Development of Digital Society in Estonia

ESTONIA – THE MOST ADVANCED DIGITAL SOCIETY IN THE WORLD

ABSTRACT

In this paper, we examine the incredible success story of Estonia, that grew out of a partnership between a forward-thinking government, a proactive IT sector, and a switched-on, tech-savvy population.  Estonia is an innovative nation in Northern Europe known for its digital ambitions, and they have built an efficient, secure, and transparent ecosystem that saves time and money (“e-Estonia – We have built a digital society and so can you,” 2018).  In 2007, Estonia set a world record for organizing a company online in just 18 minutes.  Estonia is ranked on a high scale in the Human Development Index and is equally well rated in areas of economic freedom, education, and civic rights.  Its citizens are provided with universal health care, free education, and the longest-paid maternity leave in the OECD (“The Economist – Which countries are most generous to new parents?,” 2016).  Estonia is the world’s most digitally advanced nation.  In 2005, Estonia became the first state to hold elections over the Internet followed by being the first state to provide e-residency in 2014 (Korjus, 2017).  This article describes the journey of the history and the advanced digitalization of Estonia and how the e-Estonia program came into full power and efficiency.

BACKGROUND

Estonia is a country in Europe and its capital is Tallinn.  The country has a population of 1.3 million, and with an advanced, high-income economy it has been one among the fastest-growing in the EU.  Ten years ago, the country gained the unenviable title of being the first in the world to experience a nationwide cyber-attack (Korjus, 2017).  Even though this didn’t create any adverse effects or data leakage, the attackers passed bulk of web traffic to overwhelm systems in an attempt to take them offline. This led to temporary damage to a country that was already investing heavily in digital governance and developing as a thriving startup hub, particularly for digital services. It had transformed into an e-nation since then and has been exporting its digital model to the rest of Europe.  Estonia started building their digital information model at a time when they did not even have internet.  It took great effort to invest in IT solutions and take their information technology platform to the next level.  Currently, IT companies within Estonia account for 7% of GDP (“e-Estonia – We have built a digital society and so can you,” 2018).  There are several e-solutions that have led Estonia to becoming one of the world’s most developed digital societies.  First, Estonia’s success relies on an open-minded citizenry, who are eager to use and experiment with e-solutions and innovations. Second, the strong infrastructure across the country also made it possible and relatively easy to build a safe user-friendly e-services ecosystem.

INTRODUCTION

The World Economic Forum ranks Estonia’s government as the most tech-savvy in Europe (“e-Estonia – We have built a digital society and so can you,” 2018).  WIRED, the technology magazine, has declared the country as the most digitally advanced in the world (Reynolds, 2016).  Constructing e-Estonia, one of the most advanced e-societies in the world (Korjus, 2017), has involved endless experimentation and learning from several mistakes.  Estonia envisions the natural next step in the evolution of the e-state is to move all the current basic services into a fully digital version.  Estonia can now further automate its towns and cities for its citizens easily and automatically, and in a sense, invisibly.  Estonia was indeed the first in the world to interconnect decentralized components of the public sector and state databases at a national level, and was also the very first in the world to test and use blockchain technology for the government (“e-Estonia – We have built a digital society and so can you,” 2018).  Estonia continues its commitment to providing a state-of-the-art platform for innovation and trending technologies as it already has all the prerequisites in place.  They also have an e-Estonia center set up in Tallinn.  The center aims to inspire global policy makers, corporate executives, political leaders, investors and international media to kick-start the digital transformation by sharing the successful example of e-Estonia and build links to the IT sector. 

e-ESTONIA

Considering the mass adoption of digital technology, the government put forward a movement called e-Estonia, to improve citizen interactions through use of electronic solutions.  The project-e-Estonia aims to make government more efficient and transparent as well as to boost economic growth.  e-Estonia revolutionized the public service and offered over 3,000 fast and easily accessible e-services and e-solutions to its citizens.  With e-Government, people could fill in long government paperwork online in a matter of minutes.  Another popular service was e-Business, which allows people to initiate their business from the comfort of their own homes in less than 20 minutes and operate it remotely.  The e-School program offers digitized education.  Children can complete schoolwork and parents can monitor their progress online.  Estonians use the e-Health system, which is one of the most successful in the world, to do regular check-ups, speak to doctors and access personal health data.  70% of Estonian health records are online and 98% of prescriptions are done online. e-Residency is another popular venture in Estonia, building an advanced digital nation for citizens of the world where no one is held back from their entrepreneurial potential because of where they travel or where they choose to live. Thus, the nation has wide potential for unlocking rapid global growth by democratizing access to e-commerce and entrepreneurship. In addition, every citizen has a secure digital identity that enables them to check their health records, file tax returns and vote. In future, Estonia also further plans to encourage cross-border e-commerce by modernizing VAT. The capital city, Tallinn, is in a strong position to counter one common objection, that e-commerce and e-government put data at risk, because it has developed an incredibly secure system, in regard to blockchain, since suffering the world’s first major cyberattack in 2007. The future potential of blockchain is sure to emerge in Estonia. Skype was born here just five years earlier. The Skype software was created by Estonians Priit Kasesalu, Ahti Heinla, and Jaan Tallinn. The Cold War cyber-attack also served as a wake-up call for how the country’s digital infrastructure could be further secured by introducing radical new technology. The longer-term effect of the cyber-attack is that it helped Estonia develop into the widely considered world’s most advanced digital nation (Korjus, 2017). Today, almost all public services provided in Estonia are digitalized and accessed through secure digital identities that are provided to every citizen and resident.  The technology behind this digital infrastructure is incredibly impressive.  The Public Key Infrastructure (PKI) and e-ID system is based on advanced encryption technology and includes a 2-factor authentication.  Data is decentralized, yet never duplicated and always shared securely through the X-Road.  The ledger technology, commonly known as a blockchain, is one of the innovations that was integrated into several of these services and is a distributed ledger that can never be erased or rewritten (Korjus, 2017).  In Estonia, this distributed ledger gives residents and citizens more control over their own data.  The Estonia Healthcare Registry is one example of this.  Very few people in the world are able to say exactly where their medical records are located and who has looked at them, whereas Estonians can log into their own records using their digital identities and see exactly which medical professionals have done the same and when.  Any government official who has accessed your data without a good reason can be challenged and prosecuted.  The journey of Estonia can be summarized by looking into the key digital technology developments in the field.

The e-Governance introduced in 1997 was a strategic choice for Estonia to improve the competitiveness of the nation and improve the quality of life of its people, while implementing hassle free governance.  Citizens could select e-solutions from among a range of public services at a time and place according to their convenience, as 99% of public services are available to them as e-services.  In most cases, there is no need to physically visit and attend the government agency providing the service.  The efficiency of the e-Government is clearly expressed when time is saved for ordinary people and officials, which would otherwise be spent on bureaucracy and document handling.

Estonia e-Tax was introduced in 2000 and provides modern, quick and easy e-solutions for setting up and running a business in Estonia..  Estonian e-solutions for business, such as electronic tax claims, have pared bureaucracy down to a minimum and helped create an environment where business is extremely streamlined and convenient.  Taxes can thus be paid in just one click, and it takes only 3-5 minutes for the tax filing process to complete.  Hence, around 95 per cent of all tax declarations in Estonia are filed electronically.  X-Road, introduced in 2001, is the open-source backbone for e-Estonia.  X-Road forms the crucial environment that allows the nation’s various e-service databases, both in the private and public sector, to link up and operate in consistency, and saves around 800 years of working time for the state and citizens annually.  Thus, all information is held in a distributed data system and can be exchanged directly upon request, providing access 24/7.

Digital ID, introduced in 2002, is a mandatory national card with a chip that carries embedded files. It functions as definitive proof of ID in an electronic environment (“e-Estonia – We have built a digital society and so can you,” 2018).  It serves more than simply a legal photo ID.  This ID card provides digital access to all of Estonia’s secure e-services, releasing a person from tedious red tape and making daily tasks speedy and more comfortable.  Whether we are talking about business or banking operations, obtaining a digital medical prescription or authorizing documents is now streamlined.

i-Voting was introduced in 2005 and is Estonia’s open-source voting solution, which is simple and secure.  Estonia was the first nation in history to provide internet voting in a nationwide election in 2005 (“Estonia First to Allow Online Voting Nationwide,” 2018).  It bought to close the costly electronic voting systems with problematic machinery used in some countries. The groundbreaking i-Voting system grants citizens to vote at their convenience, even while sitting in remote locations, since the ballot can be cast from any internet-connected computer anywhere in the world.  i-Voting takes just 3 minutes and tally’s votes from all over the world.

e-Health facilitates patients’ own their health records and are made available online.  Over 95% of the data generated by hospitals and doctors has been digitized, and blockchain technology is used for assuring the integrity of stored electronic medical records as well as system access directories (“e-Estonia – We have built a digital society and so can you,” 2018).  e-Health solutions allow Estonia to offer more efficient and precise preventative measures, increasing the awareness of patients while saving billions of dollars.  Each person in Estonia that has visited a doctor has his or her personal online e-Health record, containing their medical case, test results, digital prescriptions and records, as well as a full log-file tracking access to the data.

e-Residency is in fact Estonia’s gift to the world.  It is a transnational digital identity that can provide anyone, anywhere with the opportunity to succeed as an entrepreneur.  Like residents and citizens of Estonia, e-residents receive a government-issued digital ID and full access to the public e-services of Estonia.  This in turn also enables them to establish trusted EU business with all the tools needed to do business globally.  They can then use their secure digital identity to manage their company entirely online from anywhere in the world with minimal cost and hassle.

e-schoolbag is another initiative adapting digitalization in the education field.  The educational digital revolution in Estonia aims to implement modern digital technology more effectively and efficiently in teaching, learning, and to improve the digital skills of the entire nation.  Estonia’s success in the digital revolution in education is evident as twice as many students pursue IT careers in Estonia than the average in other OECD countries (“e-Estonia – We have built a digital society and so can you,” 2018).  One example of the digital transformation in the education system is that by 2020 all study materials in Estonia will be digitized and available through an online e-schoolbag.

Industry 4.0-type solutions also has a major impact on many sectors from how quality is monitored to how much effort goes into supply chain management. Many of the players in Estonia’s ICT sector focus on Industry 4.0 solutions development.  At the center of their strategy is a concept called Real Time Factory which allows managers to track key performance indicators in real time, showing where improvements can be made and allowing the entire factory to operate as one integrated system.

The Real Time Economy (RTE) is an environment where administrative and financial transactions connecting citizens, public sector entities and businesses are in structured standardized digital form and increasingly generated automatically and completed in real time without forward and store processes (Diginno, 2018).  For example, solutions such as real time payments, real time e-Invoicing, e-ID services, and e-Receipts, real time and automated accounting and VAT-reporting, automated credit and investment risk processing and evaluation, can hugely benefit digital single market by directly saving the costs.

FUTURE ENDEVOURS

As citizens and businesses become more mobile, the need for truly international e-services becomes even more important to remove the red tape involved in the cross-border movement of companies and people around the world.  In the future, an ER specialist sitting in Norway would be able to instantly access and monitor the medical records of a patient in the UK, or a Swedish company could digitally sign a contract with a counterpart in the US.  Estonia has already started directing their innovations on exploring new horizons.  As the leader in this sphere, Estonia, hopes that cross-border data exchange will become possible between all European countries soon.  Healthcare 4.0 is another future solution planned for Estonia.  With new innovations coming into reign, people will start becoming more aware of factors influencing their health and each person will progressively start becoming more responsible for managing the same.  Patients will also be able to access information wherever they are, at any time they choose, which will improve mobility.  Estonia will also provide point-of-care devices such as equipment that patients can use for themselves (“e-Estonia – We have built a digital society and so can you,” 2018).  Global health accounts will be accessible, and this will introduce the benefits of health procedures based on artificial intelligence. “Reporting 3.0” project is another venture planned to be released by 2020.  This program will help reduce the burden on entrepreneurs on the obligatory submission of data to state governed institutions.  The first step in the project would be the simplification of the entire salaries and the labor expense reporting process to automate the submission of this data.  Hence, a new Customs Board and e-Tax portal will be completed, in which information exchange between tax authority and companies will be automatic and will require only the granting of access to necessary data. This will save valuable time and money, and in this way, companies can focus on growth and people can work more productively.  Estonia is also currently investing in self-driving technology, as they believe it will help improve road safety and road use efficiency. With self-driving cars, Estonia will continue its commitment to providing a state-of-the-art platform for innovations and rising technologies, as it already has all the necessary prerequisites in place (“e-Estonia – We have built a digital society and so can you,” 2018).

CONCLUSION

Twenty years ago, Estonia decided to take a “tiger leap”  forward towards digitalization.  Today it is a shining example of bureaucratic efficiency.  Filing a tax return just takes five minutes, national voting can be done online, and no one has to track down medical records. Estonia almost saves over 800 years of working time and 2 percent of GDP annually through its digitized public services (Bruan, 2018).  The state has a legal and moral obligation to ensure a high level of security to personal data entrusted to the state.  By drawing on Estonia’s path towards digital success, the EU can more effectively implement e-solutions.

References

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Diginno. (2018, June 5). Enhancing Nordic-Baltic Region’s Leadership in Real Time Economy. Retrieved October 18, 2018, from https://www.diginnobsr.eu/single-post/2018/05/30/Enhancing-Nordic-Baltic-Region%E2%80%99s-Leadership-in-Real-Time-Economy

e-Estonia – We have built a digital society and so can you. (2018, October 17). Retrieved October 17, 2018, from https://e-estonia.com/

Estonia First to Allow Online Voting Nationwide. (2018, October 17). Retrieved October 14, 2005, from http://www.nbcnews.com/id/9697336/ns/technology_and_science-tech_and_gadgets/t/estonia-first-allow-online-voting-nationwide/#.W8oUXPYpCHs

Korjus, K. (2017, July 7). Welcome to the blockchain nation. Retrieved October 17, 2018, from https://medium.com/e-residency-blog/welcome-to-the-blockchain-nation-5d9b46c06fd4

Reynolds, M. (2016, October 20). Welcome to E-stonia, the world’s most digitally advanced society. Retrieved October 17, 2018, from https://www.wired.co.uk/article/digital-estonia

The Economist – Which countries are most generous to new parents? (2016, October 18). Retrieved October 17, 2018, from https://www.economist.com/graphic-detail/2016/10/18/which-countries-are-most-generous-to-new-parents