NARRATOR: Dominated by Czarist Russia and
the Soviet Union for nearly two centuries, Estonia was an economic backwater. When the
Soviet Union dissolved in the early 1990’s, Estonia reclaimed its independence.
Desperate for a new direction, Estonians elected the youngest prime minister in Europe’s
history. Mart Laar was 32 years old. Many in his cabinet were in their twenties. MART LAAR: We started from 1992 with inflation
1000%, we had drop in economics 30%, we had prognosis for unemployment of
35%, we had a shortage of everything, and of course I didn’t know very much about
economy. The only book about economy what I read was Milton Friedman’s Freedom of
Choice, and that was the only one. But there was lot of good ideas in there and I introduced
a big part of those. NARRATOR: Racing to catch up with the rest
of the world, the young Estonians created a low tax laboratory. The zero corporate tax
on profits reinvested in Estonia has made the tiny country a magnet for foreign investment. It is now considered the most competitive of the new European Union members and ranked by the Wall Street Journal as one of the freest economies in the world. One of neighboring
Finland’s largest electronic Companies, Elcoteq, built this manufacturing plant here
in Tallinn in 1992. It produces communication equipment. Elcoteq is now Estonia’s largest
exporter and one of its largest employers. Antii Piippo is the CEO. ANTII PIIPPO: Well, it’s very simple to
say that Estonia in my mind is one of the most attractive countries in the European Union. NARRATOR: Among the more innovative aspects
of life in Estonia are free Internet sites scattered throughout the country. The World
Economic Forum reports that per capita, Estonia is more wired than Italy, Belgium and Spain.
And Estonia has adopted one of Milton Friedman’s most controversial ideas. MART LAAR: We were the first country to institute
and create this beautiful idea of the flat rate personal income tax. As a matter
of fact, I didn’t know that nobody had done it. But it worked; it worked exactly in the
way how it was proposed by Mr. Friedman.