Estonia: From Bankruptcy to First World in Twenty Years

Updated on January 23, 2020
TessSchlesinger profile image

Growing up in a political family, Tessa joined her first political party at 14. Her interest in progressive politics & economics continues.

Estonia – From Bankruptcy to First World in Twenty Years

When the USSR broke up in 1992, virtually all the satellite countries which received their independence were bankrupt. Estonia, in northeastern Europe, was no exception. Inflation ran at 1000%, there were no goods in the shops, and gas/petrol was hard to find. The country would have compared well with any undeveloped country, yet in twenty short years, the government of the country educated its people to first world level with first world skills and an economy to envy.

This amazing bridge acts as architectural art as well as serving a purpose.
This amazing bridge acts as architectural art as well as serving a purpose. | Source

21st Century Education for Everybody

Mart Laar, the prime minister at the time realized that education was the single most powerful tool that would bring his country prosperity. With that in mind, he designed a syllabus that comprised learning language and coding from day one at school. That’s right! Learning to write programs began on day one in grade one. Along with reading, writing, ‘rithmetic, the 21st century demanded trilingualism and outstanding skills in cyber world.

Within six years, every school in Estonia was online (that was 1998 with the Internet barely six years old), and by the dawn of the Millennium, Parliament made access to the internet a human right.

The country spends the largest part of its education budget on junior school where it is 100% focused on teaching kids to write software. President Ilves believes it is vital that children grow up with skills that can be used in a robot economy.

The government understood that few would survive without digital and coding skills in the 21st century.

It has the second highest literacy rate in the world - 99.8% - with only North Korea having a higher one.

Estonia is the most atheistic country in the world with only 16% of its people believing in a God.

Over the past two decades, this former Soviet-controlled nation — home to just 1.3 million people, or under one-sixth the size of New York City — has quietly become one of the most tech-savvy countries on earth.
Over the past two decades, this former Soviet-controlled nation — home to just 1.3 million people, or under one-sixth the size of New York City — has quietly become one of the most tech-savvy countries on earth. | Source

An Open Economic System

Rather than kick out ‘foreigners,’ the president opened the doors of Estonia in a most unusual way. He offered e-citizenship to anyone who wanted to base their business in Estonia. To do that, they simply had to visit once, complete a thirty minute form, and they were done. They need never return to the country again, but they could base their internet business in Estonia, thereby paying Estonia taxes (less than elsewhere), and bypass numerous other rules which were instigated by other countries who ran closed shops (e.g. South Africa, China, and some other ex-USSR countries).

Those from other countries could also buy real estate as well as live there (permanent residence being easily acquired).

In addition, import restrictions were removed, thereby allowing cheap access of 21st century goods to its citizenry,

Protection of the elite was removed so that it had a flat structure and class could not impede the growth of the bourgeois.

Consequently, there was massive investment in the country, and by the late '90s, it had managed to lay the foundations for a leading technological country – all in the space of six short years.

Libertarians will be happy to know that the prime minister used Milton Friedman's principles in order to create this success story.

Infrastructure in Estonia

The infrastructure of a country is vital to its performance. It includes roads without potholes so traffic can move fast, safe bridges over rivers and dams, excellent, super-fast rail transport (bullet trains) to transport both people and goods, reliable flights, great bus service which is always on time, and other innovations such as fast digital systems. Rather than going for analog which was the cheaper option in a country which was trying to recover from bankruptcy, Laar created a digital network which all citizens could use. No one was left out of the loop Every citizen mattered.

Public transport is free for all citizens, so there is no need to own a car. It's also first world, made to get people from A to B fast.

Fast transport is vital. This bullet train links Germany with Estonia.
Fast transport is vital. This bullet train links Germany with Estonia. | Source

Estonia Joined Nato on March 29, 2004 and Was Admitted to the European Union on May 1st, 2004

Ten Facts about Estonia

  1. Estonia has 1.3 million people, yet it has developed to such an extent in twenty short years that it can compete with China in terms of trade. It is believed that small countries can compete with big countries if they have sufficiently developed robotic and artificial intelligence sector.
  2. It holds the world records for number of start-ups (that’s what happens when you educate people). Some of the innovative Estonian start-ups include: TransferWise, Sorry As a Service, Jobbatical, AddGoals, Faralong, Contriber, Fundwise, Greenhouse, pocopay, Voog, MRP Easy, CreavieMobile, Erply, Zeroturnaround, Marinexplore, Kazaa, Grabcad, Pipedrive, Vitalfields, Flirtic,Skype, Playtech, Fitsme, and Click and Grow. It takes eighteen minutes to register a new start up on the web.
  3. Virtually all official (government) business is online, so people can do what they need to do where they are. This includes access to their health records. The web is also used for voting, paying their tax, banking, medication scrips, and education.
  4. It has the lowest debt to GDP ratio in the EU.
  5. They are number one in Freedom of the World report.
  6. Estonians have an electronic ID card which can be used online to acquire services, prove identity and provide an electronic signature.
  7. Estonians pay a flat tax which means that no deductions are allowed. Average income for workers is $16,000 per annum. Taxes are paid online in five minutes.
  8. Those who register for E-citizenship will be allowed to open Estonian bank accounts. This is useful because most countries do not permit one to hold bak accounts outside one’s own country. In addition, more and more countries are demanding proof of address.
  9. Most politicians are technical gurus – even the current prime minister knows how to write software.
  10. Estonians pay for parking with their mobile phones.

Like most of the old world, it has wonderful architecture.
Like most of the old world, it has wonderful architecture. | Source

Would you be interested in E-Residency?

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Getting to Estonia

Whether you want to get to Estonia for a vacation or are keen to try out their e-residency program, here's how you do it!

First go to either Skyscanner or Google Flights as they offer the best prices at about $1000 return for a week. That's more than you need, as registration for e-residency takes thirty minutes maximum. Staying in a decent hotel for a week will cost you about $600 (with breakfast included). If you prefer hostels to hotels, the week will set you back about $230.

Naturally, you will need a passport. If you live in countries outside the EU you need a visa. Generally, the earlier you apply for visas the better. Also check vaccination requirements.

The capital city is Tallinn so that is where you will be traveling to initially.

If you are in a Schengen country, there are options beside flying. You can travel by bus or train, or a combination.

If you want to create something similar to an Estonian success story, remember the basics:

1. Education involving many languages and learning to write software from grade one.

2. Open economic policies.

3. Flat tax structure - no loopholes and no exceptions.

4. Get rid of privilege for the rich and powerful.

There you have it!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2016 Tessa Schlesinger


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