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RIO Country Report Estonia 2016

The annual RIO Country Report offers an analysis of the R&I system in Estonia, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Estonian research and innovation system and assesses the policy response.




  • The Estonian economy is small, has high level of openness and its structure has remained remarkably stable during the 2010-2015 period. Exports and value added are driven mostly by contract manufacturing of relatively complex products. SMEs dominate the non-financial business economy.
  • Estonia has a very favourable business environment but it is faced with a short supply of highly qualified human resources due to ageing population, outward migration and lower attractiveness of research careers.
  • An important aspect of the Estonian R&D system is its overwhelming reliance on competitive project-based policy measures, both in funding public universities and private companies.
  • The overall level of GERD almost doubled in 2009-2011 (from 1.4% to 2.31%), but slid back to 1.45% in 2014. In 2015 it picked up slightly to 1.5%. Public allocation of R&D and R&D expenditure are above the EU average but the business investments (BERD) dropped significantly as the effect of the business R&D investments in an oil shale refinery by Eesti Energia ended.
  • Estonia has been at the forefront of online public services for a few years now. However, other aspects of public sector innovation are far less developed, most notably user-centric service design, co-creation of services and similar areas.

Main R&I policy challenges

  • Addressing the asymmetry between the public and the private R&I efforts. The Estonian science system follows very different specialisation from the business sector as it finances and supports mostly curiosity-driven basic research for which there is little immediate economic demand.
  • Promoting private investment in R&I by addressing the low pace of technological upgrading in industry. Due to their contract manufacturing profile, most Estonian manufacturing companies are not very strong in design and development capacities, both in terms of in-house capabilities and networks they belong to, thus these companies have strong obstacles in climbing the value ladder.
  • Improving the unbalanced public sector innovation effort. Public sector innovation efforts since early 2000s have been firmly focused on the development of e-government infrastructure (x-road architecture, e-ID card) and less on service development (via co-creation with the civil society) and public procurement for innovative solutions.

Main R&I policy developments in 2016

  • The Government decided to allocate additional funds for basic funding of universities.
  • A task force on research funding and organization at the Government Office was formed to discuss consolidation, pooling of resources and changing the financing model of HEIs.
  • The Government Office set up two tasks forces to strengthen its public sector innovation efforts: one on zero bureaucracy, the other on public sector innovation and social entrepreneurship.
  • The creation of R&D officer positions in line ministries through the RITA programme was launched.
  • The Estonian Development Fund was closed down and its investment function merged into KredEx, and its foresight and monitoring functions were transferred to the newly created Foresight Centre of the Estonian Parliament.
Geo coverage
Report year
Official publication date
Monday, 8 May, 2017
Last update: 22/10/2019 | Top | Legal notice | Contact | Search