What will the world be like after the economic crisis? #2

In my previous post I introduced you four possible future developments that may be ahead after the economic crisis is over, taking into consideration Jeffrey Scott Saunders’ predictions, the professor of Copenhagen Institute of Futures Researches.

Now I would like to write how may these possible ways of developments influence on Estonia.

In the first case, if we deal with a “typical cyclical crisis or hangover after the boom”, Estonia’s economy will continue in structure and way as before the crisis. The stops of economic development are the same as before (development based on foreign capital, especially loan money, lack of qualified workforce, structural problems etc). Recovery on the foreign markets will bring short relief. Weaker companies will bankrupt. That will free resources, including workforce to new and more efficient companies. Opening of the credit canals and restarting financial markets will bring a wave of mergers-acquisitions. Investors and investment recipients will be the biggest winners.

Second possibility, when the recession continues in western countries, Estonia’s challenges are the same as elsewhere in Europe: approaching new leaders, going to new distant markets in condition of strong currency peg. Estonia has an opportunity to try cooperating with new partners and bring foreign investments by offering Asian companies a favourable location to enter European market. The competition on emerging markets is stronger than experienced on the European markets. Estonian producers are able to keep their export markets only in specific niches and with strong competitive advantages.

It would be the worst of these possible four developments for Estonia, if the crisis is followed by deep economic downturn and stagnation in the whole world, as the third case say. Although closing to areas brings Estonia new opportunities to be subcontractor or make end products to Europe, there are no big chances to break to foreign markets. The economic recession, influenced by protectionism, would limit market demand in Europe for which Estonia would struggle for a long time.

The last scenario may have either positive or negative scenario depending on how Estonia can change direction and use new business opportunities on areas of environment and sustainable energy. Estonia will be a bystander of new global growth when continuing its old ways.