TALLINN — A new audit seems to indicate that the 7.4 billion krooni (€475 million) of support to increase the productivity and export capacity of Estonian companies appears to have largely useless in improving the sector.

The National Audit Office reported Wednesday that the low productivity and export capacity of companies, which form the basis of an economy’s competitive advantages for trade have not improved significantly as a result of [private_supervisor]the state’s support. The research by the Audit Office studied 1,881 companies who received support from 2004-09. The objective was to ascertain whether or not the productivity and added value of such companies had increased more quickly compared to those who had not received support and also whether or not it had influenced the indicators of Estonia’s competitive strength on the whole.

The result of the audit found that the state’s enterprise support system has benefited only a few unrelated companies whose integration with Estonia’s economy is weak, and there has been no noticeable improvement in economic indicators or cooperation between companies.

“The reason why enterprise support is so ineffective is the inflexible and fragmented support system, which has no focus,” the audit office reported. “It tries to approach a myriad of problems at the same time and often fails to take account of the actual needs of companies.”

The audit office alleged that the state’s lack of interest in assessing the impact of business policy is the main reason for the majority of the problems. They said that the Ministry of Economic Affairs and Communications has no idea whether or not the support, guarantees and loans granted via Enterprise Estonia and KredEx have had any impact on business or what that impact might be.

“This is compounded by the fact that policies are based on European Union funds, which for many years have focused on the distribution of money and reporting on effective percentage of use rather than trying to ascertain whether or not the distributed funds have created any permanent benefits,” the report reads.

The National Audit Office suggests that Estonia needs fundamental changes in its business policies, and instead of merely distributing the money received from the European Union, the state should integrate the various and currently separate business promotion measures — education, research and development, taxation, business regulation and support — in order to increase the competitive strength of Estonia’s economy.

Audit director of the National Audit Office Tarmo Olgo says that in addition to strengthening its overall financial position, the state also has to pay attention to redesigning the structure of Estonia’s economy and improving its competitive strength so that the next period of recession does not result in employment as high as the current one.

Ministry disagrees

Ministry of Economy largely dismissed the audit office’s conclusions, calling the National Audit Office’s judgments largely abstract and exaggerated which do not offer any feasible solution on how to improve the situation. The ministry also accused that the audit office did not answer the main question- how to go on in 2013 after the support ends.

The ministry argued that the export of Estonian enterprises grew strongly in the second quarter this year and the rise was equal in all sectors. Also the productivity has increased, the ministry said.

“We can give hundreds of examples how the enterprise support has strongly increased the exports and enlarged the productivity. Above all, we have helped Estonian entrepreneurs and thousands of jobs were created,” Minister of Economy Juhan Parts told the press on Thursday. [/private_supervisor] [private_subscription 1 month]the state’s support. The research by the Audit Office studied 1,881 companies who received support from 2004-09. The objective was to ascertain whether or not the productivity and added value of such companies had increased more quickly compared to those who had not received support and also whether or not it had influenced the indicators of Estonia’s competitive strength on the whole.

The result of the audit found that the state’s enterprise support system has benefited only a few unrelated companies whose integration with Estonia’s economy is weak, and there has been no noticeable improvement in economic indicators or cooperation between companies.

“The reason why enterprise support is so ineffective is the inflexible and fragmented support system, which has no focus,” the audit office reported. “It tries to approach a myriad of problems at the same time and often fails to take account of the actual needs of companies.”

The audit office alleged that the state’s lack of interest in assessing the impact of business policy is the main reason for the majority of the problems. They said that the Ministry of Economic Affairs and Communications has no idea whether or not the support, guarantees and loans granted via Enterprise Estonia and KredEx have had any impact on business or what that impact might be.

“This is compounded by the fact that policies are based on European Union funds, which for many years have focused on the distribution of money and reporting on effective percentage of use rather than trying to ascertain whether or not the distributed funds have created any permanent benefits,” the report reads.

The National Audit Office suggests that Estonia needs fundamental changes in its business policies, and instead of merely distributing the money received from the European Union, the state should integrate the various and currently separate business promotion measures — education, research and development, taxation, business regulation and support — in order to increase the competitive strength of Estonia’s economy.

Audit director of the National Audit Office Tarmo Olgo says that in addition to strengthening its overall financial position, the state also has to pay attention to redesigning the structure of Estonia’s economy and improving its competitive strength so that the next period of recession does not result in employment as high as the current one.

Ministry disagrees

Ministry of Economy largely dismissed the audit office’s conclusions, calling the National Audit Office’s judgments largely abstract and exaggerated which do not offer any feasible solution on how to improve the situation. The ministry also accused that the audit office did not answer the main question- how to go on in 2013 after the support ends.

The ministry argued that the export of Estonian enterprises grew strongly in the second quarter this year and the rise was equal in all sectors. Also the productivity has increased, the ministry said.

“We can give hundreds of examples how the enterprise support has strongly increased the exports and enlarged the productivity. Above all, we have helped Estonian entrepreneurs and thousands of jobs were created,” Minister of Economy Juhan Parts told the press on Thursday. [/private_subscription 1 month] [private_subscription 4 months]the state’s support. The research by the Audit Office studied 1,881 companies who received support from 2004-09. The objective was to ascertain whether or not the productivity and added value of such companies had increased more quickly compared to those who had not received support and also whether or not it had influenced the indicators of Estonia’s competitive strength on the whole.

The result of the audit found that the state’s enterprise support system has benefited only a few unrelated companies whose integration with Estonia’s economy is weak, and there has been no noticeable improvement in economic indicators or cooperation between companies.

“The reason why enterprise support is so ineffective is the inflexible and fragmented support system, which has no focus,” the audit office reported. “It tries to approach a myriad of problems at the same time and often fails to take account of the actual needs of companies.”

The audit office alleged that the state’s lack of interest in assessing the impact of business policy is the main reason for the majority of the problems. They said that the Ministry of Economic Affairs and Communications has no idea whether or not the support, guarantees and loans granted via Enterprise Estonia and KredEx have had any impact on business or what that impact might be.

“This is compounded by the fact that policies are based on European Union funds, which for many years have focused on the distribution of money and reporting on effective percentage of use rather than trying to ascertain whether or not the distributed funds have created any permanent benefits,” the report reads.

The National Audit Office suggests that Estonia needs fundamental changes in its business policies, and instead of merely distributing the money received from the European Union, the state should integrate the various and currently separate business promotion measures — education, research and development, taxation, business regulation and support — in order to increase the competitive strength of Estonia’s economy.

Audit director of the National Audit Office Tarmo Olgo says that in addition to strengthening its overall financial position, the state also has to pay attention to redesigning the structure of Estonia’s economy and improving its competitive strength so that the next period of recession does not result in employment as high as the current one.

Ministry disagrees

Ministry of Economy largely dismissed the audit office’s conclusions, calling the National Audit Office’s judgments largely abstract and exaggerated which do not offer any feasible solution on how to improve the situation. The ministry also accused that the audit office did not answer the main question- how to go on in 2013 after the support ends.

The ministry argued that the export of Estonian enterprises grew strongly in the second quarter this year and the rise was equal in all sectors. Also the productivity has increased, the ministry said.

“We can give hundreds of examples how the enterprise support has strongly increased the exports and enlarged the productivity. Above all, we have helped Estonian entrepreneurs and thousands of jobs were created,” Minister of Economy Juhan Parts told the press on Thursday. [/private_subscription 4 months] [private_subscription 1 year]the state’s support. The research by the Audit Office studied 1,881 companies who received support from 2004-09. The objective was to ascertain whether or not the productivity and added value of such companies had increased more quickly compared to those who had not received support and also whether or not it had influenced the indicators of Estonia’s competitive strength on the whole.

The result of the audit found that the state’s enterprise support system has benefited only a few unrelated companies whose integration with Estonia’s economy is weak, and there has been no noticeable improvement in economic indicators or cooperation between companies.

“The reason why enterprise support is so ineffective is the inflexible and fragmented support system, which has no focus,” the audit office reported. “It tries to approach a myriad of problems at the same time and often fails to take account of the actual needs of companies.”

The audit office alleged that the state’s lack of interest in assessing the impact of business policy is the main reason for the majority of the problems. They said that the Ministry of Economic Affairs and Communications has no idea whether or not the support, guarantees and loans granted via Enterprise Estonia and KredEx have had any impact on business or what that impact might be.

“This is compounded by the fact that policies are based on European Union funds, which for many years have focused on the distribution of money and reporting on effective percentage of use rather than trying to ascertain whether or not the distributed funds have created any permanent benefits,” the report reads.

The National Audit Office suggests that Estonia needs fundamental changes in its business policies, and instead of merely distributing the money received from the European Union, the state should integrate the various and currently separate business promotion measures — education, research and development, taxation, business regulation and support — in order to increase the competitive strength of Estonia’s economy.

Audit director of the National Audit Office Tarmo Olgo says that in addition to strengthening its overall financial position, the state also has to pay attention to redesigning the structure of Estonia’s economy and improving its competitive strength so that the next period of recession does not result in employment as high as the current one.

Ministry disagrees

Ministry of Economy largely dismissed the audit office’s conclusions, calling the National Audit Office’s judgments largely abstract and exaggerated which do not offer any feasible solution on how to improve the situation. The ministry also accused that the audit office did not answer the main question- how to go on in 2013 after the support ends.

The ministry argued that the export of Estonian enterprises grew strongly in the second quarter this year and the rise was equal in all sectors. Also the productivity has increased, the ministry said.

“We can give hundreds of examples how the enterprise support has strongly increased the exports and enlarged the productivity. Above all, we have helped Estonian entrepreneurs and thousands of jobs were created,” Minister of Economy Juhan Parts told the press on Thursday. [/private_subscription 1 year]

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