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Welcome to Estonia!

Here is a radical suggestion to make the best of the current tough times: why not move to Estonia?

I was there recently, explaining how to cope with the current recession. Last time we in the UK went through one, in 1991, they were rather preoccupied with becoming independent from the Soviet Union. At the time, many expected the worst; they had seen both German and Soviet tanks in recent history. But they came through the process as a new, young country, keen to share their own skills with the outside world.

Their mathematicians were able to leverage the benefits of the new internet technology, and not having archaic legacy systems, Estonia resolved to make itself an e-country and put everything on the web.

Today, they have an entirely connected country, with a completely transparent legislature and everyone happy to submit their tax returns on-line. Identity cards were seamlessly introduced; it obviously helped to have a population used to such a level of surveillance, but the main driver in their swift adoption was making the identity cards also work on the public transport system.

Mobile phones are used for almost everything, including a simple public parking system, now being taken up by local authorities around the world and soon for voting in elections. Estonia’s dynamic business environment was able to catalyse several well-known international successes, including Skype, the internet-based voice service.

Generally, Estonia is doing better in the recession than most countries. They have suffered an inevitable slump in property prices, arguably an expected consequence of the previous unsustainable boom. Many people have lost money, but the wise ones are just biding their time, waiting for the market to recover; after all, there is only a finite amount of space in the country, as in the UK.

Of course, Estonia is only a very small country with around 1.5 million people, and so does not represent a very big market for the major players. But Estonia’s small size also provides one important advantage. You can get things done.

I had a very agreeable chat over a beer with Estonia’s president. Toomas Hendrik Ilves. Charming and relaxed, he explained that Estonia had fared better in the recent crisis as their banks are owned by Swedish and Finnish institutions, which suffered back in 1991, and have consequently been much more circumspect and risk-averse recently.

He gave me details of their low fixed rate of corporation tax and 100% relief for companies that re-invest. He suggested that more people from the UK might want to base their companies in Estonia, easy to do as they are a member of the Economic Union.

You may recall a recent news item detailing how our National Health Service has fallen down the league table below Estonia, and another which expressed concerns over the costs and problems associated with the twelve billion pound patient record system currently under development.

I met an Estonian doctor, Madis Tiik, who has been looking at the same challenge in his own country. Lacking any detailed understanding of complex project management, and oblivious to suggestions that it was impossible to implement, he just got on and did it; the system is being rolled out next year.

Having an IT background, I understand that the UK database is much larger, and that there are many different data items including text-based records and X-Rays. But I also observe that Friends Reunited and Facebook seem to be managing quite well, and using simple document and image standards and XML, you can put anything in a web browser.

Perhaps this is why many successful entrepreneurs move to islands or other small countries. They remember the tribal atmosphere of the early days of their start-up, and having status in this community can make things happen quickly, so long as you know the right people. The key is then not to become dictatorial, as seems to be the issue in Sark.

The key drivers are inclusion and transparency. Some people argue that early funding of the ARPA project in the 80s (which eventually became the internet in the 90s) was a plot by the powers that be to make sure they could read all our e-mails and know where we were at all times. Plus, the bigger the country, the more silly rules there tend to be.

If this is the case, then would you not prefer to be in a small country like Estonia, where you can get things done quickly, and more importantly, make a real difference?

 

 

This article Copyright © Mike Southon 2009. All Rights Reserved

Originally published in The Financial Times. Mike Southon can be contacted at mike@beermat.biz, www.beermat.biz.

About Mike Southon