e-Estonia, the information society since 1997

Great Policy Successes This case study corresponds to a chapter by Rainer Kattel and Ines Mergel, entitled "Estonia’s Digital Transformation: Mission Mystique and the Hiding Hand", in the book Great Policy Successes, co-edited by Mallory Compton and Paul 't Hart. The book brings together fifteen cases of highly successful governance from around the world. For further information on this line of research, see: https://successfulpublicgovernance.com.

Since gaining independence in 1991, Estonia has rebuilt its government from scratch to achieve a modern information society where IT is used throughout its public sector and governance, 99 percent of public services are available online, and free wifi is accessible throughout most of the country. Continuous and strong cross-party support, fiscal feasibility – thanks to EU funding – and strong alignment with private sector partners have helped Estonia become one of the most digitally advanced governments, receiving global recognition and praise. 

Despite starting out with a relatively small budget and a loosely defined policy, Estonia managed to become the leading European nation in digital public services in 2017, according to EU’s Digital Economy and Society Index (DESI). Although Estonia’s success in this particular area is clear, it is not performing as well in other areas such as digital democracy, citizen engagement, and the digital transformation of public services like the welfare state.

The challenge

Following Estonia’s independence from the USSR in 1991, the country wanted to break away from its Soviet heritage and transform itself from a socialist economy to a liberal, private sector-based market economy. It did so by undergoing several structural and institutional reforms.[1] Specifically, this meant governance and funding reforms of its research and development systems; privatisation of state-owned companies; new financial regulations; and the transformation of the finance sector.[2] 

Against the backdrop of these radical changes, Estonia needed to reinvent itself and find new opportunities for achieving a competitive advantage. The particular circumstances obtaining at the time may actually have helped to provide the country with a focus and a sense of urgency. As former prime minister Taavi Rõivas pointed out: “Located between neighbours that are much bigger, Estonia is a small fish in a huge global ocean, you’re either slow and get eaten or you become very fast and develop the economy and the digital society – Estonia opted for the latter.”[3]

Estonia also had to overcome major social challenges, such as the significant digital divideonly a minority of the population had access to computers or the internet at the turn of the millenium.[4] Of the country’s 1.4 million citizens, less than a third had ever used the internet and many could not afford a computer.[5][4] “The main barrier in Estonian society is the fact that the possibilities offered by the internet are not associated with personal needs. It is believed that ‘computers are not for me’.”[6]

The initiative

The Estonian government saw an opportunity to make use of information and communication technologies (ICT) to modernise the country’s public sector and provide transparent governance and online public services for its citizenswithout using legacy systems.[7] To begin this process, the Estonian government put in place a new IT policy, an improved IT infrastructure, programmes to bridge the digital divide among its citizens, and a mandatory electronic identity card system. 

In 1993, the Department of State Information Systems [Riigi Infosüsteemide Osakond] (RISO) was established under the Government Office.[8] From then on, all ministries’ and agencies’ IT development plans had to go through RISO for approval, and all the various government agencies’ IT expenditure could therefore be traced.[9] In 1994, a small IT community of government officials, IT specialists, and academics developed the strategy paper The Estonian Way to the Information Society with the aim of establishing principles for the management of modern, efficient state information systems.[9][10][11] Four years later, the Estonian parliament approved the Principles of Estonian Information Policy, which had been developed by the Ministry of Economic Affairs and Communications.[2] “On the basis of the Principles, an Information Policy Action Plan which is updated annually was developed where all Government agencies made specific proposals with schedules, sources of finance, and responsibilities for implementation of information policy.”[11]. Subsequently, the government published three additional information policy papers.[8][12]  

To strengthen IT infrastructure within government departments, a network called EEBone or “Peatee” was launched by the government in 1998.[10] EEBone connected all government departments with secure access to the internet and intranet. This, in turn, paved the way for the X-Road system in 2001, which was developed by researchers at Tallinn Technical University and launched by the Information System Authority [Riigi Infosüsteemi Amet] (RIA).[9][13] X-Road is a platform which exchanges information securely over the internet across separate IT systems.[10] 

To help bridge Estonia’s digital divide, the then Estonian ambassador to the US, Toomas Hendrik Ilves, the minister of education Jaak Aaviksoo, and President Lennart Georg Meri introduced the Tiigrihüppe (Tiger’s Leap) Programme, which ran from 1997 to 2000.[14] The main goal of Tiger’s Leap was to promote the use of ICT in education by providing schools with computers, connecting all schools to the internet, and introducing technology as a tool in education.[14] Tiger’s Leap was followed by the Look@World project, a large public-private partnership project aimed at promoting the use of the internet across Estonia.[4]

In 2000, the Estonian parliament decided to introduce electronic identity cards, and the first cards were issued in 2002.[15] The cards were made compulsory for all Estonians through the Identity Documents Act 2000, and allowed citizens to identify themselves digitally and sign documents or actions online.[4] Using eID, citizens can, for example, review their personal health records, submit their tax declaration, and vote in elections online.[4]

The public impact

Estonia has become one of the most advanced e-governments in Europe, particularly in the area of digital public services infrastructure.[16] According to the European Commission’s May 2018 report on e-government in Estonia, the country scored markedly above the EU average on all e-government indicators , such as the “percentage of individuals using the internet for interacting with public authorities”, user-centricity, and transparency.[17] The majority of Estonian citizens are now using IT to access public servicesfor example, more than 2,300 public and private services can be used via X-Road, nearly all residents have an electronic identification card, 30 percent of local and national votes are cast online, and nearly all medical prescriptions and personal income tax declarations are processed online.[16] 

The government’s efforts to close the digital divide in the country were also successful, resulting in broadband access in all schools across Estonia, and ICT methodology training and access to ICT tools for teachers and students. By 2002, the government had built a free wifi network that covered most of the populated areas.[18] In addition, a total of 100,000 citizens10 percent of the adult populationreceived free, basic computer literacy courses during 2002, 2009 and 2010, and 500 extra public internet access pointssuch as internet cafés and librarieswere introduced across the country.[4][19] As a result of these measures, 91.4 percent of Estonians were using the internet as of July 2016, compared to 28.6 percent in 2000.[20] 

The greatest impact from Estonia’s digital transformation, however, is the reduced administrative burden for both the state and the citizens during public service delivery, saving them approximately 820 years of working time every year.[21] According to the Estonian government, the reduced working timeas a result of fewer face-to-face interactions, for examplecorresponds to fiscal savings of around two percent of Estonia’s GDP annually in salaries and expenses.[22][23] This particular success has been achieved largely due to the introduction of X-Road and the eID cards. “Together, X-Road and the digital ID make it possible to digitally sign any contract, access essentially any public service, order prescriptions, file taxes, vote and so forth.”[16]

However, the increased number of online public services available to citizens in Estonia has not necessarily led to higher satisfaction with key public services. “As an example, according to OECD rankings in 2014, Estonia ranked fifth from bottom in satisfaction with health services (in 2007 it ranked the lowest) and second from bottom in education system satisfaction (in 2007 it ranked third lowest).”[2] In addition, the impact of Estonia’s digital transformation on creating digital democracy has been weaker than the impact of its digital public service infrastructure. “Furthermore, while e-voting is increasingly popular, other aspects of digital democracy, such as civic engagement, have remained weak.[16]

The former prime minister of Estonia, Taavi Rõivas, admits that Estonia does not have all the answers to digital transformation. “I’m not saying that every country should follow our course... Making a government digital is not just down to technology. The technology behind our digital identity, for example, has been around for fifteen years, so it’s not rocket science anymore. Any country needs to be ready to experiment. Our success has involved continuous experimentation and learning from our mistakes.”[3]

Written by Linnéa Larsson

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Public Confidence Good

Public confidence in the government’s digital society initiatives is apparent from the widespread use of eID and other e-public services, but that confidence may be eroding somewhat as concerns grow over privacy issues and a failure to reform and improve the system.

According to the Ministry of Economic Affairs and Communications’ webpage: “In 2012, 76 percent of entrepreneurs and 67 percent of regular citizens expressed their satisfaction with the e-services”.[34] Furthermore, a 2013 report by the Institute of Baltic Studies and the Praxis Centre for Policy Studies found that users believed e-services had made accessing public services easier: “80 percent of the respondents say that 12 of the 15 e-services have made using the public service considerably easier. The respondents feel that the biggest changes have once again been brought about by the possibility to submit tax returns to the EMTA (Estonia’s Tax and Customs Board).”[35]

However, in 2007 a series of cyberattacks against Estonia’s e-society infrastructure “fundamentally changed both Estonian and international discussions about Cyber Security and Privacy”.[36] Another incident, in 2018, which caused public concern and threatened to erode public confidence was a case of leaked sensitive personal information about schoolchildren, and there has also been criticism that the e-residency programme enables money laundering.[37][38]

Stakeholder Engagement Good

The Estonian e-government initiative enjoyed strong support from external IT experts, academics, the private sector and internal stakeholders in its early decision-making processes. The academic stakeholders were part of the Informatics Council (now the e-Estonia Council), a government committee of experts established in 1990.[24] In the early 1990s, Estonia also consulted with and attended seminars by the IT departments of Swedish and Finnish government agencies focusing on IT in public administration.[24] 

Stakeholders from the private sector, especially from banking and telecoms, helped shape the eID initiative and served on the Tiger’s Leap foundation and the Look@World consortium.[4] Internal stakeholders included RISO and the Prime Minister’s Office under the prime minister Mart Laar. The members of the RIA were also directly involved in the early policy-shaping processes.[9] 

Although these stakeholders were all supportive of the policy, there is no evidence that the government involved the public as a stakeholder when formulating its initial policies. In 2001, the government launched an online tool called Today I Decide [Täna Otsustan Mina] (TOM), giving the public an opportunity to comment on proposals and policy documents online.[25] However, due to a poor and diminishing public engagement, this tool did not shape future policy decisions in any meaningful way.[25]

Political Commitment Strong

There was clear political commitment to the overall digital agenda, for two main reasons. Firstly, it was integral to most of the ruling parties’ ideas of creating a modern, more efficient state, and secondly because it was an important agenda for the EU, which Estonia aimed to join from the early 1990s onwards, and finally succeeded in joining in 2004.[26][27]

In the 1990s, the strongest support for promoting e-government came from the politicians and parties who were the most radical in terms of implementing economic reforms, such as the Pro Patria Union led by Mart Laar (prime minister, 1992-4) and the Estonian Reform Party led by Siim Kallas (in a coalition government, 1995-6).[10][28] “Right-wing political leaders supported the IT community’s early initiatives, because these initiatives were consistent with their goals of creating a minimal and efficient state; the understanding that e-government should be more than simply a back-office tool or a channel for service delivery has grown slowly in the IT community and within political circles.”[29]

Between 1992 and 2003, there was a high turnover in government, as various coalitions collapsed.[30] However, political support for the digital agenda remained constant throughout this period of turmoil, and was seen as part of the broader, common cross-political goal of joining the EU and NATO.[31] 

More recently, however, there has been political opposition from the Reform party to the management of Estonia’s digital transformation. For example, the chair of the Reform Party, Kaja Kallas, expressed criticism of the current government’s failure to maintain and improve the digital society in Estonia, in light of Estonia’s 2018 overall DESI ranking, falling from 8th to 9th place, below the European average.[32][33] 

Policy

Clear Objectives Fair

Although the objectives of the e-government initiative were vague when the programme was introduced in 1998, their clarity has increased over time. There were no clear, measurable objectives in the initial 1998 strategy report, the Principles of Estonian Information Policy.[11][39] The report states that “the general goal of the information policy actions of the Government of Estonia is to help create a society and a state that serves citizens, promotes their participation and cares for their wellbeing”.[39] The development of e-government services has since been prioritised, and the following main objectives stated: 

  • The introduction of e-services in all state agencies, together with training and awareness-raising activities for the whole of society
  • Maintaining the level of ICT use in Estonia at no less than the average level of the EU – hence ensuring the efficiency of the Estonian economy and society in general
  • Increasing the export capacity of the IT sector.[11]  

The general objective of the strategy is “to contribute to achieving higher growth, more jobs and increased welfare by creating an environment supporting the use and development of ICT solutions”.[12]

Evidence Good

The use of evidence  Estonia’s e-government initiative drew on evidence from similar developments abroad, as well as pilot studies and advice from academic and industry experts when shaping their policy. However, the 1998 Principles of Information Policy remains very general strategy document which does not provide many details on what further evidence was taken into account when creating the policy.

When formulating the 1998 document, Principles of Estonian information policy,[39] the Estonian government drew on similar policies and developments then current in the EU and the US. For example, the EU’s Bangemann Report on Europe and the Global Information Society from 1994,[40] the 1993 European Commission White Paper on Growth, Competitiveness, and Employment,[41] and the Information Infrastructure Task Force from 1994.[11][42] 

In terms of pilot studies used as evidence, the Tiger’s Leap programme for educational development is one example. It began as a pilot study for the priority field of “education in the native language”, and was supported by the Estonian state budget.[39] However, it later developed into a project in its own right and is now mainly referred to in those terms.[20] 

In addition, government officials drew on external expertise from academic IT experts, who were involved in writing the first strategy document on Estonia’s information policy.[9] The external experts provided policymakers with advice based on existing research and their own experience in the IT field. 

Feasibility Good

Feasibility for the implementation of e-government in Estonia was good, as appropriate legislative frameworks were put in place early and because financial resources were provided through EU funding and public-private partnerships. However, ICT funding has been kept very modest in comparison to how much other countries spend on ICT.

The legislative framework put in place early on to support the initiative included the following statutory legislation: the Personal Data Protection Act (1996), the Public Information Act (2000), the Population Register Act (2000), the Digital Signatures Act (2000), and the Electronic Communications Act (2004).[4] These different pieces of legislation cover aspects of application development, data protection, and security issues in the area of e-governance.[4] “Indeed, in some instances, the regulatory framework has been crucial. For example, the Public Information Act... also includes significant provisions on electronic access and disclosure (e.g. the duty to maintain websites, obligation to ensure that the information is not ‘outdated, inaccurate or misleading’, e-mail requests must be treated as official requests for information, etc.).”[11] 

In terms of fiscal feasibility, the Estonian government allocated a small ICT budget compared to other countries, but partnered with the private sector to secure the financial feasibility of certain aspects of the initiative. The government budget allocated only about one percent for ICT from 1995 to 2003, which is low compared with many other countries, which spend 2.5 to 4 percent of their budget on ICT.[10] Since joining the EU in 2004, Estonia’s digital investments have relied heavily on EU structural funds, which amount to 85 percent of the financing used for information society development.[34] However, between 2014 and 2020, Estonia has committed to invest more than EUR200 million to the implementation of the digital agenda , “including the EU funds and the government of Estonia’s own contribution”.[34]

Finally, Estonia was well placed in regard to human resources and expertise at the time of implementation of its digital agenda – since the 1960s it had invested in its Cybernetics Institute, which focused on computer programming.[10] “The collapse of the Soviet science system forced younger scientists to start up their own ventures and also freed material resources for the development of new sectors of economy. As a new, challenging industry, IT had much in common with the emerging market economy.”[1]

Action

Management Strong

The overall management structure of Estonia’s digital transformation initiative is more informal and ad hoc than that of countries such as Finland, but it benefits from many smaller, interpersonal networks.[43] 

The management structure is divided into three levels: a central coordinating function; a decentralised function at each government ministry; and support agencies or collaborating partnerships through public-private networks. 

The central coordinating function’s role is to manage the negotiation of ICT investment decisions and to formulate crucial design principles. At the beginning of the digital transformation, this function was assigned to the Prime Minister’s Office, but it moved in 2000 to the Ministry of Economic Affairs and Communications, where it is today – in the Office of the Chief Information Officer.[44] RISO is part of that ministry and plays a key role in coordinating and implementing policy.[45] 

The government ministries and their agencies are responsible for decentralised functions – their own ICT strategies, investment, data, and information architecture. “The structure of government in Estonia is decentralised, meaning that much of the responsibility for information systems development is delegated to IT managers in ministries, county governors, boards and inspectorates.”[45]

Public-private networks are used for developing the services and applications needed for the information society, where there is mutual benefit to all parties involved. For example, the State Infocommunication Foundation, which provides communication-related services for public institutions, and the RIA, which develops common information systems in the Estonian administration and is in charge of Estonia’s e-government infrastructure.[45][46][47][48] 

Measurement Good

Estonia’s early strategic policy document on its digital transformation did not contain measurable goals, and hence progress could not be tracked or measured. However, in the latest strategy document, Digital Agenda 2020 for Estonia, the goal has been further crystallised and contains indicators on how progress will be measured.[12] In addition, the government works together with the University of Tartu to analyse the impact of e-government, using government records. 

Estonia’s state institutions gather data from the logs of X-Road, eID, internet voting, and various survey data measuring technology usage.[49] The Centre for IT Impact Studies (CITIS), a research centre which was founded in 2015 at the University of Tartu, works with the government to make use of this large-scale data in order to evaluate the economic, social and political impact of e-governance.[50] According to Kristjan Vassil, a senior researcher at CITIS: “We use the data which is being produced from the public sector and we do two things. We assess the impact of e-government and we use the data to prototype the next generation of public e-service.”[51] The goal of their research is “to create information streams and models to help governments make better predictions that can improve policymaking and decisions in the future”.[51]

Alignment Good

There was close alignment between government and the private sector, particularly the banking sector, during Estonia’s digital transformation, as evidenced by several successful partnerships and ongoing collaborations such as Tiger’s Leap, Look@World, the eID project and X-Road.[4] The reason for this positive relationship was that the banks benefited as much as the government in pushing forward the digital agenda. The banks were able to identify their customers securely online instead of in person, which greatly reduced the need for physical offices.[4] The government, on the other hand, benefited both financially and through accumulated expertise.

However, alignment between ministries and agencies is more uneven because their digital agendas and databases were created independently of each other. “While the decentralised digital agendas of line ministries have provided needed agility, they have also created uneven digital capabilities across different departments and agencies. This reliance on bottom-up departmental initiatives seems to necessitate stronger and perhaps more formalised coordination structures than are currently present.”[16]