The letter says: “The rise in the cost of living in the past three years has been larger than has been seen in many other countries that compete with us in foreign markets. When the cost of living rises, so wages should also rise and consequently so too production costs, with the result that our competitiveness declines. Do we not have to fear this?” Unfortunately we do not know what advice Nurkse gave to Jaakson, and within only a couple of years the question was no longer of any great relevance for Eesti Pank. During the second world war, Ragnar Nurkse focused in his work on inflation and exchange rates. The research that he published on these topics has led many writers to call Nurkse one of the main architects of the Bretton Woods system. After the war Nurkse taught for thirteen years in the prestigious Columbia University in New York. There he mainly focused on development economics, earning a great reputation as an international advisor on the subject. He died unexpectedly and still relatively young at only 51. The view of Ragnar Nurkse of the time notes his thorough knowledge of economic theory and practice, his original ideas, and his clear vision. He was the sort of man who is clearly needed in the world today. When Estonia regained its independence it chose the path of reform, with a unique combination of conservatism, innovation and a recognition of its own limitations. Estonia chose once again the road to Europe.
In this setting, the ECB’s clearly expansionary monetary policy stance, the institutional reforms to the financial governance of the EU, and the cleanup and restructuring of the national financial sector were all pivotal in significantly reducing the degree of financial fragmentation in the euro area between 2010 and 2012. Deleveraging by the non-financial private sector has also notably influenced competitiveness. This ongoing process is very advanced both in the case of non-financial corporations and of households. In the case of companies, for instance, the debt/GDP ratio has fallen by more than 40 pp from its peak, meaning it now stands below the average for euro area firms. This has all contributed to goods exports increasing from having accounted for 15% of GDP in 2009 to approximately 24% in 2019. During this period, export growth has, moreover, been higher in general terms than that of foreign markets. This has enabled the global trade share to be maintained, despite the ever-more influential role of the emerging economies in world trade. In parallel, there have been significant and permanent increases in the Spanish economy’s export base. This is been in terms of the figures both for total export firms and of those for firms that regularly export. As regards the proportion of exporting firms relative to total firms, the attendant growth rates have been very sharp since 2009.