, we lowered the minimum investment amount for the measure from one hundred million euros to seventy million. The government did not do this because there were no applicants. There were, but not enough for the measure to fully achieve its goal: to bring new investments to Estonia, create higher value‑added jobs and strengthen the competitiveness of Estonian industry. 

If the investment climate is weak throughout Europe and feedback from entrepreneurs also indicated that in the current situation it is reasonable to lower the threshold, then we take that into account and act according to market conditions. In this way, the support becomes accessible to more companies, and in future also to sectors important for our security, such as the defense and food industries, where the thresholds are 20 and 35 million euros respectively. 

Expanding the target group of the support helps create more flexibility for sectors where investment is particularly important in order to strengthen Estonia's economy and reduce dependence on third countries. 

Investments in Estonia have not dried up 

Estonia is not a desert where all investments have dried up, where the wind howls and emptiness stretches across the horizon. 

As minister of economic affairs and industry, I naturally want to see more investments than at present — investments that would grow our economy, create added value and offer people well‑paid jobs. But listing only those investments that are made elsewhere or that have gone to neighboring countries instead of Estonia does not provide factual confirmation of the claim that Estonia has failed to attract foreign investment or that foreign investors are fleeing from here. Simply throwing around billions of euros without referring to more precise data is a distortion of reality in a way that is useful to oneself. 

Who benefits from spreading this narrative? I see only political profiteering in it. For Estonia, however, it unfortunately causes harm. 

According to Eesti Pank's latest review of economic financing, for four years in a row more new foreign direct investments have flowed into Estonian companies than foreign investors have withdrawn capital through reducing or selling their holdings. 

As of 2025, foreign owners hold nearly 30 percent of the equity of Estonia's non‑financial companies, and according to Eesti Pank this share is similar to the pre‑corona level as well as to Finland, Latvia and Lithuania. 

It is true that new foreign equity investments in Estonian non‑financial companies have remained roughly at the same level in recent years, but they have not decreased. When comparing years, one must also take into account when and how much dividends are paid out. The more dividends are taken out, the less money is reinvested, and this also affects the data.

High value‑added investments are being made in Estonia

The logic of "the grass is greener elsewhere" could just as easily be applied in Estonia's favor. One could take, for example, an investment made here by ABB or another international company and conclude that Estonia is better than the rest of Europe. Last year, ABB opened two new facilities in Estonia and placed its only European wind‑turbine service center here.

The most recent investment made public concerns the Baltic region's first AI factory, currently under construction in Estonia. Another major success story is the Neo magnet factory built in Narva, which was established in Estonia thanks to fast procedures and the competence of local specialists. It is an undisputed world record: only 500 days passed between the investment decision and the opening of the factory.

For several years now, media outlets have been doing valuable work by compiling overviews of new factories and production buildings being constructed in Estonia. This year, several dozen new factories worth €330 million will begin operations. Surprisingly, Estonia's spa market is also booming — nearly ten new spas are planned in the coming years. Even Latvians are confident enough to invest here, expanding the Kohila plywood factory by €70 million after it exceeded its originally planned production capacity.

Contrary to Andrus Kaarelson's claims, I see nothing tragic about Estonian companies investing abroad. We should be proud of companies like Skeleton when they open factories and expand across Europe.

This is how companies in successful, wealthy countries operate: large‑scale production is placed where there is sufficient labor, production capacity and other necessary resources, while higher value‑added activities — development, management, sales and intellectual property — remain in the home country, and the value created ultimately flows back into the domestic economy.

Given Estonia's size, we will never be able to host a factory with 10,000 employees, but we could operate such a plant in Poland or Germany while keeping headquarters, development and high‑value jobs in Estonia.

Similarly, some industrial projects may require so much energy — for example, 500 MW of grid capacity — that Estonia's electricity network cannot realistically provide it. In such cases, building the factory elsewhere does not mean Estonia loses; it means an Estonian company is growing internationally.

Estonia's economy is growing as fast as the U.S. economy

Despite everything, our economy has turned to growth. We have reached a solid 2 percent growth rate, and according to fresh Eurostat second‑quarter data, Estonia is growing as fast as the U.S. economy and nearly twice as fast as the EU average.

This does not mean all problems are solved or that we can sit back, because competition for investment, companies and talent requires constant effort.

The economy does not grow when we consistently drag our own business environment through the mud and declare to the world that investing in Estonia is pointless. Criticism should help us improve, not turn into a self‑destructive contest over who can paint Estonia in the darkest colors.

Let Estonia's economy grow. Let's work to make this a good place to invest, build companies and create new jobs. Let's not scare away the very people we are trying to attract.

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