e-Estonia: How a Small Baltic Nation Became “The World’s Most Digital Country”

Image Source


As the title phrase was coined by Forbes, other outlets like Wired called Estonia “The most advanced digital society in the world.” Even former president Barack Obama was praising Estonia when saying “I should have called the Estonians when we were setting up our healthcare website.”

How come a small Baltic country, home to around 1.3m inhabitants - comparable to metro regions like San Diego or Dallas – is now the world’s leader when it comes to a digitized society?

The History and Philosophy of Estonia’s Digital Leap

When Estonia gained its independence from the former Soviet Union in 1991, the leaders at this time had the rare chance of building public services from scratch. As a former remotely ruled part of the Soviet Union, Estonia had no reliable network of tax offices or public service provision points to rely on, so they had to come up with a solution on their own.

The idea was to provide cost-efficient access to governmental and social services even in the most rural areas by leveraging information and computer technology. Instead of putting resources into the development and implementation of the common legacy systems like paper-work archives and manual document processing, they decided to skip this part and build up a digital system right away.

Alongside a strategy to penetrate society with digital skills, schools and public libraries were equipped with free internet access points first. Students who just learned exciting new traits about digital technology would spread the word at home with their parents and grandparents, thus, facilitating broader adoption of the digital-first approach.

Another critical measure was to not rely on developing state-of-the-art tech by themselves but make use of already proven and cheap solutions from mostly private entities. This makes the implementation and usage much easier and more affordable than implementing prototypes and scaling them to serve a whole nation.

“The Estonian experience also demonstrates that high rates of basic technological penetration pay off better than cutting-edge technology only in the hands of a selected few.” – Kersti Kaljulaid, Former President of Estonia (Source)

The Services

When Estonian citizens have to get in contact with their government, they can rely on digital remote services for about 99% of public service transactions. The only exceptions where citizens must be present in person are when they’re getting married, filing a divorce, or acquiring real estate.

The Estonian government is constantly seeking to innovate and taking the most successful private companies as an example of what’s possible. Former Estonian President Kersti Kaljulaid also coined the phrase

“Governments must learn to provide public services as efficiently as Amazon sells books: no physical presence, no cost of application, no opening hours.” – Source

Which describes their mindset and claim pretty well. Let’s find out more about the Estonian digital services by highlighting a few selected functionalities:

• Since the year 2000, Estonians can declare their taxes online with a proclaimed effort of only several minutes to file the taxes for a whole year.
• By implementing the e-ID functionality in the year 2002, Estonians can safely sign digital documents remotely. The corresponding ID card in combination with a card reader is also used to identify themselves reliably when logging into public and private online services.
• The i-Voting system is live since the year 2005 and enables people in rural locations to safely cast their votes from home and optimizes expenses for setting up local election offices. It is also a great workaround for Estonian citizens who are residing in another country at the time of voting.
• The e-Health system (implemented in 2008) consists of a nationwide system of electronic health records. The records can be accessed by authorized entities like doctors and hospitals and are used to retrieve critical health information (like certain medication allergies) in times of emergencies. E-Health was flanked by e-prescriptions in 2010, further reducing paperwork for prescribing medicine, as most prescriptions are handled digitally, which also saves resources as there are no further appointments needed for routine refills.
• One of the most famous services, the Estonian e-Residency, was implemented in 2014 and allows citizens of other states to acquire an e-ID in Estonia and make use of their digitized public services. Holders of an e-Residency can also open a business in Estonia and manage it completely remotely. By September 2022, more than 85.000 people from around the world applied for an e-Residency and more than 19.000 companies were founded by those e-Residents.

As these are just examples of the Estonian digital services stack, Estonian citizens are benefitted from the ability to carry out around 99% of their public services transactions online and remotely, which is an astonishing saving of time and effort. They are also indirectly benefitted by the amount of savings the digital servings are generating, as this money could be spent in other fields: Estonian authorities report they are saving 2% of their total GDP and around 1.400 years of working time every year by using digital public services.

The Tech Stack

To fuel all these functionalities, provide safe and secure access, and ensure high availability of remote services, the Estonian IT tech stack relies on several technologies including blockchain that enable Estonia to be the most digital country in the world.

• The X-Road software is arguably the central piece in the whole digital ecosystem of Estonia. It allows the safe exchange of data between public and private electronic systems over the internet. Any member connected to the decentralized X-Road can send and request data using a standardized protocol. For example, in traffic control, it would be sufficient to scan the ID of the driver, make a request to the Transportation Authority via X-Road and retrieve the info if the driver has a valid license. As the data is already stored online and accessible via X-Road, there is no need for an Estonian citizen to carry his driver’s license with them.

• Responding to the severe cyberattacks in 2007, which lasted 22 days and led to the loss-of-service of several government servers, Estonia searched for a way to store critical data in a safe and non-immutable way, so even inside jobs couldn’t compromise the data. They came up with the then young blockchain technology: Together with private partner Guardtime, they developed the KSI Blockchain, which today holds several critical state registries, such as the Healthcare Registry, the Property Registry, the Business Registry, and the Succession Registry (among others.) It has proven so successful, even NATO and the US Dept of Defense are using the KSI blockchain for their own needs.

• As an answer to the question of what will happen in case of major cyber attacks, natural disasters, or other circumstances that put a threat to Estonian statehood, Estonia and Luxembourg opened up the world’s first Data Embassy in 2017. Although it is named an embassy, there is no diplomatic personnel on-site, as it is a data center outside of Estonian borders that back-ups critical data and provides the most vital public services. In total, ten data sets are stored and continuously updated, such as the Identity Documents Registry, the State Gazette, the Treasury Information System, the e-Land Registry, and the Treasury Information System. By opening the facilities in Luxembourg, both these countries entered formerly unknown territory but made it work under the Vienna Convention. This includes several characteristics of real embassies like the immunity regarding the hosting country Luxembourg as well as being regarded as Estonian territory.

Final Thoughts

As we’ve seen, Estonia is now the most digital country in the world and not only benefits its citizens but provides attractive services for foreigners due to the e-residency program. What were the deciding factors in this development:

• The rare chance in history to rebuild public services for a whole nation from scratch, eliminating the innovation inertness of existing bureaucracy and legacy systems.
• Making use of already established and affordable technology from the private sector.
• A mindset of constant innovation and improving the services by comparing the public service to private companies.

If you like to dive deeper into this topic, check out e-Estonia.com.