ESTONIA: The world’s most advanced DIGITAL society
Estonia is a small country located in northern Europe. It used to not receive much attention until a few years ago when international publications highlighted it as a very digitally developed country. Some consider it to be the most advanced digital society in the world. People in this country can access most public services online, have a digital id, and can vote online.
This doesn’t sound very new, but keep in mind that Estonia has been implementing these technologies for more than 20 years to get an idea of the level of efficiency that benefits the daily lives of Estonian residents filing a tax return online takes no more than five minutes.
The time to create a company is not measured in days, but in minutes in 2007, Estonia broke the world record for creating a company online. It took only 18 minutes. On the other hand, 99 public procedures and services are available online 24 hours a day.
The remaining one percent corresponds to procedures such as getting married, getting divorced, and selling a property. In these cases, the physical presence of the person is required. As you can imagine, there are no lines or lengthy paperwork, so the savings in time and money are very large.
According to official sources, the digitization of public services saves more than 1400 work years per year and two percent of Estonia’s GDP, which translates into greater efficiency, fewer public employees, and less bureaucracy.
The questions to address in this video are three: how did the idea of a digital Estonia begin? How did Estonia become the first country to use blockchain technology and how is it that anyone in the world can get a digital residency in Estonia, the road to the digitalization of the country started in 1992 after Estonia became independent from the soviet union.
The first government implemented a series of reforms to modernize the economy and leave the soviet past. The first steps were taken with a proposal from a professor of computer engineering at Tallinn, university of technology. His goal was to establish a research and development project in electronics and computer engineering to improve the industry in Estonia.
Although the program was not implemented immediately, it did make clear a principle on which the professor insisted not to buy old technology and to avoid large-scale investments, as the public budget was scarce rather based on this principle of frugality.
Instead of buying technology from established suppliers, government departments and agencies were encouraged to find technological solutions according to their specific needs. For that reason, Estonia rejected Finland’s donation of an old analog telephone central envisioning that the internet was going to be the communication of the future, and that decision was a good one because it encouraged innovation.
Indeed, in 1998, all schools in Estonia were connected to the internet. At a time when internet access was very limited worldwide since the late 1990s Estonia has not stopped innovating and pioneering many technologies as early as 2000, it had already created tax the electronic tax delivery system. Apart from having competitive taxes in Estonia, 95 of tax returns are filed online.
The same year saw the creation of m parking a system that allows drivers to pay for parking using their cell phones. This is commonplace today, but let’s remember that we are talking about the year 2000 when smartphones were barely spoken of in 2002.
The electronic identification program was created. It consists of a digital identification document that has a double pin code, one associated with personal authentication and the other with a digital signature. Most services can be accessed using the first code and the second is used to approve online transactions, obtain insurance policies, and vote online, and it was precisely in 2005 that e-voting was founded.
It is estimated that 30 percent of votes are cast online, both for local and national elections. In fact, in 2005 Estonia became the first country in the world to hold national elections using this method. Also, there are other programs such as health, where, for example, paramedics have access to patients, medical records in case of an emergency.
All of these technologies mean time and money savings for both citizens and the government, and you may be wondering about data security and privacy, but despite the potential threat of storing all information online, Estonia has remained relatively scandal-free over the past few years.
The most critical moment came in 2007 when the country was the victim of a cyber attack from Russian IP addresses. This exposed the vulnerability of the centralized data management system, so Estonia needed a cyber attack-resistant technology, which is why, in 2012.
Estonia became the first country to use blockchain technology, the same technology on which the bitcoin cryptocurrency is based and due to the decentralized nature of the blockchain, it is a technology that guarantees security against cyber attacks, as its name suggests.
It is a chain of blocks and each block stores an exact copy of the information of the entire blockchain. In other words, if a hacker wanted to attack the service, you would have to do it with all the blocks, because it is enough that at least one is working for all the information to be available.
So in Estonia, citizens know that not even officials can access their data beyond what is approved by them for a specific service required as a result of efforts to strengthen the company’s cyber security. Estonia helped launch a nato program dedicated to fighting cyber attacks.
Estonia even created the world’s first data embassy outside its borders, the government created a backup in Luxembourg, where it stores a copy of all of its information. All these technological solutions and the fact of being a pioneer in many areas make the creation and management of a company in Estonia very efficient.
hence it is one of the countries with the best environments for entrepreneurship in Europe and is among the countries with the highest number of startups per capita skype. One of Estonia’s first technological success stories was founded in 2003 and later bought by Microsoft.
Estonia’s recent tech, unicorns meaning companies valued at more than one billion dollars, include payments company transfers and an uber competitor Taxify. Keep in mind that Estonia is a small country with a population of about 1.3 million, so it never enjoyed abundant natural resources or a large domestic market.
Consequently, the country competes with incentives for entrepreneurship, technology, minimal bureaucracy, and a clear and stable fiscal framework. Therefore, it seems to attract highly skilled workers such as digital nomads, who use technology to perform their work from anywhere in the world. In this field, Estonia is again a pioneer in 2014.
It created the program called e-residency as a way to attract international companies and talent. The digital residency allows foreigners to start their business in Estonia while living elsewhere. The goal is to democratize access to entrepreneurship and e-commerce. This kind of digital citizenship allows you to set up a business in Estonia without the need to be physically present without paperwork or queues. You can open a bank account and access the financial system in general in a fast and secure way.
Digital residents receive their digital IDs with the previously mentioned. Double pin to perform multiple transactions by the next decade. Estonia expects to have more than 10 million digital residents. At the moment, more than 50 000 people have applied for residency since the program was launched in 2014.
Another goal is to create greater economic dynamism, because Estonia believes that, in the future, countries will compete to attract digital residents through the quality of their public e-services and their friendliness to starting businesses.
In short, where people move will largely define the failure or success of an economy and the digital visa offers just that a gateway to Estonia and in turn to the European Union, for foreigners to make investments, set up businesses, and make use of the advanced services.
The country has to offer the Estonian case to demonstrate that dig the italization of a country is possible. The question that remains is whether other larger, more populated, polarized, and heterogeneous nations could apply all these initiatives with similar success.