In order to generate innovation, innovative people have to be raised in Estonia, brought to Estonia - and kept in Estonia, hence the aim should be to create more high-productivity jobs. •  I maintain that being a part of Europe, we should become quality leaders since we have already lost the price leader position to Asia. This is undoubtedly easier to say than to do. Here we face the threat of outpacing the so-called natural development, which calls for step-by-step industrial development towards manufacturing products with increased added value - such a development is in fact currently under way in Estonia. On the other hand, the payback period of such investments is very long and the experience of several countries (including Finland and Ireland) has shown that success often arrives only decades later. Consequently - if it is our goal to become a quality leader, development activities in this direction should be launched as soon as possible. •  Here we come to the question, WHERE to start? The answer requires a good prediction or even a vision: which areas have enough potential in Estonia that are worth to be given systematic development priority. It is possible that due to its small size Estonia lacks any potential for developing high-technology industry since this would require the emergence of clusters. Even if we manage to develop our own high-technology industry, sufficiently high-level know-how will most likely emerge only in few fields. However, this does not mean that we should develop just a few areas.
But this task can only be performed in cooperation with the Government and other constitutional institutions. Today we can acknowledge that regardless of the fact that both the central bank and other state institutions employ Estonians who are known as great individualists, our cooperation in the field of economic policy has been smooth and yielded results. •  Five years ago I also spoke about the essential developments and necessary reforms facing Estonia. Today, many structural reforms under discussion at the time have been successfully launched, including the pension system reform, which has given a completely new dimension to the saving patterns of the Estonians. As regards the changes that the financial system was facing, my anniversary speech mentioned the plans to set up a universal financial supervisory body, which has also successfully materialised. Today we have a banking sector that is very up-to-date and successful on the international banking scene as well. •  According to the World Economic Forum, Estonia is the most competitive country today among the new European Union member states with its competitiveness index of 4.64 points. With this score Estonia is also ahead of four ‘old’ member states (Spain - 4.47, Italy - 4.38, Portugal - 4.25, and Greece - 4.00), while narrowly falling behind Ireland (4.69). Our open market economy, development of the information society and the financial sector  BIS Review 26/2004  1  as well as the quality of our business environment have been considered Estonia's strongest areas.