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Abstract
One of the key issues of Estonian Forest Development Plan 2020 is to maintain and increase the
competitiveness of Estonian forest sector. For the maximum effect for the sector (also for the
whole country in wide perspective), all parts of the sector should operate competitively. In 2004
the competitiveness of Estonian forest industry sector was analyzed, using the competitiveness
indices of external trade. Until now the competitiveness of the Estonian forest management and
logging sector has not been studied. Since there is no commonly accepted definition of sectoral
competitiveness among economic theorists, different approaches can be found in the literature,
which are mainly based on productivity or external trade. In the current paper the suitability of
competitiveness indices based on external trade in evaluating sectoral competitiveness are
tested, using Estonian forest management and logging sector as an example. The
competitiveness of Estonian forestry and logging sector is evaluated using:
1. the changes of market shares of Estonian roundwood in main export markets;
2. competitiveness indices based on external trade – revealed competitveness advantage
(RCA) and relative trade advantage (RTA) in vis-a-vis comparison with the main
competitors.
The external trade data from UN COMTRADE and EUROSTAT databases are used for the
calculations. The market share of Estonian roundwood in the main export markets (Sweden and
Finland) has increased during the period 2002 – 2011, respectively about 1% in Finland and
10% in Sweden, but at the same time the volumes have decreased. The calculated indices of
RCA and RTA in vis-a-vis comparison with Latvia are indicating Latvia to be more competitive
in exporting roundwood, during the period 2002-2011. On the other hand, Estonian annual
felling volume has increased about 40% in 2011 compared to 2002 and domestic consumption
of roundwood has increased about 70% during that period. The export volume of roundwood
has decreased 17% and import volume 47%, which indicates the structural change in Estonian
forest sector external trade. Due to the development of Estonian forest industries, most of the
roundwood (sawlogs) is consumed domestically. Since Estonia has a limited demand for
pulpwood, which forms about 20% of the total felling volume, it is the main export article (to
Scandinavia) of forest management and logging sector. To sum up, using only the indices of external trade for evaluating the competitiveness of
Estonian forest management and logging sector is not sufficient for the fundamental conclusons
of the competitiveness of the sector, since most of the product (roundwood) is oriented to the
local market, which decreases the share of roundwood (roundwood is the output of forest
management and logging sector) in total export of Estonia. For this reason, in the comparison
with the countries or group of countries which are more oriented to exporting raw material
instead of consuming it domestically (the share of roundwood is higher in total export) lower
rankings are obtained.