- 29/03/2018
- Category: Commentaries
Estonia, mostly known as the birthplace of Skype and Hotmail, shocked the world once more when the government announced the e-Residency program under the ‘e-Estonia’ project and claimed themselves to be the first digital society in 2014. Beginning as a project, e-Estonia now facilitates state-citizen interaction through the use of digital technology. While e-Estonia is not a new idea, its presence is still unfamiliar to the public. How did it start and how does it work?
The idea of a digital government in Estonia began in the early 1990s after the Soviet Union disintegrated and Estonia became an independent country. The Estonian government, led by Prime Minister Mart Laar, went to build its digital society by utilizing the newly invented Internet and automation. To this small country, that gamble paid off big.[i] Led by Tarvi Martens, in less than a decade Estonia managed to achieve 97% internet penetration nationwide, along with the invention of the electronic ID card in 1996 and the announcement of the e-Estonia project in 1997.[ii] The e-Estonia website claimed that each year since 2000, 95% of all taxes in Estonia were filed online. In 2003, the Estonian government already took most of its services online.[iii] While the rest of the world is still discussing the use of online voting in elections, Estonia has done so since 2005 and became the first nation to hold legally binding general elections over the Internet.[iv] The newest addition, e-Residency, makes it possible for anyone – both national and foreign citizens – to apply for a government-issued digital ID card and receive many benefits, including the opportunity to own online businesses registered in the EU. [v]
e-Estonia was possible thanks to the X-Road technology, a secure Internet-based data exchange layer developed by the Estonian company Cybernetica. X-Road was called ‘the backbone of e-Estonia,’ and it serves as a platform and ‘adaptor’ to link up numerous databases from multiple institutions to communicate and exchange data with each other. This system is also very efficient as there is no data monopoly and institutions can access data even from two different databases at the same time. The X-Road technology is also very transparent, as residents can see parts of X-Road stores and access their information. Furthermore, combined with the blockchain technology implemented in 2008, the system will divide the data into multiple servers, meaning that it is almost impossible for hackers to attack and get away with it.[vi]
Figure 1 Schematic structure of X-Road as a data exchange layer between government and private services[vii]
What is the result of the whole invention? Since its inception, even only from the e-Residency initiative, it managed to attract approximately 30,000 virtual residents from 143 countries and established 3,000 companies, giving €2.8 million of new income from labor taxes. [viii] Deloitte, a UK private company, estimated that Estonia had made €14.4 million in income, including €1.4 million in net income and €13 million in net indirect socio-economic benefits.[ix]
Why was the e-Estonia movement successful? While in theory this invention can be applied by any country, the fact remains that its small population made it easier for Estonia to control and manage the system. The whole movement would not be possible without trust, as the government is granted the access to citizens’ information anytime and anywhere without having to notify the citizens first. Furthermore, Estonia also had the advantage of starting their e-government project from scratch, as implementing innovations using technology may cause public backlash and resistance in already established societies. However, with the vast benefits that this technology advancement could potentially bring, it will not be long before other countries start to embrace an e-government system similar to Estonia.
Editors: Atin Prabandari MA(IR) & Nabeel Khawarizmy Muna, S.IP
Picture: Pixabay
[i] Hoe, W. (2017). Estonia: One Small Country’s Digital Government Is Having a Big Impact | Government Innovators Network. [online] Government Innovative Network. Available at: https://www.innovations.harvard.edu/blog/estonia-one-small-country-digital-government-having-big-impact-x-road [Accessed 1 Mar. 2018].
[ii] Austin, E. (2018). ‘e-Estonia’: A Case Study in Digital Governance. [online] The Market Mogul. Available at: https://themarketmogul.com/estonia-digital-governance/ [Accessed 1 Mar. 2018].
[iii] Yeung, B. (2017). Welcome To E-Estonia, The Tiny Nation That’s Leading Europe In Digital Innovation. [online] HuffPost. Available at: https://www.huffingtonpost.com/entry/welcome-to-e-estonia-the-tiny-nation-thats-leading_us_58e3c555e4b09deecf0e1a82 [Accessed 1 Mar. 2018].
[iv] e-Estonia. (n.d.). i-Voting — e-Estonia. [online] Available at: https://e-estonia.com/solutions/e-governance/i-voting/ [Accessed 1 Mar. 2018].
[v] ERR. (2017). E-residency program announces e-banking partnership with Finland’s Holvi. [online] Available at: https://news.err.ee/598072/e-residency-program-announces-e-banking-partnership-with-finland-s-holvi [Accessed 1 Mar. 2018].
[vi]Lufkin, B. (2017). Could Estonia be the first ‘digital’ country?. [online] BBC. Available at: http://www.bbc.com/future/story/20171019-could-estonia-be-the-first-digital-country [Accessed 1 Mar. 2018].
[vii] World Bank (2015). Estonian e-Government Ecosystem: Foundation, applications, outcomes. World Development Report 2016. [online] World Bank, pp.11-12. Available at: http://pubdocs.worldbank.org/en/165711456838073531/WDR16-BP-Estonian-eGov-ecosystem-Vassil.pdf [Accessed 12 Mar. 2018].
[viii] Bathke, B. (2017). Digital residency pays off big for Estonia. [online] DW.COM. Available at: http://www.dw.com/en/digital-residency-pays-off-big-for-estonia/a-41969304 [Accessed 1 Mar. 2018].
[ix] ERR. (2017). Deloitte: E-residency brought €14.4 million to Estonia in first three years. [online] Available at: https://news.err.ee/646254/deloitte-e-residency-brought-14-4-million-to-estonia-in-first-three-years [Accessed 1 Mar. 2018].
