ABSTRACT
The Republic of Estonia lies on the Eastern shore of the Baltic Sea and shares borders with Latvia to the South and Russia to the East.
Estonia's annexation by the Soviet Union in 1940, lead to a forced and radical transformation of its economy. The post-war period was characterized by rapid industrialization, which resulted in aggressive capital formation and forced relocation of labor - from agriculture to industry, and from other parts of the Soviet Union (notably Russia) into Estonia. Today Russian-speaking population make up 30 per cent of the Estonian 1.5 million inhabitants. When in the second half of the 1980s the Soviet authorities started to abandon the central planning, Estonia was the leader, among the former Soviet republics, in implementing the reforms.
