Learning in the school of 21^st century must be exiting and consider the pupil’s individual interests and abilities better than it does today.  For achieving the result the possibilities offered by the information technology (ICT) must be used to enrich the teaching process with sound, video and other multimedia solutions. The learning will become more effective, interactive and playful. To get the change moving on one hand the leader must be found both in state and in schools and on the other hand the initiatives coming from teachers and pupils must be supported.

The head of the Development Fund Ott Pärna marked that the computers are present in schools, now there is need to start using them properly. “We stand on the brink of the era when the technology is broadening the understanding of traditional lesson, allowing to bond different subjects and problems of everyday life,” said Pärna.

The report on usage of ICT in education, presented today by the Development Fund, presents a roadmap enabling Estonia to reform education system from class-centred into pupil-centred style. The Minister of Education and Science Tõnis Lukas marked on the possibility of drawing together better the worlds of pupils and teachers through the use of ICT.

Of the problems standing before educational system ICT presents solutions to taking into better account the individuality of a pupil, to altering the teaching into more creative and problem-based process and to secure to every pupil the possibility of learning from the best materials and from highly valued teachers.

To achieve the goals presented in the report the vital role is played by the leader, foreperson or organisation, who would attend to the coordination of learning materials, to the elating of school directors and teachers and to the including of the pupils. The forward-looking school directors must be credited and supported. For endorsing the initiative of teachers the Innovation Fund has to be established, to enable the start of pilot projects for testing ITK solutions and spread the experience. Sensible would be to start the introduction of ITK solutions from science classes as the interest of pupils to participate in these is the lowest while the need of the society for future specialist is the highest.

The current report is a follow-up to the report EST_IT@2018

Additional information:

kristjan.rebane[A]arengufond.ee,

Expert of IT Society

If we want to achieve new growth, making things a little better is not enough. Neither will introducing euro nor a few supplementary programmes suffice. Our whole society needs to take a long leap forward!

The post-crisis GDP level we are slipping to is the doping-free (read: loan-free) ceiling of our current collective capacity - as entrepreneurs, politicians, officials, education leaders and media managers, as well as the entire society. "We need to wake up and do something fundamentally different," the recognised IT management professor Carlota Perez said once so pertinently when commenting on the success options of the countries battling with the crisis.

In order to move forward, we need a Big Plan - a shared long-sighted vision for the practical future of the Estonian economy and a coherent action plan for its implementation.

The successful Estonia of the future will definitely be creative, appreciative of knowledge and exporting much more sophisticated products and services than today, and doing so on a larger scale. But what kind of knowledge are we talking about, who will be the buyer and where and at which capacity will the products and services be produced, etc? The crisis is the time for a new kind of beginning for both entrepreneurs and the state.

We need to do our best for Estonia could be perceived as a small and smart Scandinavian country that has decided, by acting wisely, to exit the crisis among frontrunners. So that The Economist wouldn't ironically describe us and the other Baltic countries now in slump as suffering from the Baltic blues.

We are not starting out from scratch. Firstly, the percentage of resourceful people in Estonia is close to that of the Scandinavian countries, higher than in the countries sharing the same fate, and also higher than in the southern Europe. Secondly, the Development Fund has carried out a number of foresight projects during its slightly more than two years of existence. These have helped us to gain in-depth insight into the problems of the Estonian economy, perceive global trends and thus identify growth potential in different sectors.

Over a thousand entrepreneurs, decision-makers and thinkers from Estonia and elsewhere have been involved in analysing Estonia's options. About a hundred brainstorming sessions have been held. As a strategic initiative, we have started the Estonian IT Academy project, aimed at taking Estonia's higher IT education to an international level, and launched the Estonian Private Equity and Venture Capital Association together with 25 market players.

Within 14 months five venture capital investments have been made. Four new investments are being prepared while five new ambitious projects are maturing in our international business incubator SeedBooster.

All this has given us enough reason and the certainty to initiate the Estonia's Growth Vision 2018 project, which would give rise to clearly targeted coherent growth programmes to be collectively and effectively implemented. If a small country wants to be in the global picture in certain niches, it has no other option than to specialise.
The Development Fund can, must and wants to be the leader in that process. But we cannot and must not do it alone. There is no institution in this small country that possesses the potential to single-handedly work through all the options and propose and implement the best decisions for Estonia.

Therefore, I call on you, just as I proposed in my speech to the Riigikogu (Estonian Parliament), to jointly draft the Growth Vision for Estonia 2018 and set out in that direction. In fact, we have no other choice. Also in search of a new growth story are the pragmatic Singapore, the welfare state Finland, as well as Ireland, once a role model for many, let alone larger countries.

I am appealing to all Estonian leaders: by the next summer, let us discuss the choices that Estonia has and establish a new meaningful landmark. Then we can collectively put it to practice. This is the only way that gives us grounds to expect a new sustainable success story for Estonia that will bring well-being to our people. And so one day The Economist could be inspired to write laudatory feature stories - The Rolling Estonians are back and stronger than ever!

ott.parna[A]arengufond.ee, CEO of the Estonian Development Fund

The Estonian IT Academy is the umbrella name given to a joint initiative aimed at elevating Estonia’s higher education in the field of information and communication technology (ICT) to a new level so that it would be capable of an international breakthrough.

This entails world-class higher ICT education, which would:
- be interdisciplinary;
- appeal to talented Estonian and foreign students;
- attract top professors and researchers;
- contribute to international ICT or ICT-based business conducted by Estonian companies;
- prompt a new wave of foreign investments channelled into Estonia.

When pursuing the objective, Estonia will benefit from its international reputation as a successful IT country capable of implementing and developing new information and communication technologies. This is a foundation which makes it significantly easier to resume building up reliability as a significant provider of higher ICT education.

This initiative stemmed from the conclusions of the Estonian Development Fund’s EST_IT@2018 foresight project. ICT implementation has contributed to almost 50% of the productivity growth witnessed by the Western economies. Estonia possesses sufficient untapped potential for benefiting even more from ICT.

Regrettably, the shortage of thousands of ICT specialists does not enable to utilise the ICT potential in Estonia. Therefore, ICT companies find it impossible to expand their business activities in Estonia. The current economic crisis and an overall increase in unemployment have not brought any relief: according to employment agencies, there is a persistently high demand for ICT specialists and every tenth available job is being offered namely to computer specialists.

Problems are deepening in the medium-long term: the supply of highly qualified IT specialists will decrease further in the coming years due to unfavourable demographic trends persisting in Estonia. In 2014, the number of high school graduates will plummet by nearly a half from the current 12,000. The ensuing relevance to higher ICT education would be a decline to just five hundred students enrolled in computer sciences programmes compared to the one thousand students currently commencing their studies in this area. Should the efficiency of the education process remain unchanged, the number of ICT graduates would drop from some 350 today to just 190 a year.

Considering the deepening shortage of ICT specialists, the common goal of the signatories is to make sure that – regardless of the unfavourable demographics – the number of students commencing studies in the field of ICT in Estonia would remain AT LEAST at the current level and that most of the students would complete their studies on schedule.

A possible solution is to become significantly more active in bringing foreign students and lecturers to Estonia. In order to achieve that, needless duplication in Estonia's higher ICT education must be avoided and all efforts should be pooled towards co-operation outside Estonia. A purposeful engagement of foreign students from target countries relevant to us will also underpin the efforts of Estonian companies seeking to operate in these markets and increase their export revenues.

Within the framework of the co-operation agreement, we have decided to prepare a business plan by spring 2010 at the latest. We will try out different possibilities, agree on necessary steps and then mobilise resources into carrying out the vision.

We hope that the experience drawn from this pilot project will be of use in a broader context and contribute to finding effective and fast ways of making Estonia's higher education international.

We are inviting all interested parties to contribute to the success of the Estonian IT Academy!

The memorandum has been signed digitally by:

Taavi Kotka from the Estonian Association of Information Technology and Telecommunications, Peep Sürje from Tallinn University of Technology, Alar Karis from University of Tartu, Rein Raud from Tallinn University, Kalle Tammemäe from the Estonian Information Technology College, Ott Pärna from the Estonian Development Fund.

Background slides by Ott Pärna on the cooperation agreement as the basis for the Estonian IT academy (pdf 2 mb)

Read also the EST_IT@2018 foresight conclusions.

• www.itacademy.ee/en

BBN: So far it’s not even known whether we met Maastricht criteria last year, not mentioning this year, Heido Vitsur, an economy expert at the Estonian Development Fund told ERR News.

“When last year’s gross domestic product is reviewed 0.5 pct smaller then we haven’t met the criteria. We overdramatize things. We must understand that getting euro is likely process, not certain arithmetical game where everyone knows what happens,” Vitsur said.

He said that nothing will happen if we fail to join euro next year.

“We live on just the same. Currently it’s hoped that euro brings more investments. If it is so then our efforts are justified,” he said.

Vitsur said that analysts and investors have different interests and principles, which is why no one knows whether euro will bring big investments at once.

“Euro is beneficial for one, not other,” he said.

From a Baltic Point of View, Baltic Sea Unit, Swedish International Development Cooperation Agency: When Kitty Kubo first heard about the Baltic Sea Strategy, she was sceptical as to its value.

"My first impression was ‘just another paper'. What's the point of doing this at EU level when, from what I understand, there were bilateral, regional and other initiatives underway. However, on further reading I soon realised that it wasn't actually an additional thing at all but an attempt at coordinating the already existing initiatives, add missing bits and boost the visibility of the whole region within the EU."

Kitty says that talking about cooperation requires joint interests and equal partners, but the present strategy consists of a diverse set of countries where some are world leaders in innovation, while others are still catching up. As countries differ, it is important for them to share a future vision.

"I think innovation could be the common denominator for the Baltic Sea Strategy; being renowned as a region where new solutions are tested and standards created with the ultimate aim of improving life for all European citizens. The strategy covers a considerable market in which we can develop and experiment in new ways of doing things through IT, in private and, more importantly, public sector services."

What is most important in achieving positive development in the region?

"We need to make this region attractive, not only for our citizens to stay and tourists to visit, but also for foreign talents and capital looking for the best place to innovate and grow. I have three children of my own and I hate thinking about their future in

Estonia consisting of folk dancing or singing to Asian tourists. But if we are not able to compete with Asia, that is our reality."

When asked what the optimum outcome would be from the Baltic Sea Strategy from Estonia's point of view, Kitty says to be careful not to limit our view to the Baltic Sea corner of the world.

"If we want to grow further and ensure that some parts of manufacturing and services still remain in this part of the world, we need a more proactive approach towards the BRIC* countries. Maybe we could cooperate more in entering the BRIC markets, but also in attracting capital from them."

*BRIC is an acronym referring to Brazil, Russia, India and China.

• To read the rest of the magazine, click here (pdf format, 1MB)

The Estonian Development Fund presented a vision of the steps needed for bringing the Estonian economy out of the crisis and laying the foundation for new growth to the Riigikogu in the form of a white paper. The experts who worked with the Development Fund believe that in order to speed up needed changes and handle the crisis, it is necessary to agree and initiate a crisis package of strategic steps in Estonia the latest by this autumn.

The white paper was presented to the Riigikogu at a meeting with the speaker Mrs Ene Ergma on Friday, June 19. The white paper, together with an accompanying letter signed by the authored experts, was also sent to other decision-makers who influence the progress of the Estonian economy. The signatories call to support the proposals of the white paper, to complement them and to rapidly start the joint elaboration of the crisis package. The appeal is: the crisis package must be put together quickly and in broad-based cooperation.

The underlying starting point of the white paper is that the situation in the Estonian economy is critical and can decline even further. The hardest times of the crisis are expected to begin in autumn 2009. Estonia has no grounds to wait for a significant improvement in the economic situation even when the foreign markets turn to growth again.

The state must become significantly more active in supporting and activating the economy. For this, we have to be ready to review, upon need, some point of views and positions rooted in the existing economic policy.

Systemic measures are needed if we want emerge from the crisis, simple state budget cuts and transition to the euro will not be enough. These do not by themselves solve the continual main concern in the Estonian economy: the structural weaknesses. There is also a danger to remain after the crisis still reliant on the economic sectors and activities that do not allow for a considerable rise in value-added and competitiveness within the economy. Estonia should also be ready for the case if the transition to the euro will not be possible at the ideally hoped time: we have to make ready a "plan B", which should be the crisis package.

Within this package, it is necessary to support quick restructuring of the economy and the associated long-term growth of the enterprises' competitiveness. On the one hand, this requires attracting new capital for investments into the economy and developing the human capital. On the other hand, in parallel we must deal with easing the direct impacts of the crisis. It is important to develop enterprises exporting capacity and sustain employment. In the white paper, the experts have made several concrete steps proposals for the crisis package in these four directions.

The Estonian Development Fund's mission is to create a long-term growth vision for the Estonian economy, for which it undertakes various foresight and analysis work. "However, today the first task is to emerge from of the crisis as painless as possible and ensure that the current crisis-pressured decisions would be smart also in a longer perspective," said the Development Fund's CEO, Ott Pärna. "It is precisely for this reason why we initiated the compilation of the now finished white paper as preparatory work for the Growth Vision foresight work, inviting along the best experts and thinkers."

The white paper was prepared by a group of experts consisting of Urmas Varblane, Marju Lauristin (both professors at the University of Tartu), Jaan Pillesaar (Chairman of the Supervisory Board of AS Helmes), Erik Terk (Director of the Estonian Institute for Futures Studies), Taavi Veskimägi (Member of the Riigikogu), Raivo Vare (consultant and member of the Supervisory Board of the Estonian Cooperation Assembly), Siim Sikkut, Marek Tiits, Heido Vitsur and Ott Pärna (all from the Estonian Development Fund).

A draft of the white paper was first introduced and discussed at the Development Fund's Futures Forum 2 "World - Options - Decisions" on 27 April 2009.

The white paper can be found at the website http://www.arengufond.ee/publications (only in Estonian).

Further information:

Siim Sikkut, Estonian Development Fund (siim.sikkut[A]arengufond.ee, +372 616 1065)

Everything that will happen in the Estonian Economy depends on the people.

Marju Lauristin, Futures Forum 2, 27.04.2009

Specific proposals by the white paper regarding the content of the crisis package:

1. Steps for attracting new capital necessary for investments

• Offering motivation packages for (foreign) investors
• Establishing a high-level representative or "czar" post by the government for investor communication and motivation package related deal-making
• Lower taxation rates on dividend income
• Ensuring the capitalization of private equity and venture capital companies with cornerstone investments
• Instituting a tax relief on securities investments for private persons, similar to the existing relief on enterprise investments
• Improving the coordination between governmental offices, particularly at prime minister's level, for effective utilisation of EU Structural Funds

2. Steps for developing the human capital:

• Increasing the flexibility of retraining, including allowing for another university degree at the state's expense and creating mechanisms to ensure the training of the workforce required for investors
• Attracting high-level specialists with international experience to Estonia and creating a favourable environment for them to stay by setting a cap on (social) taxes as a recruitment incentive
• General reduction in employment taxes together with relevant rearrangements in the funding of health and social insurance systems

3. Steps for supporting the export capacity growth

• Direct communication with current major exporters
• More intensive state sales work and establishment of supporting (infra)structures in promising foreign markets
• More emphasis on national economic interests in foreign policy

4. Steps for empowering the labour force and sustaining jobs:

• Putting a special focus within skill conversion and retraining measures on increasing entrepreneurial abilities and acquiring relevant skills
• Favouring the establishment of new enterprises, including instituting a "new entrepreneur's wage" scheme and reducing the capital requirements and bureaucracy of enterprise registration
• Significantly increasing the availability of retraining, including abolishing the fringe benefit tax from training expenses
• Enabling temporary tax preferences for enterprises that create or maintain jobs
• Supporting the maintenance of internal market jobs with state orders, including making investments for increasing energy efficiency and by developing state-level infrastructures with pension fund finances

We would like to let our innoLab friends know that the 18th of June was the last innoLab for this season. We will open our doors again for Thursday evening discussions on the 3rd of September.

From the last autumn to this summer there have been 27 innoLabs. Generally 15-20 people participate at the InnoLabs. The topics and presenters varied greatly: foreign investments, advanced technologies and different fields of business, management and entrepreneurship studies, etc. All innoLab presentations are available from the Development Fund events archive: http://www.arengufond.ee/eng/events/archive/

Did you know that you have the possibility to shape the innoLab topics? If you have any thoughts on issues which could be discussed in the following innoLab's and/or people who could be invited to present, then please give notice in good time to kitty.kubo[A]arengufond.ee, as the new season has already been put on the calendar!

Whoever is not yet on the list which gives information about the innoLab, but who would like to be, should send an email to: innolab[A]arengufond.ee

We would like to thank everyone who presented at the innoLabs, and also to those for whom participing in the discussions has become a pleasant habit!

Wishing you a sunny summer and see you again in the autumn!

The Development Fund

How does Estonia's ICT capability stand in international comparison?

• Even though the development of ICT is fast, it is quite predictable. Most of the technologies that will be widespread by 2018, exist in an embryonic form already today in the top laboratories throughout the world.
• Most of the more fundamentals of ICT systems are created in major industrialised countries, i.e. outside Estonia. Therefore, it is very important for Estonia to be able to utilise the technologies created elsewhere.
• Estonia's current ICT capabilities lag behind the global forefront, and Estonia has to strengthen its ICT competencies in the emerging key ICT areas.

Recommendation 1:

Upgrading ICT higher education to an internationally attractive level

Estonia needs to increase its ICT labour supply whilst simultaneously improving the quality of higher education in the field of ICT. Estonia has to build up several new areas of competence in ICT, e.g. Internet of Services and GRID, integration of communication systems, new basic technologies in the areas of convergence of microelectronics, bio- and nanotechnologies, and alternative theoretical foundations of ICT systems (e.g., cognitive systems, quantum computing, etc.).

In order to fast-track the internationalisation of Estonia's ICT higher education, at least 5 or 6 distinguished  professors, both foreign or expatriates should be attracted to Estonia simultaneously. This is the most effective way to fill the above key ICT areas where Estonia has relative weaknesses with acknowledged specialists. Having said that the existence of host university's internationalisation plan stating the desired objectives and schedules should be seen as a prerequisite for inviting foreign lecturers to Estonia. Furthermore, to build up critical mass needed for attracting also international students, it is expedient to recruit those new professors into a single structure at a time.

Similar experiences of Ireland, Finland and Singapore in attracting foreign talents demonstrate that competitive salary offer is a prerequisite, but not necessarily sufficient.  If Estonia wants to become competitive in importing top researchers, it has to offer integral package covering the issues related to salary and research costs , as well as issues concerning relocation of accompanying family members and their adaption to the new environment.

High-quality international higher education will make the ICT programmes in Estonian universities more attractive to local students while also attracting more foreign students. Bringing foreign lecturers to Estonia and enabling Estonian students to pursue post-graduate studies (partly) abroad will eventually upgrade the ICT programmes offered in Estonian universities to a strong international level. Regardless of whether smarter foreign students will after graduation be employed by Estonian companies or return home, student exchange will in turn underpin the internationalisation of the Estonian economy and particularly of its ICT companies.

Moreover, upgrading ICT higher education to an internationally recognised level should be seen as a pilot project in Estonia which would provide experience for renewing the entire higher education system in Estonia.

Increasing Estonia's ICT export requires contacts and professional sales.

Taavi Kotka
CEO, Webmedia Estonia

What is the role of ICT in Estonia's economy?

• The ICT sector itself accounts for only a small part of the Estonian economy. Nevertheless, the contribution of ICT to economic and social development is immense.
• The main contribution of the ICT manifests itself through productivity growth achieved with smart take-up of ICT throughout the economy.
• In order to increase the export of high value-added ICT products and services, international business skills of Estonian enterprises need to be improved significantly.

Recommendation 2:

Strengthening international business management skills in ICT companies

Entrepreneurs have identified during the foresight process the lack of specialists possessing international product development and sales skills as well as insufficient experience as a significant bottleneck affecting the development of Estonia's ICT sector. Strengthening of international technology and business management as well as marketing training is thus of crucial importance, if the competitiveness of Estonia's ICT sector and the economy at large is to be strengthened.

The better our insights into foreign markets are and the more product development skills we have, the more effective business we will make.

Estonian Development Fund recommends that Estonian universities to start to offer to technology specialists, middle managers or heads of small companies (executive) MBA programmes in technology and business management with a strong ICT focus.  Similar programmes are offered in the Netherlands (Leiden University), the United Kingdom (University of St Andrews and University of Westminster) and elsewhere globally. However, they are not yet very common. Consequently, there are also good chances to start to offer such high-quality education provided with the involvement of foreign lecturers also to foreign students.

The ICT education itself has also to become more interdisciplinary. A practical way to achieve that is to include compulsory business management courses in ICT syllabuses. Technology students would benefit foremost from courses on technology strategies, business management, marketing and other subjects. Besides the above-mentioned business and technology management courses, graduate students in technology also need access to courses in design, psychology, etc.

Mart Laar,
Member of the Parliament of Estonia and
the Supervisory Board of the Development Fund
(EST_IT@2018 Forum, 11 December 2008)

Which are they key areas for the application of ICT for Estonia?

• Each of the major socio- economic challenges Estonia faces represent a new rapidly growing market for smart take-up of ICT applications.
• The areas that Estonia has to focus in take-up of ICT foremost are education, health care, manufacturing, energy, financial services and ICT security systems.
• In all of these target areas, demand for innovative ICT solutions is growing not only in Estonia but also in Europe and beyond thus extending the export possibilities of Estonian ICT solutions.

Recommendation 3:

Roadmaps for the application of ICT in target areas

In the course of the foresight exercise, six target areas were identified for the application of ICT in Estonia. These areas are education, health care, manufacturing, energy, financial services and ICT security. Meeting the social and economic challenges of the above target areas is foremost about creative - sometimes groundbreaking - changes a respective area is willing to accept or not. Planning a future application for ICT requires a good perception of the technological possibilities, but in itself, it is hardly a technological issue. Therefore, the effective application of ICT requires an understanding of strategic focal points of the above target areas as well as knowledge of technologies and markets.

With this, each of the socio-economic challenges Estonia faces represents a fast-growing market for new ICT solutions.

One possibility for analysing strategic choices in the target areas and related possibilities for application of ICT is to draw up long-term roadmaps for the take-up of ICT.

Roadmapping is a strategic planning tool used for identifying common long-term goals, ways to achieve these goals and the milestones on the way. Roadmaps describe important changes in the society and the economy, but also global trends in technology and markets that are relevant to the topic of the roadmap. Most importantly, however, roadmap specifies expected future activities of entrepreneurs (new products and services) as well as resources (people, funding) required for achieving specific strategic goals.

To address the key challenges in the above six target areas, Estonian Development Fund is initiating the development of roadmaps that document possible future developments in the respective areas and draw up detailed action plans for the application of ICT.

Marek Tiits, economic expert at the Estonian Development Fund, co-author of the EST_IT@2018 report

How did we come up with these recommendations?

ICT foresight is one of the three foresight projects (alongside restructuring the manufacturing sector and the service economy) undertaken by the Estonian Development Fund in order to prepare and contribute to the subsequent more broad-based foresight, the objective of which is to formulate Estonia's growth vision for the coming decade.

In the ICT foresight, we commenced by mapping the global ICT and socio-economic trends affecting Estonia the most. Then we then conducted interviews with the 20 most influential Estonian ICT specialists and decision-makers representing companies, academia and the public sector. Based on the interviews and trend analyses, an interim report was drawn up and conclusions presented in report were introduced and discussed at a one-day workshop.

In September 2008, we conducted an extensive web survey with the purpose of defining Estonia's ICT development priorities. Based on the survey, we defined the most relevant areas of activity in order to upgrade Estonia's ICT education and research to an attractive level. We also identified the above six target areas where Estonia needs to boost the take-up of ICT solutions.

In December 2008, a major forum assembling 140 experts and decision-makers was held to discuss Estonia's ICT development visions and collect additional input for elaborating the final results.

The EST_IT@2018 foresight final report "Focus on Estonia 2/2009: EST_IT@2018 Estonian information technology outlook" was published in February 2009 and is electronically available on the Development Fund's website www.arengufond.ee.

The Estonian Development Fund was established by the Parliament of Estonia in order to perform foresight on perspectives for economic development of Estonia and to invest into ambitious knowledge-intensive technology start-ups.

Additional information:

Focus on Estonia 2/2009: EST_IT@2018 Estonian information technology outlook

See also:

Videocast of the EST_IT@2018 forum (in Estonian, except for the keynote)

BBN: Since Q1 15.6 pct economic downturn brings threat that Estonia may have to use additional resources then the state could sell bonds to people, Heido Vitsur, an economy expert at Estonian Development Fund told ERR News.

The recovery will happen later and be more difficult in case additional resources aren't used. It's possible to get additional money by bringing foreign investments or borrowing, Vitsur said.

One possibility is to use people's savings.

"Creating such situation where people have the interest and certainty to invest their billions from accounts to Estonian economy. There are tens of billions which can't be used," he said.

It's possible to invest people's money everywhere. One possibility is infrastructure.

"The state could sell bonds to people who are worried about their money and with such yield that people are willing to buy," Vitsur said.

"And the state could invest in infrastructure. Doesn't matter, whether repairing schools or streets, it's a thing that must be done anyway. When we let them decay during the crisis, then renovating is expensive afterwards," Vitsur said.

He said that the state is able to sell bonds after it gives up its aim of keeping budget deficit under 3 pct of GDP, which is necessary to join euro.

"I've talked all the time that euro is a necessary and good thing, but most important is to come out of the crisis alive, as fast as possible and with smallest losses. All Western advisers have hinted that euro can't be our main goal. It is important, but that we wouldn't miss euro and economic growth by chasing it blindly," Vitsur said.

BBN: Estonia is 20 pct more expensive than international competitiveness would allow and even modest inflation is harming economy's recovery, Heido Vitsur, an economy expert at Estonian Development Fund told Eesti Päevaleht.

"Deflation is usually something that is terrifying. But Estonia has no other way than deflation is it doesn't want or can't devalue the EEK," Vitsur said.

"Estonia wasn't competitive even years ago and it's so even less with its expenditures and productivity. The level of expenditures can be taken down by devaluation or deflation in the short term. In longer perspective the productivity growth will also help, but it's not possible to count on it in the time of sharp crisis," Vitsur said.

He brought out three reasons why it's not possible to compare Estonia to other countries when talking of deflation.

First, not a single country besides Estonia has set euro as their first priority, but coming out of the crisis.

"These two are far from being concurrent. Of course we're talking of how big aid packages can be used in one or other case," Vitsur said.

"The other reason is that Estonia is among those countries that let huge consumption boom on foreign credit to evolve.

Accidentally we're among weak countries in this group and can't hope on measures which are used by GB, US or even Ireland. It is, to take huge loans to enliven the economy. No one is lending money to us for they don't believe in our capability to service bigger national loan than we already have. So the 3 pct deficit level is already given by the size of reserves and borrowing capability (considering that the crisis won't be over this year)," Vitsur said.

"Thirdly - if Estonia had understood importance of a policy that recons with the cyclic nature of economy couple of years ago, it would have given us more liberty is using economy's incentive programs and we wouldn't have increased our expenditures to such level from which coming down is painful and complicated," the economy expert said.

Ultrafast halting like ours is complicated and may bring along downwards spiral which is difficult to control and also social tensions:" But the main problem, as mentioned before, is elsewhere - Estonia's economy was uncompetitive years ago with its high expenditures that didn't match productivity," Vitsur said.

He said that the situation hasn't improved, rather worsened.

"The currencies of nearly half of our trading partners have devalued sensibly in past 6 months and that has worsened our competitiveness and hopes for recovery," Vitsur said.