Foreign trade in the Republic of Estonia in the 1920s and 1930s

​From the first months of independence, Estonia actively sought foreign markets, as the development potential of its economy was connected with exports. In addition, industry needed raw materials, fuel, equipment, food and consumer goods for the domestic market.

The trade agreements on the most-favoured-nation principle (facilitated market entry) signed in the 1920s with Great Britain, France, Finland, Germany, Latvia, Sweden, Denmark, the USA, the Soviet Union, Turkey, Bulgaria and other countries opened the markets in these countries and laid the foundations for permanent foreign trade relations.

Due to similar economic structures, operating in the markets of such nearby countries as Latvia, Lithuania, Finland, Denmark and Sweden was limited. In the economies of all these countries, the agricultural sector and exports prevailed. Economic relations with the Soviet Union were much more modest than expected. Estonian producers were thus keen to reach the biggest and most attractive markets in Europe, in Great Britain and Germany.

In the 1920s, these two countries became Estonia’s two main foreign trade partners. Germany and Great Britain played an especially important role as markets for Estonian agricultural and industrial products. In the second half of the 1930s, Estonia sold its goods in about 100 countries, although over 60% was marketed in Germany and Great Britain. These countries were also essential in importing. In 1939, Estonia bought goods from 69 countries, with over half the goods being from Germany and Great Britain (54%). However, this made Estonia too dependent on the economic policies and markets of these two countries. This became obvious during the years of the world economic crisis, when increased customs fees and the establishing of import quotas considerably diminished Estonia’s opportunities to market such export articles as butter, eggs and textiles.

After the economic crisis in the second half of the 1930s, Estonia tried to diversify its export production and extend the range of its export markets, in order to minimise risks caused by concentrating on certain markets and goods. However, the main markets for both selling and buying were still Germany and Great Britain.

The main export articles of Estonia to Germany were agricultural products: butter, eggs, flax and timber. From Germany, Estonia bought metals and metal goods, various machinery, equipment and chemical products.

The British markets also mostly bought Estonian agricultural products. In terms of industrial products, Estonia sold wooden products, cotton and linen cloth and cellulose. From Great Britain, Estonia bought cotton, coal, textiles, various machinery and herring.

Besides Germany and Great Britain, Estonia’s major foreign trade partners were the USA, the Soviet Union, Sweden and Finland.

The Estonian market was small and depended on what was happening in the world market. As a small country, Estonia remained a country that exported agricultural products and raw materials, and imported technology from more advanced European countries.

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