ABSTRACT
Many scholarly works have been published on foreign direct investments (FDI) in developing and transition economies with the focus on inward FDI’s impact on the host economy. Even though modern retail in these economies has been extensively studied, analytical research on FDI in the food retail industry in Estonia represents a missing link. On the theoretical level, Estonia is a significant example. Being one of the more successful transition economies, Estonia’s economic policy framework is perhaps the clearest example of applying a neoliberal policy toolbox in a transition context and beyond (see Thorhallsson and Kattel 2012). 1 Hence, the study of Estonian retail offers an opportunity to understand the impact of neoliberal policies on retail and related industries. As the neoliberal policy toolbox would prescribe, Estonia has not used any foreign investment management policies beyond macroeconomic reforms oriented towards price stability and low taxes. Consequently, while being a small and extremely open economy, the Estonian experience offers relatively unique opportunity to understand the consequences and impacts of an unmanaged FDI policy. On the international comparative basis, the Estonian case reveals the challenges for the host economy that have resulted from rapid developments during a relatively short period (less than 15 years), compared to the decades-long transformation of retail business in the Western hemisphere. 2
