Estonia stays ahead of moving target

TALLINN - Estonia.eu, a Web site dedicated to promoting the country, describes Estonia as an “e-country with a favorable business climate and cost advantages that is also open to growth. Successive governments have adhered to the principles of Estonia’s economic success: a balanced state budget, liberal trade and investment laws,” and a strong currency. Today, Estonia is well positioned to face the challenges of the future, and in the past 20 years it has shown remarkable progress. But what about the future? Experts agree that success is not static, and in order to be relevant and competitive, constant innovation is required.

Can Estonia be successful in the future? This article delves into Estonia’s outlook and innovation in the well-known and expected area of information technology, as well as other areas of possible advancement. History has shown that innovation cannot come from a single sector. Innovation must be a progression in most, if not all, areas of economic and civic life.
Professor Katrin Nyman-Metcalf, chair of Law and Technology at Tallinn Law School at the Tallinn University of Technology, sees innovation in Estonia as an integral part of development. “Estonia is a very small country with a complicated history that has only been independent for 20 years – at the same time it is recognized as one of the success stories in Eastern Europe. As I travel and work all over the world, I often get the question what is the secret of the success, and I think the ability to be innovative and to support innovation is a large part of the reason for the success.”

Urmas Koiv, chairman of the board of InnoEurope, proudly points to the “Innovation Scoreboard 2010, released in March 2011 and compiling data from 2008-2009 [which] ranks Estonia together with Austria, Belgium, Cyprus, France, Ireland, Luxembourg, Netherlands, Slovenia and the UK [as a] group of countries who are leading innovation.” IT development and advancement does lead the Estonian innovation front. Koiv points to Skype and the ICT sector in general; banking services, which are some of the most advanced in the world; a vast number of public services which have moved to the Internet and have made life easier for citizens.

Indrek Vimberg, managing director of the Estonian ICT Demo Center and project manager for ICT Export Cluster, also sees technological innovation at the core of Estonia’s future. “The first thing that comes to mind is Mobile - ID, the nation-wide legally binding digital authentication and digital signature, launched in 2007. A SIM - card inside the phone has 2 private keys, just as the ordinary ID - card [launched 2002], but functions as a caller ID, digital authentication and signature at the same time. The next challenge for mobile – ID and digital signature is mobile voting, which is only a question of application development and will be available in the 2013 elections for local municipalities.”

Innovation in other sectors of the economy is, to a large degree, e-based, too. An example of innovation in healthcare is the e-Health system, currently used nationwide and launched in 2008, as well as the e - Prescription, launched in 2010. e -Health provides doctors with access to a patient’s medical records, allows monitoring, diagnosis, prescriptions, safekeeping of sensitive information and emergency contacts. “Possible benefits of this could be prevention of diseases by learning more about each individual, his genes, habits, favorite food and lifestyle. The patient has the possibility to monitor doctors’ visits to his/her electronic medical record, which is a step towards data protection. Paper records are not as well protected from unwanted eyes!” notes Vimberg. He indicates that a very important innovation is the e-School. “e- School was launched in 2002, and since then, Estonian pupils, teachers and parents have a clear overview about home-work, grades, absences and course schedules, which are all updated daily on the e-school Web site. 95 percent of our children are covered with the service and it has a positive impact on the quality of public education.”

Prof. Nyman-Metcalf disagrees and sees education as less obviously innovative in Estonia.  “It varies very much how innovative it is at different levels. It [also] varies between parts of the country, different educational institutions, even between persons and departments in the same educational institution,” she says. “Estonia has been ahead of many richer countries in the region in implementing new ideas in education, such as e-learning, the Bologna principles, etc., but the application and implementation is uneven.”

Cathy Wang, User Experience Designer at Klik Logik and a Canadian transplant, agrees.  “I think Estonia can use more IT innovation in education. I am surprised to find that for such a high tech society, there are very limited online learning curriculums or platforms for more accessible learning.” In education, however, IT solutions can only go so far. Tallinn Law School’s English language master’s degree program, for example, contains a large amount of mandatory e-courses that are supervised by teachers. While they are accessible and have some advantages, their quality and the instructors’ level of preparation and qualification range from excellent guidance and active involvement to confusing busy work by lecturers with no teaching and/or professional credentials.  E-courses are cheap for the university, but even at their best do not provide the same educational benefits to students as do lectures with highly qualified teachers.

Koiv agrees that “Estonian education has distinguished itself by keeping the costs of education relatively low. At the same time there’s a question of sustainability - is the level of salaries paid to teachers just and enough for acquiring top talent? I still believe that innovation in education is strongly related to individual teachers.” Technology cannot substitute for professional, experienced and dedicated educators. It is difficult to strike the perfect balance of providing innovative education, yet one that is long-term relevant and universally recognized.

Can Estonia innovate and influence large economic sectors within the European Union? Prof. Nyman-Metcalf thinks that there is a possibility for this. “To be on the cutting edge of new developments, a small country cannot over-reach itself, and building on existing developments in, for example, the IT field, may be more productive than trying to cover all areas. However, if interesting research and development projects are presented and if funding was also available in new areas, nothing should be excluded from support in principle; any innovative idea should have a chance to compete for support.” 
Koiv points to the sales and export sector, where Enterprise Estonia recently launched an initiative called Export Revolution. The aim of the initiative was to bring together 25 Estonian companies that are interested in expanding their export markets and 25 young professionals who possess the needed international experience to lead sales abroad. There is also a “Talent to come home” project, which aims to bring talent back to Estonia.

Innovation is less obvious in traditional sectors, but it is nevertheless present. In the construction sector, much of the attention has been directed toward creating the ‘smart house conception,’ which would allow a household to minimize the costs of maintaining the house by effectively using insulation and layout to conserve heat. In food, there has been a wide range of new products introduced to the market, starting with ‘Hellus,’ a brand of dairy products which is the result of cooperation between scientists and traditional dairy farmers. “I believe that its agility is something that is unique in terms of Estonia’s strength, despite its size. Also, I believe that the size of a country does not limit its boundaries of innovation,” says Wang.

As with every country, Estonia has areas that could benefit from a higher speed of innovation. Koiv cites Finland as an example of innovative approach in tourism and urges Estonia to follow suit. “Flying to the East with Finnair gives you just an excellent understanding of how well our neighbor country has mastered the ability to secure a steady flow of tourists from Asia.” Wang agrees: “I think Estonia can work on the diversity of culture and internationality, and, of course, being able to sell its uniqueness better. The general foreigners’ impression of Estonia is vague. Estonia needs to position itself on a global map as an international society.”

Another area to improve is energy. Currently, Estonia is relying heavily on coal, which is one of the least efficient sources of energy. More work could be done in finding greener alternatives. EU surveys routinely show that young people prefer to work for large organizations, instead of starting their own enterprise. However, small and medium business has an important role both in the local and the global economy. A stronger emphasis on, and support of, entrepreneurship would benefit Estonia. Yet Vimberg sees education as the sector most needing attention. “We need to improve the education system in Estonia. To be competitive on the global market in the field of ICT we need more IT specialists, and this requires changes in the current system: higher education and lifelong learning should be available to all citizens for free.”

Estonia’s strongest sector – IT – is also, predictably, the most innovative. Partly because IT demands constant innovation, and partly because as the strongest sector, it gets the most attention, funds, and talent. Experts agree that this is not necessarily a negative. For a small country, niche specialization is a smart strategy. The introduction of the euro currency further eases Estonia’s entrance into the global market. Continued innovation in IT, a focus on bettering education and retaining talent, as well as bettering the development of energy efficiency, tourism and entrepreneurship will allow Estonia to continue as a success story.