This Small Country Is a Giant When It Comes to Digitization


Estonia shows the world how digital innovation and e-government for the benefit of the citizens works. The Baltic country is considered a poster child for unconventional thinking and a fertile environment for start-ups. The Mektory, the innovation and business center at the Tallinn University of Technology, is a particularly successful example.

The lobby showcases an electric car that looks like a cross between a go-kart and a Formula 1 racing car. A few feet further on, one room houses a model railroad, while another has oversized Lego bricks piling up in front of yellow and red painted walls. In a glass studio, a wooden swing hangs from the ceiling, while a bunch of students lounges on giant beanbags strewn on the artificial lawn underneath.

Only the marked-up whiteboards in the corner give away the fact that work is being done here. A few junior computer scientists are sitting in a lounge corner on sofas and brightly colored stools, balancing their open laptops in their laps and sipping coffee.

The Mektory, the innovation and business center at the Tallinn University of Technology, seems as creative and unconventional a place as one imagines a start-up to be.

Mektory, the innovation and business center in Tallinn
The Mektory, the innovation and business center at the Tallinn University of Technology Marc Beckmann / Ostkreuz

Save that probably not many start-ups have that many curious guests: Every year, 200,000 visitors come here to learn how Estonia, of all places, with its population of 1.3 million, has managed to become a pioneer of digitization.

In the small Baltic country, much that is still being debated in other countries is already taken for granted. Estonia is a global leader in e-government especially. “We are digital by default. 99 percent of all services are online,” proudly explains Anna Piperal, managing director of e-Estonia Showroom at Enterprise Estonia, which makes her something like the leading PR person for e-government.

Every Estonian has a digital ID and can do almost all government business online. The ID can be used to register a new address, write a will, register the birth of a child – and comfortably access hundreds of other services online. Submitting a tax return takes barely more than three minutes – not least because the form comes pre-filled from the tax office and there is a 20 percent flat tax. Even founding a company can be done quickly online. “It only takes 18 minutes to open a new business,” Piperal says enthusiastically.

"Only getting married or divorced and selling real estate can’t be done online."

Anna Piperal

The digital ID also functions as a driver’s license, insurance card, library card, online banking ID, and even as a supermarket rewards card. “Only getting married or divorced and selling real estate can’t be done online,” Piperal says, adding after a short pause with a smile: “Yet.” Systematic digitization saves the Estonian government around 800 man-years of work. “We save two percent of our GDP every year,” explains Piperal.

BMW Foundation European Table

Mektory was the side visit during the first European Table, which took place in Tallinn, Estonia. Participants discussed whether digitization can serve as a growth and job engine for Europe - for global digitization is leading to far-reaching changes in many areas fpr social life and work.

At the opening of the Tallinn Digital Summit a few weeks ago, the Estonian president thus could not refrain from taking a potshot at the other EU countries that have not yet digitized their government services to the same extent: “Current paper processes are like fossil fuel – they have formed over generations of people and lawmakers, getting more complex over time, more and more political compromises weaved in them as the bureaucracies grow,” she said.

The Boston Consulting Group sees Estonia as playing a pioneering role for Europe – together with other countries such as Sweden, Denmark, and Finland, where digitization has advanced further than elsewhere on the continent.
A study conducted by the consulting firm calls on these countries to drive the digitization of the EU: “The European digital frontrunners have a key role to play and a responsibility to act as Europe’s engine … to make the digital transition happen at a sufficiently fast pace for Europe to remain competitive in a rapidly digitizing world.”

Visitors from all over the world come to the Mektory to learn about digitization. Marc Beckmann / Ostkreuz

But can the development in Estonia also be transferred to other European countries? Robert Krimmer, professor for e-governance in Tallinn, is skeptical. “I think the technical solutions would work anywhere. But getting there, so that it actually fits the needs of other societies – that is the problem,” says the Austrian-born Krimmer during the discussion at the Mektory. “We need to basically transform the experience from Estonia to different contexts that have different needs.”

Pointing to the unique historical situation, Krimmer notes that the Estonians, after gaining their independence in 1991, were able to design their government and administration basically from scratch.

“There was this feeling that now is the time that we can design our own country,” he says. The key politicians at the time were young technology enthusiasts and digital natives, so the young state relied on the Internet early on. As early as 1996, the then-president initiated a program to equip all schools with computers and connect them to the Internet.

“We need to basically transform the experience from Estonia to different contexts that have different needs.”
Robert Krimmer

In 2001, Estonia introduced the digital ID. Today, 88 percent of the population is online, more than in almost any other country, and Estonia is the only country in the world that even offers full-scale electronic voting.

Unlike in other countries, there has never been any significant opposition to the digitization of public life in Estonia. The main reason is that most citizens trust the state. “But how did the citizens come to trust the Estonian model? By being included early on,” says Krimmer. The citizens were involved every step along the way and thus learned to handle the new technology early on.

After all, it is not always easy, especially for older people, to use a computer and do one’s government business online. “A lot of effort goes into training people to work with digital IDs. Estonia is so small we can train everybody to use the Internet and electronic identity,” says Ralf-Martin Soe, counselor to the Minister of Information Technology and a colleague of Anna Piperal’s.

He also mentions another of Estonia’s advantages that cannot be transferred to other European countries: the country’s small size.
“In micro-countries like Estonia, effectively everyone knows everybody,” says Soe. “It's a small community, so if you make stupid decisions, you will be ashamed for a long time.”

A blackboard inside the Mektory Marc Beckmann / Ostkreuz

Anna Piperal believes that the transparency of the government, too, strengthens the citizens’ trust: “Estonia as a country is opening the data it is collecting about the people. It's available, that's why we trust them.” All citizens can check online what personal data the government collects about them. This even applies to sensitive information such as illness and health: “You have your medical files online from different hospitals. And you can access all the files online,” says Piperal.

The Estonians’ trust in e-government was put to the test in early September when it became known that the digital ID chips were not secure and could be compromised by hackers. The problem affected 750,000 IDs – that is, more than half of the population. The government responded quickly, locked the online function of the affected IDs and, within a few weeks, released new software for updating the IDs’ security certificates.

But even massive security problems such as these do not undermine the Estonian IT experts’ trust in e-government. “The ID breach is a good lesson for us. We have to continuously develop the technology,” says Ralf-Martin Soe.

And this is why Estonians continue to work in innovation centers and creative labs such as the Mektory on how to further drive digitization. “We try to achieve zero bureaucracy,” says Anna Piperal, formulating a goal that is to be realized through “invisible services” – systems that think for themselves. She gives an example to explain what that means: “When a women has a baby, she could get parental aid at once. There would be no need for her to apply.”

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