08-05-2025
How Estonia is Advancing AI in Government, Business and Education
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Estonia may be a small country, but it maintains an outsized reputation in technology.
Known for being where the pioneering video calling platform Skype was created, Estonia has been pushing its government services to be as digitally friendly as possible since gaining its independence in 1991. By the year 2000, Estonians could do their banking and taxes online. Today, people can apply for residency or citizenship online, form a business and even get divorced without leaving the house. In January, the country announced it had reached 100 percent digitization in government services.
The next phase is around generative artificial intelligence (AI) and machine-learning technology and how to best take advantage of the opportunities presented by new technological capabilities. In March, the country launched a program to provide educators and teachers with AI-based tools.
In an interview with Newsweek, Estonian Prime Minister Kristen Michal shared that the government works closely with entrepreneurs and tech companies, domestically and abroad, to promote technology development and remove bureaucracy from government services and business activities such as business formation, tax filing and real estate transactions.
"Everything is pre-filled to you already in tax preparation," Michal said. "It takes a lot of stress away."
He added that the same is true when a baby is born. Paperwork for birth and medical records is initiated immediately and filed automatically so the parent can view them at home when they return from the hospital.
"Almost everything [is] online and we have already more than 120 examples of uses of AI in public services," he explained. "They are predictive, personalized and proactive."
The ongoing war with Ukraine hangs over Estonia, which neighbors Russia and was previously part of the Soviet Union. But it has also represented an opportunity, Michal said.
"We are having a very vibrant defense industry sector, from that also new companies will emerge," he explained.
Cybersecurity is also a strength of the country, which has been the site of the NATO Cooperative Cyber Defence Centre of Excellence in the capital city of Tallinn since 2008.
Prime Minister of Estonia Kristen Michel.
Prime Minister of Estonia Kristen Michel.
Office of Prime Minister of Estonia
"I find a lot more people who are entrepreneurs and intellectuals than I see in other countries," Mark Minevich, president of Going Global Ventures and a strategic advisor to the venture capital firm Mayfield, told Newsweek after a recent visit to Tallinn. "I see a lot more people focusing on science and innovation and technology and entrepreneurship. Everybody's trying to come up with some idea."
Minevich said some of the businesses and AI capabilities he's seen rival those of Silicon Valley and would receive similar valuations if they were located in California instead of Eastern Europe. He pointed to Bolt, the European rideshare and delivery company founded by 19-year-old Markus Villig in Tallinn in 2013, and Pactum, a company founded and led by the former leader and cofounder of Estonia's famed e-residency program Kaspar Korjus.
Pactum, an AI-driven operations and supply chain software used by many major companies, recently won a continental "Future Unicorn" award as recognition for its potential for future success.
The challenges Estonia face are manpower, the population is around 1.3 million, and working capital. Pactum has raised $55 million but the ecosystem does not have as much investment as the U.S., U.K. or countries in Asia and the Middle East, Minevich said.
"The biggest problem they told me, they don't have big access to capital, so they've got to rely on European Union grants," he explained. "They don't have an established venture capital. They don't have government grants. They basically have to compete with every other European Union nation for some capital, on some grants, and it's not easy."
Michal maintains an optimistic attitude given the economy's recent growth and projections for further growth in the next year.
"Estonia doesn't have too big an interior market," he said. "For us, the only way is to work smarter not in quantity but in quality." He also echoed a sentiment shared by many around the proliferation of technology: AI won't take your job but somebody using AI will.
"If you are using AI tools smarter than anybody else then you probably will be a winner in the markets," Michal said. "Our private sector investments have increased, from 2017 to 2023, people with scientific degrees doubled. The only way is to increase the quality."
Through education, Michal said he also hopes to develop the "smartest users" of emerging technology, in order to spur innovation and remain a market ripe for entrepreneurs and innovation in the future. This is part of why AI is gaining a stronger foothold in education and government in Estonia.
"With technology, AI and different possibilities coming with that, if you are the smartest of the users, you probably will win with this revolution," he said.
