However, in spite of its population of a mere 1,3 million and the third smallest GDP in the European Union, Estonia has in recent years been heralded as the promised land of information technology.
Industrial PRIME has been eager to learn more about Estonia. At this year’s Subcontracting trade fair in Tampere, we got lucky and had a chance to meet with a man who has been part of Estonia’s miracle practically ever since its first faltering steps after the collapse of the Soviet Union.
Mr Siim Roos, Investor Consultant at Enterprise Estonia (EAS), began his career in banking in 1995. According to him, banking is where it all began.
”After the Soviet Union was gone, we had nothing but paper,” Roos recalls. “We had to start everything from scratch. In my opinion, those poor conditions worked for our benefit. What we built during those years formed a solid foundation for the development that followed and the amazing IT infrastructure that we now have.”
Estonia has since brought the world such visionary innovations as Skype and, more recently, the peer-to-peer money transfer service TransferWise. In 2007, Estonia became the first country where citizens could vote online in a general election, while its broadband Internet speeds have been ranked first worldwide.
In addition, the Estonian ID card is perhaps the most versatile form of identification in the world. By using the ID card you can sign documents, file your annual tax reports, have digital prescriptions, and even start a company. And all this can be done without ever leaving the side of your laptop. No waiting in line, no paper, no hassle. Just pure efficiency.
More recently, Estonia has become the first country in the world to offer e-Residency, proudly pioneering the idea of a country without borders.
“By making a single visit to Estonia, every world citizen can now apply for a government-issued digital identity,” Roos says. “E-residents can use practically all the services that are available to Estonians, but without the need to actually live in Estonia or even be physically present.”
Considering how easy it is to found a company in Estonia, it is hardly surprising that the country holds the world’s largest number of start-ups per capita. Practically every young person seems to have a thing of their own going on.
What makes Estonian companies so special is the way they seek growth through exports. This, according to Roos, has to do with the size of the country.
“The Estonian economy is growing at a slow but steady rate,” he points out. “Since we are a small nation with very limited domestic market, exports account for about 90% of our GDP. Practically all growth has to come from exports. That is our lifeline, and that is why every single Estonian company thinks globally from day one.”
Opportunity: Synergy for World-Class R&D
In 2014, machinery and equipment accounted for nearly 30% of Estonia’s total exports, forming the country’s largest export segment. That is also the reason why Roos and other Estonians decided to join this year’s Subcontracting, one of the largest industrial trade fairs in Europe.
In order to develop, Estonian industry is actively seeking foreign partners – to learn from them, yes, but also to offer them its own strengths.
Cooperation with companies from countries such as Finland and Germany can prove fruitful, as high-end knowhow from abroad is combined with Estonia’s strengths, including IT expertise and cost-efficiency.
“Estonia can offer a dynamic, innovative community that is constantly striving for improvement in order to adapt to the changing world,” Roos points out. “Currently, we are looking into ways of combining IT with industry to improve our efficiency and to be able to offer more refined products for export. But we need more knowhow and skilled labour.”
To bring in more expertise, Estonia is currently developing research and development centres for industries such as the chemical and steel industries. With all the required infrastructure in place and local companies present, such centres are likely to attract foreign companies.
If that is to happen and high-level international knowhow will join forces with cutting-edge Estonian IT expertise, the resulting synergy can at best produce world-class R&D.
Text and image by Industrial PRIME
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