Industrial restructuring in transitional Baltic Sea Region countries (Baltic States,

This paper analyses recent trends and possible future changes in industrial development in transitional Baltic Sea Region countries (Baltic States, Kaliningrad region) with main focus on Estonia. The heavy industry collapsed during the first half of the 1990s in most former socialist countries. However, since the second half of the 1990s the industrial output, export, productivity and even employment (in some branches) has increased remarkably. Instead of de-industrialisation, which has been a general trend in Western Europe since the 1970s, we may speak about a re-industrialisation. Foreign investors have played a major role in the restructuring and efficiency growth of manufacturing in transitional economies. The rising importance of foreign investors and the growing export and re-export to other Baltic Sea Region (BSR) countries indicate that the industries in transitional countries are becoming more and more integrated to developed BSR countries. Still, especially textiles and electronics that are concentrated on relatively low-skille