The Baltic economies: Catalysts for the internationalization of Swedish SMEs?

Decades of globalization have fundamentally reshaped global trade. Deeper economic integration has not only led to increased access to foreign markets but also increased interdependence.

This project focuses on the relations between the Baltic countries and Sweden. Baltic independence has been surprisingly important for small and medium-sized enterprises (SMEs) in Sweden. Until the early 1990s, foreign direct investment (FDI) – in particular FDI aiming to access cheap labour – was primarily limited to the largest firms. The potential low cost destinations were located far away from Sweden, e.g. in East Asia, and few SMEs had the capacity to manage production activities in distant markets. With the creation of new low cost locations on the shores of the Baltic Sea, it became feasible also for small Swedish firms to consider FDI as way to lower production costs and raise competitiveness.

Estonia became the main Baltic investment location for Swedish firms in the 1990s, and Sweden is today the single largest foreign investor in Estonia. The investment relation has generated strong links between the countries, with significant positive effects for both partners. Estonia is not only an important low cost location, but also a natural stepping stone for other foreign markets. In a similar way, Sweden is a spring board for Estonian firms with an ambition to internationalize. In addition, Swedish FDI has had an impact on technological progress and economic growth in Estonia through various kinds of spillovers and externalities. The current research project analyses these processes in the following work packages:

• Swedish firms in Estonia

What role does the Baltic region (Estonia) play for the performance, home country operations, and internationalization of Swedish SME? How have Swedish firms adjusted to the gradual changes (and crises) in the Estonian economy?

How does investment in the Baltic region and Estonia impact expansion to more distantmarkets? In this section we focus on the relatively recent interest in step-wise learningprocesses associated with foreign market entry.

• How do Swedish firms influence the Estonian economy and Estonian firms?

This work package synthesizes and adds to extant literature, analyzing and contrastingtechnology spillovers and other learning processes that are linked to investments frommore advanced countries.

Documents

Final report - Patrik Tingvall - The Baltic economies: Catalysts for the internationalization of Swedish SMEs?