E-Stonia and the Future of the Cyberstate

Virtual Governments Come Online

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Last December, Estonia took the unprecedented step of offering any person in the world a chance to become an Estonian e-resident, a title that grants the holder access to many of the country’s top-notch online government services. Acquiring this status would allow, say, an Indian entrepreneur to establish an Estonian company that he runs from Dubai but which does the bulk of its business in Spain; he’d also be able to use his electronic signature to execute contracts with customers throughout the European Union—and pay no taxes by keeping his profits in Estonia. No wonder that 13,000 people have signed up to beta-test the program in its first nine weeks of operation, and 500 people have already received their e-residency cards.

The Estonian government has touted the program as a way to attract foreign entrepreneurs. But in launching the effort, Estonia has also laid claim to a growing new market that could transform the global economy: public services. In the future, governments, like transnational businesses, will transcend national borders, offering services, attracting customers, and deriving revenues without regard to physical territory. That would allow states to turn public goods into virtual business ventures—an opportunity that some creative countries, especially smaller ones such as Estonia, are already seizing.


Estonia has had to make great strides in the realm of virtual geography because its physical geography is challenging. This small Baltic country of only 1.3 million people sits wedged between Russia and the West. When it regained independence in 1991, after 50 years of Soviet domination, the country inherited two interrelated, dangerous shortfalls: decrepit infrastructure, especially when it came to IT, and a weak administrative structure. Estonia needed to quickly find a way to deliver effective governance. And for that, as Estonian President Toomas Hendrik Ilves recently explained, it had to “make up for the lack of human resources through automatization.”

Since then, the country has emerged as a global technology leader, boasting the largest number of startups per person in the world and

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