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News Link • Economy - International

How Estonia--Yes, Estonia--Became One of the Wealthiest Countries in Eastern Europe

• https://fee.org, by Luis Pablo de la Horra

The question of why some countries are rich and prosperous whereas others seem to be condemned to the scourge of poverty has been around for centuries. Many factors have been argued to be the determinants of prosperity: geographical, cultural, historical, etc. 

Yet, since at least the publication in 1776 of The Wealth of Nations, we know that political and economic institutions play a decisive role in this respect. Free trade, a reliable legal framework that protects private property and enforces contracts, and sound money are necessary conditions for countries to thrive.

The emergence and consolidation of growth-boosting institutions took hundreds of years in countries like the UK and the US. However, in recent decades we have seen that the right policies can significantly speed up economic development.

Estonia is a paradigmatic example of this.

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