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In Estonia, skills and innovation are an investment in the future

Indicators such as GDP per capita can estimate, to a certain extent, the success of a country’s economic performance. Nonetheless, more intimately social phenomena shine a light on the core and side effects of collective and individual choices, changes, success stories. Estonia is investing in human capital and technological development, and the returns are widely distributed. Higher quality of life and job creation represent a source of pride, but also a reliable investment in the future.

Since we won back our sovereignty in 1918, Estonia has often found itself in need of swimming against the tide. Rising from adverse geopolitical circumstances, we became digital pioneers when Europe was just getting acquainted with new technologies. But who could have said that, one day, we’d be in contrast even with a global demographic transition?

A digital life for those who come and those who stay

For the fourth year in a row, Estonia’s net migration rate was positive in 2018 – contributing to an increase in the overall population figure. The determinants of these trends are, of course, multiple and composite. However, data and research clearly point at two elements potentially contributing to driving this tendency – skills and innovation.

A growing share of Estonians decides to stay, and take the opportunities that the country has to offer. At the same time, however, more and more people chose to move to Tallinn, Tartu, and Narva between 2014 and 2018, due to rich career prospects and high quality of life for families. Online expatriate network InterNations, in its Digital Life Abroad Report, ranks Estonia top of the chart for digital life.

Ahead of countries like Finland, Norway, Denmark, and New Zealand, expats rate Estonia best in the world for unrestricted access to online services, and availability of public e-services. Respondents keep in high regard also the widespread cashless and card payment culture. The ease of getting a local mobile number and high-speed internet at home are featured as well.

Opening doors to the world

Data reflects the general commitment of Estonia towards attracting foreign talents. Institutions like the International House of Estonia help expats navigate the basics of starting up with a new life and career in the country. As the share of internationals working in Estonia has more than doubled in the past years, reasons for relocating include our tech-savvy environment. Academic research has shown, indeed, that innovation can function as a factor of attraction for high-skilled migration. An economy open to the highly-skilled, fosters productivity and further technological development. But the creation of a stronger business fabric in the long-run, then, benefits from such trends too.

Estonian companies are well aware of the added value in hiring from abroad, despite the initial investment attached to the costs of labour and recruiting. Work in Estonia and the Estonian Chamber of Commerce and Industry, thanks to monthly surveys with employers, highlight three main reasons behind such trend:

  • A limited national workforce in relation to the increasing need for high-skilled specialists;
  • The added value inherently lying in diversity for the general company environment;
  • The possibility to access bigger markets of applicants to choose from.

And in the case of startup entrepreneurs and employees, or ICT and senior specialists, immigration quota limits do not apply. But leaving aside who and what companies are looking for, how does foreign talent contribute to the economic development of the country as a whole?

High-tech jobs increase employment

An extremely detailed and insightful study from 2018 makes the case for a high-tech job multiplier in Europe. Following Eurostat’s definition, ‘high-tech jobs’ encompass both manufacturing and knowledge-intensive services. Large parts of ICT occupations are accounted for, from robotics to scientific research. The period observed records the fastest job growth in the European Union in Science, Technology, Engineering and Mathematics (STEM), signalling a 37% increase.

Researchers Goos, Konings, and Vandeweyer, from KU Leuven and Utrecht University, empirically show how rising employment in high-skilled occupations generates up to five more jobs in less-skilled-intensive services in the same reference region. It means that for every new worker in high-tech, the spillover effect on other jobs at the local level signs as much as five extra posts.

Despite differences across European regions, aggregate findings are in line with previous research on technological development and job creation – both for the US and the EU. Innovation fosters employment both in high- and local less-skilled occupations. The positive effects hint at:

  • The intrinsic relationship between new technologies and high-skilled jobs, two faces of the same coin in local aggregate production;
  • The local increase in average real income due to innovation, generating opportunities for less-skilled jobs more resistant to automation.

Furthermore, it emerges how the demand for low-skilled workers can trigger immigration from outside the reference region. Areas presenting a stronger increase or presence of high-tech jobs result then in higher net migration rates. Labour mobility, as a consequence, becomes a key component in the effectiveness of the high-tech job multiplier.

Economic development, social dividend

The growth over time of Estonia’s ICT sector matches a nationwide, renewed commitment to talent attraction. An increasing number of specialists decide to relocate to Estonia and make it their ‘home away from home’. In this way, they also contribute to the durability of our outstanding path of economic development.

Locals and internationals, by investing in skills and innovation, we are all investing in our future, together. It is the shared contribution of many, many bright minds towards the ongoing making of a model of success. Its sustainability lies in the many declensions of the added value that, ultimately, we will keep being able to generate.

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