Just Results

Report: Estonia

Report

Digital Nation: How Estonia is transcending borders with
e-government

Estonia is a country with one of the longest histories of digital governance, dating to the first decade of its independence with universal internet access in schools by 1998 and internet being declared as a human right in 2000.¹ As a result this early digital mindset, Estonia set itself up to be a pioneer in e-government. 

 
¹ Nathan Heller. “Estonia, the Digital Republic”. The New Yorker, December 18, 2017. View

Source:  E-Residency, Accessed December 17, 2018.  https://e-resident.gov.ee/

Source: E-Residency, Accessed December 17, 2018. https://e-resident.gov.ee/

 

Home page from Estonia's
e-Residency platform


Even before Estonia’s full-scale e-government revolution

Even prior to the first Ease of Doing Business rankings, Estonia was already recognized as one of the easiest countries in which to do business, due to a number of business-friendly practices including very low taxes, efficient and fast contract enforcement, and low collateral requirements for getting credit.²

However, while many of the legal indicators of investment climate were positive, many of Estonia’s administrative procedures remained time consuming and inefficient prior to digital reforms. Before Estonia became one of the first countries to institute a digital system for business registration in 2006, you still had to go in person to 4 separate agencies, a notary, and a bank to register your business – a process that could take over a month. 

Over several years, Estonia abolished the notary requirements and implemented mandatory e-reporting for agencies (2002), an electronic business registry (2003), electronic name verification, online business registration form, and online payment (2007). The results weren’t instantaneous, but after the Minister of Justice mandated that a time requirement of two hours be set for the completion of a business registration, the time and cost required to start a business plummeted and business registration skyrocketed (annual registrations went up about 65% from 2007 to 2016). By the 2009 Doing Business ranking, starting a business in Estonia could be done in one day, with a single online procedure, at a lower cost (due to removing notary fees).³

 
² Organization for Security and Co-operation in Europe (OSCE). “Best-Practice Guide for a Positive Business and Investment Climate,” 2006. View
³ John Olaisen. “Business Registration - Reform Case Studies: Estonia,” IFC, June 2009. View

Business registration was merely the first step in what has become a torrent of digital governance reforms, known as e-Estonia.

Simplification and digitization have become the rule in Estonia, with, e-Tax Board, e-Business, e-Banking, e-Ticket, and even i-Voting being examples of the numerous government services which have been made digital.⁴ These reforms have kept Estonia firmly entrenched among the top countries in World Bank’s Doing Business rankings, never falling out of the top 25 since reforms began, and never ranking worse than 17 since 2015.

Perhaps the most groundbreaking and innovative reform has been Estonia’s e-Residency program. This program breaks traditional concepts of citizenship by allowing any person in the world to gain digital citizenship in Estonia, giving them access to Estonia’s digital government services through a digital id card. These services allow Estonian e-residents around the world to take advantage of Estonia’s online company formation, banking, payment processing, and taxation. With a goal of "10 million e-residents by 2025,” e-Residency could become a game-changer, by showing the power of high quality and efficient government services to attract businesses globally regardless of physical location.⁵

⁴ “e-Estonia”. Estonia.eu. Estonian Foreign Ministry and Enterprise Estonia. View
⁵ E-Residency, Accessed December 17, 2018. View