Estonia: a Forerunner in Digitalization

To begin with, we, as a part of today’s society, live in a world that is constantly changing. And, generally speaking, 21st century is often referred to as the information age or the era of technology. In fact, this is the time when, more than ever, all kinds of digital technologies are being integrated into everyday life. To emphasize, digitalization affects everything that can be digitized therefore making us more and more dependent on technology. Can you imagine the present age without digital technologies and innovations? Having said that, let’s explore the situation in the European Union (EU).

As reported by Digital Economy and Society Index (DESI) 2017 rankings, countries such as Denmark, Finland, and Sweden have the most advanced digital economies in the EU. Namely, digital economy refers to an economy that is based on digital computing technologies and is possible through the process of digitalization. It is also swiftly developing all over the world, therefore constantly changing the world as we know it today. In addition, DESI is used to track the progression of EU member states in digital competitiveness through five linking components: connectivity, human capital, use of the internet, integration of digital technology, digital public services.

Accordingly, the most recent statistic indicates that in DESI rankings Estonia places in the ninth position overall. As shown in the picture below, Estonia falls behind the Nordic countries mentioned before, as well as other European countries such as the Netherlands, Luxemburg, Belgium, United Kingdom and Ireland. However, the data also reveals us that Estonia is the leading country in the EU in the online provision of digital public services where the focus is mainly based on eGovernment (short for an electronic government). This feature is used to measure the success and development of such things as digitization and modernization of public services which, in particular, can lead to effectiveness both for the public administrations and citizens. As a result, a country with only 1.3 million inhabitants is a close rival to its Nordic neighbors. So, what is the story behind the success of Estonia?

Picture 1: Digital Economy and Society Index (DESI) 2017 ranking

As we can see in a study on eGovernment services in the EU 2016, online public services these days are becoming more and more accessible across Europe. To illustrate, 81% of data nowadays is digitalized or, in other words, available online. One of the key elements of Estonia’s success, for instance, is the creation e-Estonia. It is an extensive movement by the Estonian government which goal is to combine various citizen interactions with the state using numerous electronic solutions such as e-Residency, e-School, e-Tax, i-Voting and many others. Under these circumstances, over the past few years, Estonia has received worldwide recognition as a digital society and is often considered as one of the most technologically advanced societies in the world.

Thus, by using various components of Estonia’s integrated e-services, Estonia has become a better functioning state by helping its citizens to save a great amount of time and energy in everyday life. For instance, citizens of Estonia don’t have to worry about spending hours in a queue while waiting for a doctor or to participate in voting. Instead, a prescription for medicine can be acquired online; the same as participating in elections is possible online, regardless of your whereabouts. All you have to do is verify your identity using an ID card.

Furthermore, authorities in Estonia have spent many years trying to figure out the best way for securely exchanging important data. As the years went by, in 2014 Estonia shocked the world by being the first country to offer e-Residency. It is a transnational identity available to anyone, despite their location. As cited in e-estonia.com homepage, e-Residency offers to every world citizen a government-issued digital identity and the opportunity to run a trusted company online, unleashing the world’s entrepreneurial potential.

In addition, X-Road is the most crucial tool or, in other words, core for making integrated e-services in Estonia possible. It was designed already back in 2001, and ever since then has been constantly improved. To clarify, X-Road is a crucial connection between diverse databases, therefore, making all kinds of data easily accessible by the authorities that are authorized to use it. In fact, sharing data between countries, not only locally, nowadays is gradually becoming more and more possible. For instance, Estonia and Finland are linking their electronic health records.

Picture 2: X-Road connecting numerous databases

Last but not least, Toomas Hendrik Ilves, the former president of Estonia, believes that Estonia has one of the most transparent and cleanest governments in the world. As a result, people’s trust in Estonian government is at a high level, and Estonia is attracting many entrepreneurs from all over the world. Until now, nearly 6000 e-Residency cards have been issued to people in 119 different countries. Taking everything into account, the statistic about the success of Estonia speaks for itself, making us wonder how significant role in the era of technology Estonia will play in the following years.

References:

DESI                    Digital Economy                   eGovernment                              e-Residency

Why is it smart to do business in Tallinn?

Winter is coming and the Northerners get to enjoy the Autumn colors while, slowly but surely, the year 2016 is nearing its finale. How do you see yourself and your company next year at this very same time? Wise decisions are valuable and important as is the location of your company. Ever had any thoughts that business functions do not go smoothly enough, the digital environment is ancient and progress seems to move at snail’s pace? But future is now, so all that must be frustrating. We should know since we (authors) are located in Tallinn, one of the most, or maybe even the most digitally developed country in the world.

What is it then that makes Estonia so advanced, tech-savvy and business friendly? The tiny North European country has learned hard lessons from its neighbors, the economy has not suffered from Brexit and the important indicators, such as GDP and unemployment rate, among many others are rather splendid compared to most of Europe. Actually Brexit has so far meant great success for Estonia’s interests and business world, for example, citizenship applications from Britain to Estonia increased tenfold compared to the previous year. This is the result of the unique system where anyone can apply for a digital e-citizenship of Estonia, even if they have never been anywhere near the country. With the e-residency, people all over the world are able to use Estonia’s digital services, which cover for example bank services. Most of Europe is feeling the heat about the recent Brexit vote and watching the island kingdom with binoculars wondering, waiting what will happen next, while Estonia keeps being one step ahead in the digitalization race.

Trendiest word ever, digitalization, has been repeated as the most essential development in the future, for example, in Finland, but still, the reactions have been far from the theories. Estonia, on the other hand, has been taking big steps and going forward much faster than any of its neighbors. This makes sense in a way because Tallinn has been a hub for business and start-ups since as early as the Hanseatic period, for hundreds of years. The banal Soviet decades are long gone but not forgotten.

Here is the thing: there really is no magic behind of the Estonian success. That is why it is time to make a short list of the key points why business is booming in Estonia and what to expect when trying to make a living in the Pearl of Baltics.

1) Strength in innovativeness

One can be surprised to see how well new things are being adapted in Estonia. It is as if there is no middle man slowing things down like in many other Western countries. Yes, Estonia is an Ex-Soviet satellite state but surpassing that fact they have been able to balance themselves without mental devastation, instead thriving with adaptability and resilience. These abilities are in high demand everywhere nowadays. Comparing present day Estonia to the 90’s version can help you to realize that change is always possible, and also inevitable. It is all about how we adapt to it and take our chances.

There are those who stick to the old and do not want to believe that the world is changing. Well, it never stopped changing but the nature of things is now faster than perhaps ever. Global market and the total adolescence of the concept of work might be a nightmare to those who fear regeneration and future itself. In Estonia, the future has been seen as it should be: full of opportunities waiting to be seized.

For example, the digitalization innovations, such as e-residency, do not get any faster and easier for you for doing real business in Estonia! There is already over ten thousand e-residents and a lot of them have never even touched the Estonian soil. The system is globally unique. You see, this is the innovativeness; Estonian companies get more customers and grow faster than ever because of this and all the other amazing digital applications. The next level of internationalization has already seen daylight in the most advanced digital society in the world. Others might want to take a leaf out of their book and follow.

2) Cost-effectiveness

Seriously though, where else do you get to see things running so smoothly as in Estonia? They started from the bottom 25 years ago when entering the world of independent and free nations. Celebrating its 25th year of complete freedom it is a must to raise a toast for Estonia at this point – Terviseks!

Since 1991 the economy has been steadily growing with praise from the economic world. A liberal economy policy is one key to growth, not to mention the low-tax system and the 1/3 labor costs that companies face here compared to those of, for example, Finland or Sweden. This has not been unrecognized by the world’s biggest trading and banking organizations, such as the World Band and the World Economic Forum, that praise Estonia as an astonishingly great place for business. The small country has made its mark and showed to the giants that the nation in white, black and blue is the one to look up to.

3) Digitalization

Want to open a bank account in Estonia without actually being there physically? Possible, and so is visiting Estonian library to read today’s paper among many other benefits when you get yourself an e-residency. Voting is also possible online and this e-Voting concept has been estimated to be 16 times cheaper compared to the traditional way of voting.

While the vast majority of the nations are still considering the possibilities and the hazards of digitalization, in Estonia it is a whole different story. You can never become successful if your way of surviving is all about imitating the ones you look up to. By the time you get to their level they will already have moved on to bigger things. Hard work, research, and can-do-attitude will eventually play out fine for you. A point has been reached where Estonia is the forerunner in the digitalization. Identity, health, education, social services, you name it. What will you be a forerunner in?

This digitalization aspect is also the key point when considering a country to do business in. Things actually work with digital solutions and less paperwork means more action and time to concentrate on whatever you consider relevant. Fast, reliable, digital, paperless and less bureaucracy. Is this not the way you have always wanted to see the world go round since the first days of the internet?