How digital residency is helping foreign businesses survive

Covid-19 has created a real appetite for borderless work and entrepreneurship across the world, and digital residency may well become a silver bullet for economic recovery.

The adoption of digital tools by governments has steadily increased over the past two decades, with digital strategies playing a central role in any new manifesto.



In fact, in 2019, the European Commission reported that all 27 member states of the European Union (EU) had implemented e-government strategies at some point since 2008. During the Covid-19 pandemic, McKinsey has reported that businesses’ digital offerings had grown by the equivalent of seven years in a matter of months, and governments have felt some of those effects as well.

Contrary to what one might think, these strategies are not just about being the first country to invent something spectacular, nor even being the first to deploy next-generation technology like 5G.

Much of these digital roadmaps are simply about using technology to make life easier for citizens and businesses.

In Estonia, we were one of the first to invest significantly in exploring technologies that can transform our society, such as cross-border business platforms; since then we have become world leaders in e-governance and are helping other countries realize the benefits of adopting the same model.

The digital road for most states of course requires them to overcome significant bureaucratic challenges, and this has been a bit of a deterrent. Any government must seek to address accessibility, public digital dexterity and growing cyber threats, as well as potentially widespread skepticism and privacy concerns.

Bring people together

However, European countries have come a long way since the launch of online tax filing and government websites, and have come to realize the monetary value of creating new digital revenue streams. They also realize that technology, and the challenges that come with it, can bring people together.

Tackling issues like cybercrime and internet access, for example, has become a national (and international) concern, and huge sums are spent on tackling them.

In 2020, the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy presented a new EU cybersecurity strategy focused on building collective capacities to ensure international security and stability in cyberspace. In 2021, the commission pledged to invest € 14.7 billion in creating a greener and more digital Europe.

The private sector is also doing its part to tackle these issues, with new companies such as Vistalworks (which protects online shoppers from criminal sellers and illicit trade) demonstrating how cross-border collaboration can support these international efforts to reduce cybercrime in the public sector.

The digital world gives us more and more reasons to cooperate with each other, and the sector that benefits the most is business. Electronic governance – the use of IT to deliver government services – is the key to dramatically streamlining processes, including registering and running a business.

A recent white paper by the International Monetary Fund (IMF) in fact supports the hypothesis that e-governance can be a useful tool to stimulate foreign direct investment.

The study, examining 178 countries (both advanced and developing) from 2003 to 2018, found that: e-government makes governments more inclusive, efficient, accountable and transparent, while simultaneously reducing corruption; E-government increases information and knowledge about investment opportunities in target host countries.

Estonian digital society

In Estonia, we have known this for a long time. Here, 99% of public services are done online, from voting to registering the birth of a child. Our digital society, and more specifically our digital residency program, also offers a lifeline to businesses founded by foreign nationals, giving them the ability to run their independent business from their location fully virtually from Estonia and within of the EU.

New Estonian / European businesses founded by Estonian e-residents have generated around € 5 billion, and digital residency works in two ways: businesses can use the programs and bring home money to spend (at home), but they also generate money for foreign governments.

The fact that several countries internationally are working to develop similar cross-border business platforms is a testament to the growth in its perceived value.

Digital residency creates invaluable opportunities for entrepreneurs. For people with an innovative and competitive idea, accessing a large community of start-up founders and other like-minded remote entrepreneurs, as well as a whole new market can be the difference between success and success. ‘failure. We’ve seen how having access to the EU without having to travel there gives entrepreneurs a chance to do real things – it helps them make money where the money is.

The pandemic has created a real appetite for borderless work and entrepreneurship across the world, and digital residency may well become a silver bullet for economic recovery within the European Economic Area (EEA).


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