Lesson from Estonia
When Estonia regained its independence in 1991, only a third of its people had a telephone; only government offices or large companies had personal computers. Few people even knew about the Internet or heard of Apple or Microsoft. Twenty years later, Estonia is a world leader in Information Technology (IT) in Europe with hundred thousand new jobs created in IT industry alone. Today Estonia receives more foreign investment per capita than any other country in Europe and quickly catching up in GDP with western European countries such as France, Germany with GDP growing from 34% in 1996 to 75% in 2010 and currently is rated as one of a few high income country where standard of living is similar to advanced countries such as the U.S. UK or Germany.
Why Estonia is doing so well when other Eastern European countries are still struggling? It all begins with the vision and leaderships of a young 32 years old prime minister Mart Laar. In an interview with European newspapers in 2000, he said: “Our country is very small with a population over one million people. Before World War 2, we were a small agriculture country with very limited resources. We could not compete with larger countries such as Poland, Hungary and CzechRepublic in manufacturing or heavy industry so we have to rely on the capabilities of our people. Since we are no longer part of the Soviet Union, we have to find something that is least expensive, with minimum capital investment, to rebuild our economy and create jobs to our citizens. We select Information Technology (IT) because it does not require a lot of money, the only investment we need is good education, which fit our culture very well. Began in 1993, we stared with a small education improvement program that focus strictly on information technology to all college students.”
Since Estonia is only 80 kilometers from Finland, it is easy to adopt trainings from its technology advancing neighbor. The government began sending teachers to Finland to receive trainings in Information Technology to update its old curriculum. Mr. Laar said: “Education improvement must start with the teachers. Everything in education depends on the abilities, the motivation, and the skills of teachers. Without the teachers, nothing works so we invest everything in the development of teachers. We want every child in our country to have the best education possible because they are the future and they can rebuild our economy. Since we cannot do everything at once, we focus on only one thing: technology education.”
In less than six years, Estonia was able to replace its old phone system infrastructure built by the Soviet to a new wireless digital system that covers the whole country. Estonia government began a nationwide project to equip all classrooms with personal computers and by 1998 all schools were online. Having strong skills in IT, Estonian was able to implement an effective “e-government” system where everything was placed on line to get rid of the traditional long line in front of government offices. Skilled IT workers were also developing a strong private sector e-business with online stores to replace traditional physical stores. The most exciting success came in 2003 when two students in EstoniaUniversity, Niklas Zennstrom and Janus Friis developed a new technology to make phone calls over the Internet and created a small startup called Skype. Few months later, six students developed the first file sharing network called Kazaa, which encouraged others, all over the world, to develop music and movies sharing websites. Among them the most success video sharing is You Tube.
In 2005, U.S company eBay bought Skype for $2.6 billion and suddenly the two Estonian students became “Instant billionaires”. This event encouraged a new generation of IT entrepreneurs and the entire IT industry exploded with hundreds of startups. Because Estonia is a small country with limited domestic market, most startups are focusing on global business. The fastest growing company is TransferWise, a money-transfer service with several million customers across Europe and America. According to the World Bank, Estonia high-tech industries now account for about 28% of Estonia's GDP. Today Tehnopol, a business center in the capital Tallinn has over 150 major technology companies. Estonia is considered country with a friendly business atmosphere, strong free trade policy; strong currency where new businesses could be registered in few days without delays and everything can be done online. As a country with the highest IT skills, Estonia is able to attract a lot of foreign investments; many technology companies open development centers there to take advantage of the plentiful of skills workers which add more to the local economy.
In 2007 Estonia was the first country in the world that allow online voting in a general election. It has the fastest broadband speeds and most of its citizens do business using their smartphones. All citizens' health records are digitized and stored in the cloud and people filling annual tax online. A Wall Street Analyst said: “Today Estonia is one of the most advanced countries in technology in the world, by far more advance than the U.S. UK and many western European countries. It is an e-country where everything is digital, from e-banking, e-paying, e-vote, e-tax and its e-government system is the best in the world.”
How does a very small country develop such a strong technology culture in a very short time? Although it began with a completely new education system based on the best training programs from Finland and Germany but the main reason to its success was the development of its teachers training that focus on technology. All teachers, from elementary to universities were trained in technology to develop the next generation of highly skilled workers. In a short time of ten years, Estonia also changed from an agriculture focus country to a high technology country. In the interview with European newspapers, the Prime Minister said: “We are lucky because we started from nothing. As a small country, we do not have much so it is easy to begin with a blank paper.” But he added that Estonia's success is not about technology BUT about shedding the “old thinking”. He said: “Estonia is a very small country. It is more a small village than a country where everyone knows each other; we work together and change our thinking together. After independent, we realized that the future belong to the young generation so our people select mostly young people to government offices and let them decide their faith of our country. I was selected when I am only 32 years old as Prime Minister which is unheard of in any country. We focus on a new “mind set”, a new thinking that begin with education. We have a program called “ProgeTiiger” (Programming Tiger) to teach all students the basics of computer and programming as we want to catch up quickly with other neighbor countries.
Because of this technology focus, because of this new thinking we succeed. In other countries, most high-school students want to be a “rock star,” or “movies star”. But in Estonia, high school students want to be IT entrepreneur. AND that is what we consider “Shifting the thinking” toward building our knowledge society.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
