Estonian Human Development Report
Estonian Human Development Report - Eesti Koostöö Kogu
Estonian Human Development Report - Eesti Koostöö Kogu
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Figure 1.4.3. <strong>Estonian</strong> GDP (right axis) and GDP<br />
growth (left axis) per capita in PPS 2000–2007<br />
(EU 27 = 100)<br />
10<br />
9<br />
8<br />
7<br />
6<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
2000 2001 2002 2003 2004 2005 2006 2007<br />
Source: Eurostat<br />
GDP per capita in Purchasing Power Standards<br />
Growth of GDP per capita in Purchasing Power Standards<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
The Purchasing Power Parities, like the majority of<br />
statistical indicators, include assessment and therefore<br />
also statistical errors. Therefore when comparing countries,<br />
one must keep in mind that the difference in GDP<br />
values calculated on the basis of PPP that are under 5%<br />
are statistically insignificant [Methodological…, 2006].<br />
The PPP errors depend on the reliability of the weight of<br />
the cost groups and the prices related thereto, and on how<br />
precisely the goods and services used in the measurement<br />
reflect the consumer model of an individual country and<br />
its price level.<br />
Standard of living of <strong>Estonian</strong> families in 2003–2007<br />
Considering the fact that in 2003–2007 Estonia experienced<br />
rapid GDP growth, reaching 68% of the European Union<br />
average, it is quite natural to ask whether <strong>Estonian</strong> families<br />
perceived the economic growth that took place in 2003–<br />
2007 through an improvement in their standard of living. In<br />
other words, how much are increases in general economic<br />
indicators related to increases in the standard of living?<br />
Figure 1.4.4. Structure of <strong>Estonian</strong> families’<br />
consumption 2003–2007<br />
6000<br />
5000<br />
4000<br />
3000<br />
2000<br />
1000<br />
0<br />
2003 2004 2005 2006 2007<br />
Source: SE<br />
Personal<br />
costs<br />
Travel<br />
packages<br />
Books<br />
Leisure<br />
time<br />
Communications<br />
Transport<br />
Education<br />
Health care<br />
Domestic<br />
products<br />
Dwelling<br />
Wardrobe<br />
Restaurant<br />
Alc+<br />
tobacco<br />
Food<br />
Incomes<br />
Tracking the dynamics of the economic condition of families<br />
[Tiit, 2008], it turns out that in those years incomes<br />
grew in all types of households. During the four year<br />
period, the nominal income per household member in<br />
Estonia increased by 94% on average and the real income<br />
by 63%. The greatest increase was in double-income families<br />
with several children (2.35 times), as well as in single-income<br />
(two-parent) families with two children<br />
(2.28 times) and one child (2.06 times). This is probably<br />
caused by the impact of family policies because parental<br />
benefits had the greatest impact on such families. Relatively<br />
smaller income increases (71%) were experienced<br />
by single-parent families and the impact of parental benefits<br />
was not great (presumably children are not often<br />
born into single-parent families, although single-parent<br />
families develop upon the departure of one parent).<br />
The impact of parental benefits (as a portion of income)<br />
has continually increased. Child benefits comprise an<br />
important part (at least 15%) of the income of families<br />
with at least two children and one working parent. Pensions<br />
increased during the reference period by slightly<br />
less than the average, by 77%; whereas the real pension<br />
growth was only 49%.<br />
Expenditures<br />
Increases in income have a positive impact on the quality<br />
of life, if they provide people with greater opportunities<br />
to satisfy more diverse needs. In 2003–2007, the<br />
non-food expenditures (in nominal value) of <strong>Estonian</strong><br />
families increased by 61% on average. Considering the<br />
increase in the consumer price index, one can conclude<br />
that the real expenditures increased by 40% during the<br />
same period. In the structure of non-food costs, the differences<br />
in the expenditure levels of different household<br />
groups are almost two times greater than in the case of<br />
food products (2.7–3.3 times). Transport costs experienced<br />
a relatively large increase – to a great extent this<br />
was caused by the rise in transport and fuel prices, as<br />
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