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The New Yorker published an article in 2017 called "Estonia, the Digital Republic," with the subtitle "Its government is virtual, borderless, blockchained, and safe." Has this tiny post-Soviet country discovered the path to the future?' This sums up the buzz surrounding Estonia's digital government: it is perceived as a significant success from the outside, and has been acclaimed in mainstream media outlets such as the Financial Times, New York Times, and Forbes. Given its accomplishment, it's astonishing that this storey, and its key drivers, have yet to be thoroughly recorded in academic studies. We do just that in our new working paper, which includes interviews with all of Estonia's digital government's key architects.
What were the primary factors that influenced the company's digital transformation? What does Estonia's digital revolution tell us about the future of (digital) governance, maybe most importantly?

What does it mean to be successful?

The success of Estonia's e-government infrastructure is based on two key pillars, both of which were implemented in 2001 and fundamentally create digital access to the state and digital citizens: the data infrastructure x-road and a mandatory national digital ID. X-road is a data exchange layer and interoperability platform for existing decentralised databases that can be used by both public and private sector organisations. It is platform and architecture agnostic, allowing for secure data exchanges and the identification of trusted actors in the delivery of digital services. Citizens can be digitally identified and use digital signatures thanks to the digital ID. Together, x-road and the digital ID enable users to digitally sign any contract, use virtually any government function, get prescriptions, file taxes, vote, and more.

More than 2,300 governmental and commercial services use x-road, and Estonia's 1.3 million people have used the digital signature nearly 350 million times. Almost all personal income tax declarations and medical prescriptions are done online, and most medical records held by hospitals and family doctors are accessible online; 30 percent of votes are cast digitally (in both local and national elections); almost all personal income tax declarations and medical prescriptions are done online; and most medical records held by hospital and family doctors are accessible online. According to the Estonian government, its digital infrastructure has resulted in annual savings of around 2% of GDP and more than 800 years of working time for both the public and commercial sectors.

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Estonia was the leading nation in Europe in terms of digital public services in 2017, according to the EU's Digital Economy and Society Index (DESI), but it fell to second place in 2018. However, Estonia's digital achievement is less apparent in most other e-government rankings. Estonia is placed ninth in DESI's overall ranking for 2018, and only 16th internationally according to the UN's 2018 e-government study. This cognitive dissonance reflects the nature of Estonia's digital success: high accolades and leading positions in global news outlets while relatively low rankings in overall digital transformation indexes (for more on this, read Drechsler's contribution in this new book). Estonia is praised for its generally accessible and mandatory digital public service infrastructure, which serves as the backbone of government service delivery. Other digital products, such as digital democracy, citizen involvement, or digitally altering governmental services like the welfare state, are not part of Estonia's digital success.

In worldwide coverage, the unique character of Estonia's digital achievement, as well as the mismatch between technological infrastructure and digital adoption, is frequently missed. Estonia has effectively developed its own legacy system as its digital government has become increasingly focused on the x-road, a trend that the original planners hoped to avoid. Indeed, in the early 1990s, the emphasis was on securing digital infrastructure as much as it was on achieving societal goals using digital methods. However, the progress of digital government appears to have stagnated in the 2000s, when Estonia blazed through an economic boom that left rising inequities in its wake.

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Estonia's digital government has been caught up in its own success in certain ways: in 2014, the country created an e-residency programme, which makes some digital public services (such forming a corporation and paying taxes) available to people all over the world. While more than 40,000 e-residents have joined up — including the Pope, who was recently granted e-residency — and more than 4,000 firms have been founded by e-residents, the initiative has been criticised in the United States as a show-off that facilitates money laundering. (Like India's Aadhar, Estonia's digital infrastructure was challenged in constitutional court over e-voting; like India, the Estonian court'sided' with digital solutions.)

While many digital services have helped individuals and businesses in Estonia become more efficient, citizen satisfaction with critical services like healthcare and education has remained poor. According to OECD rankings from 2014, Estonia scored fifth from the bottom in terms of satisfaction with health services (it was first in 2007) and second from the bottom in terms of education system satisfaction (in 2007 it ranked third lowest). Furthermore, Estonia scores low on a number of important social measures. In 2016, it had the biggest gender pay gap in Europe and a Gini index that was greater than the EU average. While citizen satisfaction is not the only indicator of the quality of public services — and digital infrastructure is only one component in the delivery of sophisticated services such as health and education — it does suggest that basic public services are improving.

How did you achieve your success?

Even though such a central agency was originally envisioned to manage (among other things) key public registries, Estonia has never had a central office for digital transformation, similar to the UK's Government Digital Service (GDS). Starting in the early 1990s, when Estonia regained independence, and continuing to the present day, Estonia's digital transformation has been a long and ongoing process. Much of this procedure has been haphazard and unstructured. For example, rather than responding to domestic constraints and planning procedures, many strategic policy statements for digital transformation have followed the rhythms of European (structural) funding periods. Similarly, a number of overlapping and generally self-managed public-private networks have supplied the informal dynamic capacity and capability for change, albeit only a handful of these have been institutionalised or formalised. Above all, the process was founded on what Albert Hirschman refers to as the principle of the hiding hand: policymakers push visionary changes without anticipating all of the challenges and risks ahead of time, an approach that can lead to unexpected learning, creativity, and — in this case — success.

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