Centrally planned countries, also referred to as command or planned economies, are run and managed by the government. The government controls the whole country and decisions involving the country are made amongst themselves. They own most resources of the country, like land and natural resources, e.g. oil. The government decides what sorts of goods and services to produce and how they are priced and allocated in the economy. As a result, consumers do not have a choice of products to choose from and also no unnecessary products are imported, as the government provides all the essential goods and services for consumers. What’s more, factories within a planned country are given output production targets by the government to ensure efficiency and also the necessary resources. Workers are often given evenly spread out incomes, not taking in account of what jobs they do; the government tries to balance equality amongst people by doing this. Furthermore, everybody is guaranteed a job, so there should be no unemployment and everybody is ensured housing along with free of charge basic needs, like basic health care.
Estonia is situated next to Latvia and the left side of Russia. Estonia is a small country of 1.4 million people. The economy of Estonia was agriculture based in the early 1900s. Estonia was ruled by the Soviet Union, but after World War II the Soviet Union destruction caused the Estonia’s economy to cripple. There was also a sharp decline in GDP. The only way for Estonia to recovery was to become a free market, which they carried out when they gained independence in the 1990s. Estonia transformed its economy from a centrally planned system to a free market. Estonia began its process to free market with the development of a plan for economic independence within the remaining Soviet Union. This process was an end to central economic control over Estonia and the creation of a new rule for Estonia. Before this it was said that approximately 90% of the Estonian economy was controlled from Moscow in the Soviet Union. Therefore very little was left for the Estonians to decide for themselves, this led to the process of ending the centrally planned economy role of Estonia. What’s more, another reason for the process was the decline in living standards of Estonians beginning in the early 1980s due to the consequences of the over centralisation. Following independence in the 1990s, the Estonian parliament pushed through a range of free-market transitions based on privatisation and a fundamental reformation of the economy. As soon as Estonia broke free of the Soviet Union, the government of Estonia decided to privatise enterprises and land as speedily as possible to begin their free market economy. Estonia’s employment grew as new jobs were created as firms were privatised and foreign business entered the economy. Estonia also applied and was accepted as a member of the World Trade Organisation and started trade of agriculture products with neighbouring countries, like Finland and Sweden. Estonia has carried on privatising, things like energy, telecommunications, railways and any other state owned companies. By this Estonia achieves to become a member of the EU. In 2002, Estonia completed most of its preparations for EU membership by the transition to free market and changing its currency to the euro.
