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A development e-story: Estonia

Swati Mishra's picture

"Once upon a time in the faraway Baltic region was a tiny nation of Estonia. Newly independent, with a population of 1.3 million, and with 50 percent of its land covered in forests, it was saddled with 50 years of under development. While it was operating with a 1938 telephone exchange, it’s once comparable neighbor across the gulf, Finland, had a 30 times higher GDP per capita and was waltzing its way into new technological advances. Estonia was faced with the challenge of catching-up with the rest of the world. It too embarked upon the technology bandwagon, but revolutionized it’s progression, by creating identity, secured digital Identity for its citizens. And finally, Estonia became a country teeming with cutting-edge technology. The end. “

Estonia’s fascinating transformation to e-Estonia provides a blueprint for building information infrastructure from the ground up and making it work for everyone. Setting aside any misgivings they may have had about the need to scale up the functional size of the country, the newly formed Government took a bold step by shedding past technology and going digital. The route was expensive, but the process not only compensated for the nation’s minuscule workforce, but also pretty much took care of the lack of physical infrastructure.

From Skype to Playtech, Estonia today is synonymous with start-up heaven (as per of AngelList, a website that aims to connect investors with entrepreneurs, there are 161 active start-ups in Estonia.) All of its schools have access to the internet. Wi-Fi is as freely available as water and air. Around 90 percent of the country's residents file income tax returns online. Cabinet meetings have been paperless since 2000. Doctors only issue prescriptions electronically. Estonians can vote on-line and sign legal documents on a smartphone. And all this began with creating secured online identity for its citizens.  

Identity is the fundamental issue.” said President Toomas Hendrik Ilves of Estonia while giving a talk on “e-Estonia: Making of an information age society” at the World Bank headquarters on May 27, 2014. “Once you have a secured identity, you can start doing interesting things.”

Estonia uses a simple, unique ID methodology across all systems, from passports to bank records to government offices and hospitals. These cards are mandatory for anyone age 15 or older. Estonia passed the Digital Signatures Act in 2000 to give electronic signatures the same legal weight as traditional paper signatures.

Estonia’s technological leap has definitely paid off:  The country ranks 34th in Human Development Index,  11th in Index of economic freedom, 10th in  the on state of the world’s children’s index, and 1st in Internet Freedom.  Not content to rest on its internet laurels, Estonia is continuously re-inventing. Its data-exchange system-- X-Road -- allows the nation’s various e-services databases, both in the public and private sector, to link up and operate in harmony. Estonia is redefining international policies and cooperation; its international development assistance is given not in the form of euros, but as programmatic roadmaps or information terabytes that other countries can adapt and replicate.

What can others learn from it? Because of its tiny population, it’s possible to shrug off Estonia’s success as a one-off digital fairytale. However, even with its endowment of a structured, tech-focused education system, Estonians initially were resistant to the digital wave.  

It’s important to make the system work from the beginning…If you have too many failures, then people are not going to bother.” said President Ilves.

Estonia started with reforming and simplifying its income tax system, which not only saved time, but also eliminated taxpayer headaches.  “We had a little nudge -- if you [Estonian Taxpayers] did it on your computer, then you got your refund basically in a week and if you did it on paper, then you will eventually get it.”

By concentrating on low-hanging fruits (areas such as education, healthcare, etc), developing countries can not only incentivize citizens to adopt digital technology, but also increase their Government’s efficiency and accountability. For example, Aadhaar, India's massive initiative to create a unique system for the biometric identification of its residents, has already enrolled 600 million Indians, and if and when the Indian government decides to integrate the unique ID system with public sector service delivery, it can draw from the Estonian experience.

President Ilves acknowledged the need to seriously invest in protecting people’s information online. As the next World Development Report 2016 is set to analyze the role of the internet in development, examples such as Estonia’s will offer valuable lessons on how to close the digital divide.

Public officials in Estonia learned through their technological transformation that full transparency in transactions, in government spending and in many aspects of day-to-day living has the added benefit of keeping the government honest. This was evident as President Ilves explained the nuances of information security and cloud computing to the audience. He cares as much about the public trust as he did about the power of computer programming.

The Estonian story is about willingness to change mindsets. It’s also about thinking out of the box and taking that first bold step.

The end.

Comments

Submitted by Nachiket Mor on

Thank you for sharing this story Dr.Mishra. It provides many lessons for us in India.

Dear Mr. Mor,

Thank you for your kind comment. I hope that the Estonian model and willingness to embrace technology can be replicated in other countries.

Best,
Swati

Submitted by Mohibul Islam on

A very interesting case study Ms Mishra, and well presented. It makes me want to dig deeper into their success- could you point out additional news articles or papers documenting their success or lessons learnt?

Submitted by Rajesh Ojha on

the way u write & mention all development related to e-Estonia, really interesting & also it gave a sense of "thinking out of the box" i think if developing countries should follow the way especially India- to diminish the digital divide or to broaden the tax base without exorbitant increases in taxes, & if cabinet meetings get rid of papers really a way of physical consolidation for the any government.

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