2. Similarities and attractions Small and ”peripheral” countries / economies (population: Finland 5,2 million + Estonia 1,4 million = 1,5% of the total EU population) Geographical location: North East corner of EU and long border with Russia Common linguistic, cultural and historical tratitions and ties Very active cross border interaction; tourism and civic interaction (Approx. 3 million trips from Finland to Estonia annually) From the Finnish perspective the Baltic countries, especially Estonia form a natural zone for market expansion

3. Tones of public debate Estonia membership is a great opportunity with no particular threats Finland generally speaking Estonian membership is welcomed, however, some serious threats are also expected inflow of Estonian workers to Finland outflow of Finnish investments and relocation of firms and jobs to Estonia

4. Figures and trends

5. Some market and policy characteristics

6. Observations and questions While the flow of people from Estonia to Finland has remained constant but moderate, migration in the opposite direction has been almost non-existent. The South-North flow of people has been ‘balanced’ by a North-South flow of Finnish investments to Estonia. … and questions Will this development accelerate as a result of Estonian EU membership? Will it be beneficial or harmful for these countries?

7. Answers and theses Thesis 1. The overall economic impact of enlargement has been estimated to be positive both for Estonia and Finland. The economic interaction across the Gulf of Finland has been developing already for years and there is evidence that the abolishing of economic borders will accelerate this development.

8. Answers and theses Thesis 2. The general expectations concerning the impact of Estonian EU membership on the regional labour market around the Gulf of Finland are positive in both of these countries. However, trusting the available empirical data it seems obvious that the Estonian accession will not lead to any dramatic changes in the Finnish- Estonian labour market interaction.

9. Answers and theses Thesis 3. Finnish companies have been active in investing in Estonia. The main sectors have been telecommunications, food industry, banking, and energy sector as well as wholesales and retail. Typical to these sectors is that their success is strongly anchored in the expected development of the regional economy and markets in Baltic countries and the possible eastward expansion of these markets. It seems obvious that while creating thousands of new jobs in Estonia these investments have also strengthened the foundation of high value added jobs on the Finnish labour market.

10. Answers and theses Thesis 4. As far as the mobility of companies, jobs and people across the Gulf of Finland is concerned, there is hardly any danger of such exodus of businesses from Finland to Estonia or workers in the opposite direction, which would be harmful for the development of labour market or employment situation in these countries. Quite the opposite, the free movement of labour force, investment and jobs together would further strengthen the dynamic development of the emerging new regional labour market. In this respect, the transitory regulations imposing restrictions on the free movement of labour force might in the long run prove harmful.

11. Answers and theses Thesis 5. with further questions Our analysis predicts that the current state of affairs will prevail also after May 2004. However, in long term, a new set of questions will emerge from the perspective of European single labour market policy and Finnish-Estonian regional policies: Is there a possibility for a joint Finnish-Estonian strategy to emerge for strengthening the co-operation between Estonia, in particular Tallinn-Harju region, and Southern Finland regions? What kind of partnerships could Finland and Estonia establish for better global competitiveness and improved social cohesion in the area? How could an equal partnership be developed in the current situation where Southern Finland is, in terms of economic performance, so overwhelming?

12. Answers and theses Thesis 6. The future of the cross-border labour market remains open. It might be argued that the Estonian-Finnish labour market interaction will constitute an emergent process of a “socio- political experiment” where the Nordic welfare oriented system and the neo-liberal model are negotiating on a new type of labour market mechanisms. Will this socio-political experiment lead to the harmonization of labour market systems and labour market policies or, perhaps, to further intensification of the competition between the two rival models?