- Estonia and several other Eastern European countries face economic problems due to a demographic time bomb caused by falling birth rates.
- Unlike neighboring nations, Estonia has offset some of these pressures through its e-residency program.
- E-residents receive digital ID cards that allow them to access Estonian bank accounts and run virtual businesses.
- Although the program was temporarily frozen last year due to security concerns, it remains popular.
Several Eastern European countries are plagued by demographic time bombs — a shortage of working people due to an aging population, low birth rates, and insufficient economic growth. The nations are losing citizens to countries with greater job opportunities, and their birth rates remain too low to counteract the trend.
Estonia, one of the countries grappling with a demographic time bomb, may have found a solution to offset its economic problems. The country’s “e-residency” program, which launched in 2014, is growing at a faster rate than Estonia’s population, Quartz reported.
Anyone in the world can pay a $118 fee to apply for Estonian e-residency, which comes with a government-issued digital ID. Recipients can access Estonian bank accounts and operate virtual businesses in the country, but the program does not provide legal residency or citizenship. For example, e-residents can’t reside permanently in Estonia, and they can’t buy real estate without proof of sufficient income in the country.
E-residency is just one example of Estonia’s emphasis on digitization. The country’s government stores all of its records on computer servers, chief information Siim Sikkut told the International Monetary Fund. Sikkut said electronic options increase bureaucratic efficiency and save money for the Estonian government. Estonian citizens can also vote online, which allows them to change their vote after first submitting it.
In Estonia, legal residents age 15 and older get electronic ID cards, and hospitals issue digital birth certificates for babies.
While the e-residency program is popular, it has experienced some issues since its launch. In November 2017, the Estonian government temporarily froze all digital ID cards after discovering a major security flaw that could have enabled identity theft.
Nevertheless, many prominent figures around the world are signing up for e-residency. Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel, and The Daily Show host Trevor Noah have all become e-residents. On Tuesday, Pope Francis became one, too.
Estonia’s e-residency program includes roughly 45,000 people, which is small compared to the country’s population of 1.3 million. Sikkut, however, has said the number of e-residents has a noticeable benefit for the country.
The e-residents do not bring in tax revenue directly, but domestic businesses that provide financial services to e-residents help boost Estonia’s economy. With a shortage of young people keeping Estonia from reversing the demographic time bomb, e-residency could help bridge the financial gap.