“Estonia Needs to Increase Productivity”

After Eesti Pank declared that Estonia might be ready to join the Euro already in 2011, we interviewed Mr. Robert J .Pefferly, Assoc. Professor at the Estonian Business School to understand better some future developments.

Some days after the Danish analyst Lars Christensen expressed his skeptical positions about the adoption of the Euro currency in Estonia, the Central Bank of Estonia stated that the country will fulfill the Maastricht criteria to entry in euro-zone in 2011.

Eesti Pank is hoping that the new currency will bring the country more investor confidence and place Estonia at the same level of the other States in the euro area.

Two different perspectives that incite to think whether the adoption of the Euro in Estonia would be right or not.

To gather more views on this, EFP inteviewed Mr. Robert J .Pefferly, Assoc. Professor at the Estonian Business School of Tallinn in order to get his views on the issue.

According to him the estimations coming from the European Bank are the most correct and Central Bank of Estonia’s “group think” is dangerous for a fragile country like Estonia.

Mr. Pefferly also tried to point out some potentially good decisions the Baltic country could take at the moment to consolidate its economy and start planning a new growth.

“Productivity needs to drastically increase, as the workers that are remaining in Estonia are not productively competitive and another bad thing of this country is the brain drain. Just look at where the young minds are going.  How is the culture going to be preserved if the best and brightest are leaving in droves?”

The economist added that “either prices need to decrease or wages need to go down or a significant amount of investment in productive technology needs to be infused to the economy”.

Pefferly has criticized some political and economic aspects of Estonia. According to him “The rhetoric out of the banks and politicians relies upon incoherent logic.  It is simply dangerous. To this we must add that the political landscape is like watching 3 year old children kick sand at each other.  Everyone is busy, but no one is accomplishing a damn thing and they are only causing damage”.

According to the professor the economical situation we Estonia might experience by the next spring will be very interesting from an economic researcher point of view, although might also become unpleasant for the individuals living in the country and depending from it.