Thirty-six years ago, American writer and futurist Alvin Toffler wrote his famous The Third Wave, outlining the inevitable transition from a “Second Wave,” characterized by an industrial society, to a “Third Wave,” characterized by what he calls the “Information Age.” The Information Age, as Toffler described, is defined by the shift from traditional industry that the Industrial Revolution brought through industrialization, to an economy based on computerization or digital revolution.
Though written years ago, we can clearly see Toffler’s predictions come to life today, through the digitalization of our lives and the globalization of business. And yet, archaic “industrial society” systems of personal identification, economic transactions and business registration still fiercely limit the opportunities of governments and the citizens they serve.
In today’s digital world, a global economy defined by state borders and the citizenship of its participants no longer makes sense. Many small companies have a desire to market their goods and services across continents, small countries seek larger consumer populations, digital nomads roam the world freely and one business transaction can involve a contract signed by people located in multiple countries.
Individuals who want and need to participate in this global economy require a secure way to verify themselves online, run a business from anywhere in the world and trade in multiple markets freely. Governments must be up to the task of providing digitally oriented services for these individuals or risk becoming obsolete — “increasingly out of date, unable to cope with today’s complexities,” as Toffler phrased it.
When Estonia regained its independence in 1991 from the Soviet Union, it immediately identified the difficulty of physically serving a small population spread across a large territory (Estonia has a bigger geographic footprint than the Netherlands or Switzerland). It is not realistic to put a bank branch in every small town, or have a full-service government office in each village. As a result, both the private and public sectors decided to bet on the development of digital solutions and e-services.
The country also recognized that in order to compete economically as a small country in a new digital world, it needed to seek a competitive advantage by fostering a business climate that produced innovative technology. One of the ways Estonia was able to successfully achieve this goal and produce companies such as Skype was for the government to offer technology-driven services that empowered the innovation taking place in the private sector. Today, 25 years since independence, Estonia has one of the most developed national digital infrastructures in the world.
The Estonian government has put digitalization at the center of public services, including digital ID cards for all residents, online voting and the online submission of tax returns, which takes two minutes to complete on average.