Governing Nations in the Age of Digitisation

Technology is changing how we interact with each other. It is also changing how governments interact with citizens. Two insightful papers look at two nation states harnessing the power of digital technology with very different objectives and methods.


by Kerr Neilson

Times are challenging for governments around the globe. Populist movements across various countries are pushing for a new political order at home while their heads of state jostle each other to find their place on the world stage. There are trade wars to fight, geopolitical tensions to sooth, and humanitarian crises to diffuse. And then there is the day-to-day business of running a country: how to tackle unemployment, what infrastructure to build, how to improve health care and education without breaking the budget and while handing out tax cuts… In a world where change is accelerating and growth has become a new creed, citizens are demanding more from their governments, democratically elected or otherwise.

Turning on the news channel on any night of the week, one would without fail feel a sense of tedium and hopelessness at the bickering politicians and a ballooning, yet systematically ineffectual, bureaucracy. This is true not only of our own nation, but also the other traditional beacons of the representative system of government, like the US and the UK. That’s why the story of Estonia’s digitisation, as vividly told by Nathan Heller from The New Yorker, reads like a breath of fresh air.

With a population of just 1.3 million and few big corporates and entrenched interest groups, when Estonia gained independence from the former Soviet Union in 1991 it had a historical opportunity to start afresh as a new nation and build modern institutions almost from scratch. Today, the small Baltic republic is hailed as “the most advanced digital society in the world”,[1] a shining exemplar of a forward-thinking government leading a nation in and with information technology. From voting to policing, from health records to tax filings, 99% of public services are now online and linked across a robust digital platform, which also allows the private sector, from banks to pharmacies, to connect their own databases to it.

With the 2007 Russian cyberattack still fresh in memory and being no stranger to the European Union’s privacy-focused culture, the Estonians have been both innovative and thoughtful in the design of their digital architecture, carefully balancing privacy and transparency, security and accessibility. X-Road, the data platform that forms the backbone of e-Estonia, employs open-source and distributed systems to minimise the risk of centralised attacks as well as ensuring the traceability of every digital footprint (blockchain technology has been in operational use in various registries since 2012).

Creative governance principles and concepts have been equally important to the integrity of e-Estonia: it backs up the entire national database in “data embassies” that are located on foreign soil but are afforded the same protection status as a diplomatic mission; individuals own all the personal information recorded about themselves; and a “once-only” rule that discourages agencies from asking citizens for the same information more than once.

X-Road is said to save more than 800 years of working time annually for the Estonian state and its citizens,[2] and going paperless reportedly saves 2% of GDP a year.[3] But the significant efficiency gains and cost savings in both public and private services are not the only benefits of digitisation. Greater transparency and openness can improve the accountability of government.

There are also the broader economic benefits – Estonia’s investments in technological infrastructure have created a vibrant digital ecosystem that has done a superb job attracting entrepreneurs and fostering innovative start-ups. Skype, Taxify, Transferwise… The success stories are plentiful, and the Estonian government is intent on seeing more entrepreneurialism flourish on its virtual soil through e-Residency, a “transnational digital identity” program. Foreign nationals wishing to take advantage of Estonia’s e-services, like opening a European bank account or incorporating a company with EU status, can apply online for a digital ID for the cost of 100 euros without ever setting foot in the country itself.

A remarkable aspect of e-Estonia, as you will sense from Nathan Heller’s article, is that there seems to be a virtual cycle of trust underlying its success: the trust that its citizens placed in the Estonian government allowed it to embark on such an audacious and creative undertaking, while the benefits it has delivered reinforced its citizens’ trust. The government does not seek to control its citizens with their data; it makes it easier for its people to get on with their lives. It does not coerce businesses to serve the state; but tries to be facilitative and minimise obstruction.

The contrast with China is stark, as you will see from the second feature – an extract from Rachel Botsman’s recent book, Who Can You Trust?. There, the government is also seeking to harness the power of digital connectivity and big data, and such a “social credit” system will have far-reaching impacts on the trust between the government and its citizens as well as between businesses and citizens. We have over the last year seen numerous reports on the use of facial recognition and other advanced AI technologies by the Chinese government in surveillance and law enforcement – the upsides and the potential Orwellian threats seem equally striking.

One thing is clear – technology is a powerful tool for governments. But as Marten Kaevats, Estonia’s national digital adviser, pointed out, it’s not about the technology, “It’s about the mind-set. It’s about the culture. It’s about the human relations – what it enables us to do.”

I hope you enjoy Governing Nations in the Age of Digitisation.




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