Getting to Estonia, Digitally – Foreign Affairs

Today, there are as many mobile phone subscriptions as people in the world, and close to 40 percent of the planet has Internet access. Digital connectivity is thus the defining force of our age: It fosters a more engaged civil society; gives consumers access to real-time information and a greater variety of products; opens opportunities for businesses to understand their markets, innovate, and compete; and streamlines government services and promotes transparency. The data on digital connectivity speak to its power and future economic potential. By 2016, the Internet economy in the G-20 nations will increase to $4.2 trillion, up from $2.3 trillion in 2010, according to Boston Consulting Group. If it were its own national economy, the Internet would be the fifth largest in the world. In developing countries, every ten percentage-point increase in Internet speed yields 1.3 percentage points in economic growth, according to the World Bank. In Africa alone, the Internet is slated to transform a number of sectors, such as agriculture and healthcare, and could account for $300 billion of the continent’s GDP by 2025.

The innovation driving that growth is now no longer limited to Silicon Valley. Atomico, an international investment firm, tracked 156 software companies founded in 2003 that are now valued at one billion dollars or more—what is considered a mark of start-up success. Over 50 percent of the 22 e-commerce companies on the list are in Asia. Two of the only three European e-commerce companies are based in Germany. One of them, the Berlin-based Rocket Internet, caters only minimally to consumers in Germany or the West. Its more significant operations are in incubating e-commerce companies in the developing world. It has a presence in over 100 countries and a formidable footprint in the nascent digital economies of Africa. In India, nearly 200 digital commerce start-ups are flush with private equity and venture capital funding. The country holds the dubious distinction, according to a recent UN study, of having greater cell phone accessibility than toilets.

And tiny Estonia has set a gold standard—it has reached “digital nirvana,” if you will—in its electronic enhancement of government and business functions, as well as democracy. Estonians enjoy roughly 4,000 digitized services—from banking to accessing medical records and obtaining fishing licenses. About 98 percent of Estonians pay income taxes online and a third even use the Internet to cast their ballots during an election. The government itself utilizes an e-Cabinet system, which enables ministers to conduct meetings, sign-off on decisions, and write policy—all online. This digitization is incredibly efficient—saving ministers up to 30 hours a week of work.  Similarly, entrepreneurs use a unique e-Business Register that allows them to enroll their new company, view annual reports, monitor key data, send inquiries, and conduct background checks on partners. Much of this digital push was led by the government, which had the foresight to innovate in a country that had begun its post-Soviet independent rule with large institutional voids…

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