turumajandus

Turumajandus, or market economy, is an economic system in which decisions about what to produce, how to produce, and for whom to produce are largely determined by price signals that arise from voluntary exchanges in competitive markets. Private property, freedom of contract, competition, and limited government intervention are central principles. Prices reflect supply and demand, guiding resource allocation through the actions of consumers and producers, with entrepreneurship driving innovation and efficiency.

The state's role in a turumajandus typically includes protecting property rights, enforcing contracts, regulating monopolies, providing public goods and services, and stabilizing the economy through monetary and fiscal policy. Regulation aims to maintain fair competition, correct market failures, and address externalities while safeguarding social welfare. In many countries, the market operates within a broader framework of laws and institutions that support predictable business environments and trust in exchanges.

History and variation: Market-based systems emerged and evolved over centuries, increasingly incorporating mechanisms of competition, trade liberalization, and reliance on prices to coordinate activity. In the 20th century, many economies became mixed, combining market forces with varying levels of government planning and intervention. In Europe and other regions, liberalization and privatization during the late 20th and early 1990s widely replaced centrally planned models in transitioning economies, including the post-Soviet and Baltic states.

In Estonia and other successor states, turumajandus has been linked to rapid economic liberalization, privatization of state assets, deregulation, and integration into global markets. Critics note that unregulated markets can produce inequality or public goods underprovision, underscoring the ongoing need for appropriate regulation, social safety nets, and targeted public investment within a market framework.