e-Estonia: The Blueprint of Digital Governance?
The promises and achievements of the first digital nation.
Written by Marin Verspieren
Nested in the Baltics is a small country with a population of 1.3 million inhabitants. Despite its relative insignificance in international relations, Estonia has excelled repeatedly on several important metrics. It ranks 5th worldwide in the Human Freedom Index, only behind beacons of Western freedom such as Denmark and Switzerland. It also ranks 5th worldwide on the quality of its liberal democracy and holds the longest streak of unbroken democracy in Eastern Europe. The PISA 2022 Educational Survey finds that Estonian 15-year-olds hold the first place in Maths and Science in Europe, and it has jumped 30 ranks in the Human Happiness Index in the past 6 years. How does Estonia do it? Well, the answer is highly complex, but a major contributing factor would be the digital efforts made by the government in the past 25 years. To understand how Estonia became the digital capital of the world, one must look back on the history, successes, and political implications of the e-Estonia project.
A Post-Soviet Dream
After gaining independence from the Soviet Union in 1991, the Estonian government saw an opportunity to start anew. Under the leadership of the first prime minister, Mart Laar, a period of modernisation was ushered in to heal the country from its oppressed past and bring it up to speed with the West. An early goal was the creation of a digital infrastructure, utilising the need to reform the outdated infrastructure and talented labour in Information and Communication Technologies (ICT) to build digital culture from the ground up. This idea, known as e-Estonia, was rhetorically adopted by politicians as shedding the country’s Soviet past and catching up to the West. Surprisingly, the ideology was widely accepted on the political spectrum. It created enthusiasm and fed into a culture of risk-taking policies and bold ideas, considered by some to be utopian.
With a focus on building rather than buying, the government proactively enacted policies to incentivise growth in IT, as seen by the implementation of key features in the following decade. A 1994 bill called the Principles of Estonian Information Policy earmarked 1% of the annual GDP allocated as state funding for IT development. Along with the Tiger Leap initiative, a project to develop the tech field, the digital environment was shifting fast. By 1997, almost every school in Estonia had an internet connection. Digital literacy courses were offered to the older generations, and IT labour worked hand-in-hand with the government. In 2001, the introduction of the X-Road exemplified the marriage of the public and the private sector, offering a decentralised platform of data exchange and information that became the framework of e-Estonia’s data stream. By logging in using their e-ID, introduced in 2002, citizens could fulfill important financial duties online, such as banking and filing tax returns. They gained the ability, amongst others, to vote (2005), access health records (2008), obtain medical prescriptions (2010), claim citizenship (2014), and more recently file for marriage (2022). On the side of the state, e-Cabinet (2000) has provided a more effective scheduler for governmental decision-making and reduced the average cabinet meeting length tenfold. Since as early as 2008, blockchain technology has been integrated into the digital infrastructure.
Platform State
This rapid scale-up project radically changed the face of Estonia. Twenty years on, e-Estonia can be considered a general success. Firstly, it served as a rallying cry for the disenfranchised Estonians, uniting the country under a reformist ideology. This engaged a strong civil society, compounded by the government’s willingness to interact with the private sector. IT specialists and tech entrepreneurs were quickly put in positions of authority, such as government advisors who directed the growth of e-Estonia. Conversly, private firms like Nortal had agreements with the State allowing them to request government officials’ participation on certain international projects. The combination of both cooperative government and digital infrastructure added up to a result that was worth more than the sum of its parts. Success stories like Skype (launched in 2003 and originating mainly from Estonia) only reinforced the national faith in the Tiger Leap and trust between the population and the government when it comes to technology, with low perceptions of corruption and accountability issues.
The polished bureaucracy built into the digital infrastructure works to save much time and money. The reduced cabinet meeting length is one of many examples. Further, digital signatures are features of the e-ID system and are estimated to save the equivalent of 2% of GDP annually, according to the government. This is possibly due to its efficiency, security, and lower administrative costs. Digital solutions have created success and efficiency in the fields of education and health with databases and government-supplied online profiles. This is exemplified by the feature of e-prescriptions being the most used digital service of e-Estonia. On the subject of i-Voting, the online voting base has increased steadily since the introduction of the service, making up a third of the voting base in the latest elections. The adoption of this system can be taken as a win from the visionaries of e-Estonia back in the early 90s. The introduction of e-Residency, allowing anyone to gain digital residency in Estonia, has been positively received in the financial sector. It permits access to European digital markets, and reduces paperwork for the establishment of a business, as seen in the time it takes (around 15mins). It resulted in a direct economic impact of €14m in the four years after its implementation. Now, almost 30,000 companies benefit from trading in euros, low startup costs, and minimal corruption.
Estonia has also become a high-profile for digital innovation internationally and benefits from favourable relations with powerful organisations. Having introduced online voting first, other countries such as Switzerland have implemented it since. The X-Road, the proprietary digital platform that is the basis of e-Estonia, has since been rolled out in countries like Iceland and Finland. The Estonian capital, Tallinn, serves as the location for NATO’s Cooperative Cyber Defence Centre of Excellence. These achievements have led to Estonia’s current reputation as a digital leader.
Far from Utopian
While the outcomes of e-Estonia have been encouraging, that is not to say that the project has unilaterally resolved the country’s troubles. Other observations paint a much dimmer picture when it comes to its success. Firstly, the broad adoption of new digital services hasn’t consistently led to the betterment of that civic field. Taking the example of i-Voting, it’s easy to observe an increase in use over the years, but the feature has largely failed to engage new voters. Indeed, general turnout has remained the same (if not decreased in some cases) in the past twenty years. Actually, there is very little causality between the implementation of e-Estonia and general metrics such as the previously mentioned Human Freedom Index, where the scores have been stagnant over the years. Other stats such as inequality remains above the European average, and the country sports some of the worst gender pay disparity. The country’s economy is facing a recession, with tight monetary policy and high borrowing costs leading to low consumption and investment. Sustained growth is only expected to return in 2025.
Furthermore, the reliance on digital platforms for e-Estonia represents a possible future dependency. This can be a weakness, as shown by the 2007 Russian cyberattack on Estonian infrastructures. Amidst tensions surrounding the relocation of a Soviet-period edifice, the country was hit by the first state-wide DDoS attack. Estonia’s reliance on technology made them a prime target for such attacks. The subsequent establishment of the NATO centre in Tallinn was partly in response to them. In 2017, a vulnerability found in e-ID chips led to their temporary disability, locking citizens out of key services of e-Estonia. It speaks to a new problem of the government being able to block citizens from being able to perform important civic acts. It’s a modern challenge that would be much harder to envision if it wasn’t for the digital aspect of those services. Apart from the security threats, one can also question the growing philosophy of Dataism — the faith that big data can solve all modern problems — and the implications of data protection in the future. An authoritarian state with that kind of infrastructure would have untold power over the spying and interference in citizens’ lives.
Looking Ahead
It’s hard to draw prescriptions out of the e-Estonia project. It has become clear that it’s no magic formula but still presents tangible opportunities for the growing integration of technology and governance. One could easily point to the several factors that made Estonia such a special case for the implementation of e-government. The Soviet legacy left with outdated digital infrastructure, incentivising reform while having a strong ICT community. Its small size and dense population made for a simpler wide-ranging infrastructural shift, and its distance to Scandinavian allies could be leveraged for technological and economic opportunities. At the same time, it benefited from enlightened leaders such as Laar who saw the potential of digital progress, focusing on public-private coordination and tech investment. Such contextual factors aren’t easily reproduced by any country interested in a digital future. Thus, countries shouldn’t blindly follow the promises of e-Estonia.
In any case, the titular state is doubling down on the project. Their Digital Agenda 2030 outlines their plans for development in the years to come. They envision further digitalisation to increase individual and business satisfaction, such as seamless e-Estonia services, AI-powered government, and environmental footprint. From an international perspective, the country’s increased dedication is highly encouraging. As Estonia continues to refine their digital journey and other nations start their own, the collective challenge will be to utilise technology beyond convenience. The road paved by the Baltic state ushers others into a more interconnected world. If it cannot be taken as a blueprint, e-Estonia’s story can definitely be taken as a new paradigm of governance in the digital age.
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