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Economic Integration Of The Baltic Sea Region

I. Introduction

Economic integration is not an easy task. This is clearly evident by its nature, and even more so a problem in the Baltic region where there have been so many political changes in recent history. We have seen the formation of three newly re-independent states, Estonia, Latvia, and Lithuania. East and West Germany have been reunited to form a new nation. The communist governments of the former Soviet Bloc have been replaced by democracy.

These changes have made economic integration not only more difficult, but also to some degree more necessary. Europe as a whole is becoming an economically integrated union, mainly in the nations of the European Union, but in non-member nations as well. Perhaps the best example of this phenomenon of economic integration is the introduction of a common European currency, the Euro. This more than anything signifies the changes and levels of increasing co-operation between European Union nations.

A second example could be the creation of a common trade zone, with the creation of a common tax base and the abolition of import-export fees, and the creation of the common European market, where business effectively get to treat the entire European Union as one state. Because economic integration has been a major issue in the new EU, there have been long lasting effects on the Baltic Sea region.

For the purposes of this essay, we have chosen to examine the impacts of economic integration in the Baltic region in the transportation sector. This work will examine the meaning of economic integration, the VASAB 2010 project, and two case studies. These studies will be investigating aviation development in Scandinavia and its feasibility, as well as the possibility of a Helsinki- Tallinn link similar to the bridge-link opened in resund. Economic integration is impossible to address fully in a short essay, but hopefully this work will at least touch upon the important aspects effecting transportation issues with relation to economics in the Baltic Sea region.

II. Goals of Economic Integration


Economic integration can be defined as an economic alliance or network based on co-operation, collaboration, flexibility, adaptation, risk and cost reduction, shared interests and objectives, closeness, openness, and a commitment between different countries on an integrating, ongoing basis.


This rather technical definition essentially means that economic integration is the creation of a network of like-minded states who, together, design economic goals and work together to attain these goals. Economic integration can be accomplished on a case by case basis, or can be an ongoing collaboration between nations to enhance economic conditions over a long period of time. Perhaps it is best to explain with an example: that of the co-operation between Tornio in Finland and Haparanda in Sweden.

In this instance, these two border towns have decided to co-operate on a number if issues to enhance the quality of life and economic activity in the region. Because of their co-operation, both cities have benefited from enhanced city-provided services, which each town on their own would not have been able to afford. These two cities have been successful enough in their economic integration that there are now talks about integrating the entire region straddling the Sea of Bothnia. This region of successful economic integration can be used as a model for other areas, both in Scandinavia and throughout the world.

Relation of Economic Integration to Land and Air Transportation

Economic integration and transportation are closely linked. Indeed, it is difficult to have integration of any sort, including economic, in an area without the ability to get from one location to the other. If a link is created between to previously unlinked areas, there are numerous economic consequences. An example timeline is increased tourism initially, followed by small-business investment, and ultimately the rise of co-operation in major projects. Transportation links create economic benefits for both of the linked areas, and transportation, in all of its forms, can therefore be said to be an important factor in creating the economic integration of an area.


As a supplementary issue to the larger topic of this paper, we will discuss VASAB 2010. In August of 1992, representatives from national and regional ministries of the Baltic Sea Region responsible for spatial planning and development met in Karlskorona in Sweden to discuss the future of spatial development for the Region. The outcome of this summitt was a permanent co-operation between the governments of the Baltic Sea Region in the field of spatial planning in the form of a program called Visions and Strategies Around the Baltic Sea 2010. (Westerman 169) The program, or vision that is VASAB 2010 in its most basic form is aimed at improving the quality of life in the area of the Baltic Sea. Four more elements constitute the heart of the program, and give it purpose: (Westerman 171)

-development beyond economic growth and prosperity, -economic, social and environmental sustainability, -freedom pertaining to the ability to choose in accordance with regional preferences, -solidarity, sharing benefits from economic development.

Since the first meeting in 1992, the 11 participating countries have met to discuss action plans on a regular basis. A list of priority actions was put together in 1996, highlighting projects that the VASAB countries agreed upon to be most critical at that time. (Westerman 172) Of this list, several of those endeavors have moved forward. Pilot projects focusing on transport corridors in fast developing areas such as Tampere-Helsinki-Tallinn-Riga, and the areas surrounding the Trans European Motorway have accelerated quite successfully. The development of a transport network in the Baltic Sea Region has positive and negative effects on regional development.

A better system of transportation would enhance economic development by increasing mobility opportunities, attracting capital and improving accessibility. At the same time, too intense development can jeopardize the preservation of natural resources, wildlife areas and the environment. Thus, harmony must be sought between the development of corridors and the preservation of sensitive areas.

VASAB 2010 recognizes that spatial planning and economic integration must shift its attention from solely the building of an infrastructure, to the analysis of green areas, preservation of resources and natural landscape, and a means of reconciling socio-economic development with nature and culture. VASAB 2010 is well on its way to achieving it goals of integration and peace by demonstrating that its programs can be carried out, while balancing economic development with environmentally and culturally sound means of land and water transport that will take the region well into the 21st century.

IV. resund vs. Helsinki- Tallinn Link

There are three questions I pose for this section, which compares the recently opened resund- Malm link, connecting the city and environs of Copenhagen with southern Sweden. These questions are: Would a link like resund be needed for Helsinki and Tallinn, would it be a practical project, and would it be feasible (meaning would it be a technical possibility)? As we will see, there are many similarities between Copenhagen and Malm and between Helsinki and Tallinn. For instance, the populations of the regions are remarkably similar, with each city pair containing around 1.5 million inhabitants. Another similarity is that it is anticipated that the resund link will cause 4,015,000 crossings a year, remarkably close to the 5 million that currently use the Helsinki- Tallinn links. (Janos 22) Are these similarities enough to cause the construction of the largest land link in history?

Is a Link Between Helsinki and Tallinn Needed?

This in an interesting question to pose, and there are definitely two sides to this issue. On one hand, we have upwards of 5 million Finns and Estonians making the crossing over the Gulf of Finland yearly. This would clearly indicate a strong demand for regional transportation links. On the other hand, we have to look at the reasons people are making the crossing, and what a new link would mean, or not mean, to them. First lets examine the issue of the quantities of people making the crossing now. Since the fall of the Soviet Union and the independence of Estonia in 1991, there has been a dramatic increase in traffic between Finland and Estonia.

Up until independence, it was extremely difficult to make the crossing without first going through an intermediary destination, such as Moscow or St. Petersburg. There have been ships crossing the Gulf of Finland since 1965, however, the traffic was heavily regulated by the Soviet government and was largely limited to the tourist trade. (Ruoppila 124) Since the first link was established after Estonian re-independence, and became increasingly popular, we now have around 5 million people making the crossing yearly.

In the almost 10 year period there has been a tremendous growth rate in the crossing. If the trend continues, there would definitely be a demand for some sort of bridge or tunnel between Helsinki and Tallinn. However, one must also look at the population of the region. In Helsinki and Tallinn combined, there are approximately 1,334,000 inhabitants. For the two countries, the combined population is just over 7 million people. For there to be up to 5 million crossings yearly, there either has to be a lot of repeat travellers, or practically every Finn making the crossing at least yearly. I think unless there is a great boom in tourism, above and beyond what it is now in the area, the growth rate of travel between Helsinki and Tallinn will gradually level off.

To take a second look at the issue, we need to examine why Finns and Estonians are making the crossing from one capital to the other. A majority of travellers between the two cities are Finnish. The main reason that Finns travel to Estonia is to shop and purchase duty-free items. (Ruoppila 125) There may be some element of tourism involved, with Finns, foreigners, and Estonians making the crossing merely to sightsee. For the purposes of this paper, I think most of the crossings are done as a matter of consumer consumption or business.

The business aspect of the crossings cant be neglected, however, there is not a significant number of commuters on the Helsinki- Tallinn route. When compared to the need for an resund-type link over the Gulf of Finland, the commuter traffic wont play as large as role as it did in the Copenhagen- Malm region. Goods and services are many times cheaper in Estonia, and for this reason I think there has been the great boom in travel between the two cities, especially for the Finns. They can make the crossing relatively cheaply, and if they purchase enough goods at lowered or duty-free prices, they can actually save money by making the journey. Tobacco and alcohol seem to be especially popular purchases, with savings over 20% off of normal, retail Finnish prices.

Combined, these two issues make for a strong demand for a Helsinki- Tallinn link. Unfortunately, I dont think there will be much more growth in terms of passenger traffic between the cities. One reason for this is the growth of the Estonian economy- at the current rate of growth it wont be too long before prices reach equilibrium in the Finnish and Estonian markets. As the Estonian economy strengthens, there will not only be less price motivation to travel, but also a standardisation of the goods and services available in the two countries will occur. Now well examine the practicality of a new link.

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