ABSTRACT
After the collapse of the Soviet Union in 1991, Estonia faced the challenge of instituting a capitalist market system with a supportive institutional-legal framework. Transformations in the economy were paralleled with the changes in the food retail sector by the gradual introduction of modern retail practices. More importantly, the subsidiaries of retail transnational companies (TNCs) can be considered catalysts of major shifts as from the late 1990s foreign retailers have set the path for the local retail market. By considering the foreign companies in the Estonian food retail market, the current study maps the dynamics in the food retail sector by presenting the key features of the Estonian political economy and the most significant events that have set the trajectory of the development in food retail. Hence, the objective is to present the evolution of the Estonian food retail industry and elaborate on critical junctures, that is, institutional, economic, and political factors that have affected the transformation of the industry. The significance of the study stems from the fact that the introduction of modern retail in Estonia occurred within a very short time period compared to the decades-long transformation of retail in the countries in the West. 1 Moreover, the study offers an opportunity to understand the impact of neoliberal policies, in particular openness to foreign capital and trade, on the retail industry in a small transition economy. Aside from the country’s affiliation to the neoliberal policy toolbox which provides a window of opportunity for understanding the outcomes of certain political decisions, FDI in food retail has been an understudied field despite the numerous analyses in the field of FDI in Estonia. 2 Thus, this study offers an opportunity to understand the impact of neoliberal policies, in particular the openness to foreign capital and trade, on the retail industry in a small transition economy.
