This fifth edition of the Estonian Human Development Report depicts a mixed picture of human development progress. Estonia has achieved a rapid and successful reform record since it regained independence less than a decade ago, including a rapid transition from a planned to a market economy, swift currency reform and an effective privatization process. The social challenges in Estonia remain large, however, and require further attention by policy-makers. They include economic and income stratification, structural and long-term unemployment, structural poverty, regional imbalances, gender inequality and increasing crime and drug abuse. While few would disagree that a sound and growing economy is a condition for sustained human development, the social challenges cannot be overlooked. Estonia must find the right measures and policies to strengthen its social and human capital and minimize social and individual costs. The authors hope that this report will inspire a debate on how this should be done.