Is Estonia a developed country

Digital administration in Estonia

Role model or special case?

Hardly any other country in Europe has advanced the digitalization of its public administration as far as Estonia. In a direct comparison, Germany in particular falls far behind, as our country is at best within the EU average in terms of digitization.

After all, Germany is at the forefront of the digital integration of its industry, and Estonia is also ahead. However, there is not much big industry in the small country on the Baltic Sea, but rather small and medium-sized companies, especially in rural areas. The labor factor on the northern EU's eastern border is still so cheap that the purchase of expensive IT machines is not yet worthwhile.

If you look at the digitization of Estonia across all sectors, the country is not world class. According to the Digital Economy & Society Index 2018, Estonia is only better than the European average in terms of digitization. Ahead of him are Denmark, Sweden, Finland, the Netherlands, Luxembourg, Ireland, Great Britain and Belgium. Estonia is followed by Spain, Austria, Malta and Lithuania, and only after that comes Germany. The fact that Germany is doing so relatively poorly is due in particular to the level of development in digital administration. Why is Estonia ahead here? What happened in the Baltic Republic?

Country and people, public service

Estonia has few natural resources. The country with its 1.4 million inhabitants relies above all on the education of its citizens and their entrepreneurial freedom. It is markedly economically liberal and, after its independence in 1991, consistently followed a doctrine of strict liberalization, deregulation and privatization. The Estonians are Protestant, staunch EU supporters and yet the majority are quite nationally oriented, which is mainly due to their relationship to their big neighbor Russia, the common painful history and the large Russian minority in the country. The Russian minority does not appear to have the same access to digital services as the Estonian majority.

Like many other European countries, Estonia also has an aging population. In contrast to Germany, for example, Estonia is losing many young qualified people through emigration. Skilled workers and especially IT specialists are desperately wanted in Estonia. The gross national product in Estonia is 18,000 US dollars, in Germany 45,000 US dollars. Unemployment is four percent. So there is practically full employment. The average gross income is currently 1,350 euros.

Relatively wealthy people live in the capital Tallinn, the old Reval. Outside Tallinn you can see more poverty. An Estonian has an average pension of around 400 euros. Some poor elderly people receive a "Soviet pension" of around 140 euros per month, which Russia pays in rubles. Devaluations of the ruble hit these people very hard. Outside Tallinn, rents are around three to four euros per square meter of living space, in coveted Tallinn around ten euros.

Estonia has very simple income tax law, which is why there are hardly any tax advisors. The “tax return on the beer mat” is a reality in Estonia. A quarter of Estonian income tax returns are submitted within 24 hours of the reference date. That this is the case is also due to the digitization of public administration.

The Estonian administration is divided into relatively small units. There are over 100 agencies that perform some kind of state administration function, but there are no regions, no regional autonomy. In 2017, Estonia reformed its local authorities. The 213 became 79 self-governing municipalities, including 64 rural municipalities and 15 cities. The municipalities exchange ideas with one another, autonomously pursue their respective tasks, but use economies of scale.

Civil servants can be dismissed overnight in Estonia. At the same time, they are very flexible. An IT expert who has worked out a certification law as an administrative officer can seamlessly become the managing director of a private certification service provider. “There just aren't that many experts. We know each other, ”says a government representative.

The civil servants have their own internet portal through which they are digitally networked. One is to be created soon for the municipal employees.


The Estonian mobile network offers 100 percent 3G, and 90 percent 4G. 5G is about to be introduced. Broadband is available across the country. It is beneficial that there are no mountains. 95 percent of households have broadband access.

Estonia was the cybernetic center of the Soviet Union. There were a lot of mathematicians there. “Tallinn has always been a smugglers' place,” explains a representative of the city administration, not without pride. Nokia had production facilities in Estonia in the 1990s and was also a role model in digitization. Estonians are particularly proud of Skype, which was founded in Sweden, but four of the six founders were Estonians.

Digitization began in Estonia with the banks. In the early 1990s, banking services had to be redeveloped, based on the latest technology available. The President of Parliament Siim Kallas helped steer this process in Estonia as a banker. The former EU Commissioner is optimistic about digitization with no ifs and buts. He answers questions about downsizing in administration with a smile and a shrug. He has no information on this. The question just seems strange to him, it should be noted. Because hire and fire is quite normal in Estonia.

Estonia owes its lead in eGovernment not only to its pioneering spirit. Tallinn had to rebuild the country's administration at a time when digital solutions were becoming commonplace. This has favored digitization. In addition, the clear focus on the new technological possibilities allowed Estonia to draw attention to itself and to underline its regained statehood. Many Estonians see the establishment of the digital state as a national obligation.

In the 1990s, over 500 public offices and digital hotspots were set up, for example in city libraries and schools. The state financed free internet training with the support of the EU. Internet access has been guaranteed everywhere in Estonia since 2015. The majority of citizens have their own access. But even today, public institutions such as schools and libraries still offer free training. The Estonian education system is clearly focused on digital skills. In 1997 the so-called "Tiger Leap" took place, the full digital equipment for all schools. Estonia has around 500 schools.

The Estonians trust e-solutions, which has also benefited the digitalization of public administration. They have a digital mentality, just like their Elder Statesman Siim Kallas. In 2002, 36 percent of Estonians used the Internet. In 2006 it was already over 60 percent, in 2009 over 70, 2013 over 80 and 2018 over 90 percent. Wherever there is the Internet, citizens can communicate with the administration around the clock.


On the way to a digital information society, Estonia did not define long-term goals, but principles for digitization and thus remained flexible in its development. A very important principle is “digital first”. The use of electronic administration is therefore a priority. The principle of one-stop government applies. Citizens can access it via the central state portal. Almost all administrative processes can be carried out there. Every citizen has an official email address through which he communicates with the administration. The once-only principle also applies to the Estonian administration.

The authorities are not allowed to ask the citizen whose data has already been recorded for his data. Although the individual authorities are responsible for certain data records, they exchange them with one another or make them available to authorized persons in the joint system. Every data exchange is based, and this is particularly important, on a legal or contractual basis. The principle of transparency applies: The citizen can use a "data tracker" to track every information query and thus check the authorization of the query. The ID, which he must use for every query, protects against data misuse, for example by a police officer or a doctor (exception for the police: criminal investigations). Unlawful data requests will be punished. This corresponds to the ex-post control required by EU law.

According to the Estonian government, "administrative silos" have been broken. Digital administration saves time and money because citizens no longer have to go to the authorities. The state saves because it needs fewer staff.

There is no central state database, but a large number of decentralized databases with their own security servers, which, connected to one another, work similarly to a blockchain. The "X-Road" developed by Estonia and Finland around 2000 is a system that allows data to be exchanged between authorities in real time and, thanks to its decentralization, offers very high security standards. 504 state institutions and 651 private companies take part in the Estonian X-Road today. Finland and Estonia are now working on an international X-Road.

Digital identity

The decisive turning point for the public service was the introduction of the digital ID card in 2001. Since 2002 there has been an identity card or residence permit with a personal digital identity, the so-called eCard or digital ID card. Newborns are given the eleven-digit ID on a bracelet while they are still in hospital.

According to the Estonian government, the identification system with the electronic chip card is one of the most secure, most advanced in the world, at the level of a military IT application. Estonia ranks 5th in the world for cybersecurity. It has a cybersecurity partnership with the United States. Cybersecurity was an important issue during the 2017 EU Council Presidency. In the same year, there was a strong Russian cyber attack. That was a wake up call. Therefore, Estonia was the first state to introduce a blockchain solution in the state sector that is said to be secure against such attacks.

A digital signature has the same status in Estonia as a handwritten one. Citizens initially needed a laptop, card reader and ID card, i.e. their ID card with a chip or their corresponding residence card.

70 percent of citizens use the digital possibilities of the ID card. The remaining 30 percent can still physically perform all administrative processes. But: The Estonian administration works digitally as shown. There are only three things that cannot be done digitally: getting married, getting divorced and buying a property.

The first online service available in Estonia was the electronic tax return. 95 percent of citizens now complete their tax returns electronically. This high participation was also facilitated by an incentive system. Repayments are made three months earlier if made electronically.

The area of ​​health, which is particularly sensitive in terms of data security, was a pioneer for digital applications. The digital medical record was introduced back in 2008, which allows doctors to access their data when authorized by the patient and also enables digital prescriptions and medication orders online.

Electronical voting has been possible since 2005. 47 percent of Estonian voters voted electronically in the European elections. The turnout may have increased by up to a third as a result of this change. However, unlike any other ID card-based digital innovation, electronic voting is politically controversial among Estonians.

From the beginning, the later inclusion of private services, made possible by the chip on the digital ID card, was considered. Banks and insurance companies and other companies also work via mobile or Smart ID, if the citizen so wishes. Companies, banks and insurance companies, too, only have access to the data that is relevant to them.

The private sector contributed financially to the introduction of the digital ID card and passed some of the cost savings on to customers as an incentive. Cash is becoming increasingly uncommon.

Even if Estonia is way ahead in the digitization of its administration, the change is far from over. The city of Tallinn is already thinking beyond email. Studies on digital communication behavior have shown that Generation Z (born between 1998-2020) places more value on personal encounters than the two previous generations and hardly ever uses traditional e-mail.

In Germany, an Estonian way of digitization would be difficult due to federalism. Estonia has scaling effects that cannot be exploited in Germany. The moment of Estonia's state independence also coincided with the new technological possibilities. In addition, due to the “census ruling” of the Federal Constitutional Court on the right to informational self-determination from 1983, there is no electronic ID comparable to the Estonian ID card.