e-Governments vs. Corruption. The case of Estonia

Is there a quick, inexpensive and proven way to fight corruption? Yes – Government digitization.

Corruption is real. It has made many of my friends` parents flee Moldova in search of decent pay so that they could support their families. Corruption is the “public enemy number one” in developing countries1. It cripples development. Corruption gives power to the rich and powerful, while reducing it for the poor and weak; it augments inequality. And it is costly – 5% of global GDP, the equivalent of US$ 2.6 trillion2, of which US$ 1.5 trillion is estimated to be bribes only3.

But the world is not doomed; I see light at the end of the tunnel. Advancements in technology allow for quick and cheap ways to combat this phenomenon. I believe digitization of governments is a great solution. E-Governments use information and communications technologies (ICT) to work more effectively, share information in a transparent way and provide better quality services. Numerous studies empirically showed that digitization of governments corresponds to decreases in corruption4,5. There are three main ways through which government digitization can reduce corruption: increasing transparency and accountability, removing the middle-man and creating trust between citizens and public workers6.

Estonia`s journey

Estonia is a great example of how a country can fight corruption using IT tools. After the Soviet Union collapse, Estonia found itself a small, thinly populated country without access to natural resources. Its leadership quickly realized that digitization is a way to develop beyond the country`s natural means. Over the years, key milestones were achieved: opening of first online public sector database (1995), creation of common state portal (www.riik.ee; 1998), of X-way data exchange layer allowing for cross-usage of public data (fig 1; 2001) and introduction of electronic ID cards (2002). To fully leverage up these ITC initiatives, in 2000 the Estonian parliament passes legislation declaring internet access a human right. All these actions can explain how come Estonians had the highest number of startups per person in 2013 and why they developed Skype and Kazaa.

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x-road

Fig 1

More specifically, to tackle the transparency and accountability issues, the government introduced No citizen left behind program, designed to give access to e-Government services to as many people as possible. During a 4-year period after the initiative started the number of households with computers and internet access increased from 45% to 67%, widespread free public wi-fi has been provided in both rural and urban areas and 700 Public Internet Access Points (PIAPs) have been created. These results enabled people to access good quality, relevant and trustworthy information – which in turn empowered them to avoid and denounce corrupt behavior of government employees. It also improved accountability as the availability and accessibility of information made government officials think twice before taking decisions.

To address the middle-man problem, the government instituted the Making efficiency and effectiveness a reality goal which translated in making almost all interactions with the government to be done online. A central register for public procurements accessible online free of charge was created, a place where all public procurement notices have to be published. Another created portal allowed one to establish a company, change the information of an existing company and/or submit annual reports. All these initiatives removed the middle-man, drastically reducing corruption simply because “you can’t bribe a computer7. On top of that, by eliminating bureaucracy, these reforms led to greater efficiencies, estimated to have provided savings amounting to 2% of GDP8.

To further bridge the gap between the government and citizens, Estonia introduced e-voting (first country in the world to do so). Not only did this reform increase the turnout for elections, but it also engaged groups such as young people that would otherwise simply not participate in the elections. It also sent people the message that what they think matters and that the government wants to have their input in the decision making process.

Figure 2 shows Estonia`s score improvement in the Corruption Perception Index (max 100) between 2001 (oldest data point) and 2015. To put it in perspective, the country ranked 23rd compared to US 18th (75pt), France 23rd (70pt), Italy 61st (44pt) and Moldova 103rd (33 points)9.

cpiFig 2

Estonia is in a great position from an e-government perspective. Nonetheless, I believe the country can completely break the old barriers that are deeply embedded in its systems by further educating people about e-Government`s benefits, by pushing internet penetration (currently at 84%) to the maximum and by ever increasing transparency and accountability levels. As Estonia further improves, I would also recommend that the government keeps in mind the risks that come with digitization such as data theft and less control over the information flow. On top of that, e-Government is not a panacea to corruption. It has to be part of a comprehensive plan to fight corruption. [784 words]

 

 

[1] Jim Yong Kim – World Bank Group President, 2013
[2] Global Council on Anti-Corruption – World Economic Forum
[3] Corruption: Costs and Mitigating Strategies – International Monetary Fund, 2016
[4] An Empirical Analysis of the Relationship between e-government and Corruption – The International Journal of Digital Accounting Research; Jamshed J. Mistry & Abu Jalal, 2012
[5] Does E-Government Reduce Corruption? – University of Copenhagen, T. Andersen and J. Rand, 2006
[6] Successful E-government Implementation and Reduced Corruption in Estonia – Leiden University, K. Frijters, 2016
[7] Hendrik Ilves – ICEGOV conference, 2011
[8] The Long Transition to Good Governance: the Case of Estonia Looking at the changes in the governance regime and anticorruption policy – Aare Kasemets, 2012
[9] Transparency International – Corruption Perceptions Index, 2015

 

 

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7 thoughts on “e-Governments vs. Corruption. The case of Estonia

  1. I really love this post – it feels very relevant to the current battle against corruption in Ukraine too. And while the new government has done several steps to cut the corrupt middle man (by digitalising administrative work such as ordering passports and other similar services), it feels that eGovernment in its full beauty will only work when the government is on board. Additionally, for the emerging markets, where this is one of the most pressing issues, such investment might be unaffordable in the first place. My question is: how can we spread this great practice across other countries? How can we persuade corrupt governments to implement the mechanism against their common practice? My feeling is that this could be via a strong push of joint effort of many countries (e.g. in EU it could be one of the requirements or recommendations for its members).

  2. Eugeniu – thank you for this interesting post. Asia unfortunately has a lot of corruption, too. So, I believe there are many learnings from this Estonian example. I would like to pick up one topic I felt that I wanted to further learn – how Estonia implemented efficiently the transition from its old system to the new system where almost all interactions with the government to be done online. While I was working in Indonesia (FYI, ranked 88th, with 36 CPI in the same data set as yours), one of the governmental agencies (Indonesia Investment Coordinating Board: the window agency to deal with foreign direct investment) introduced e-application system where all applications need to be conducted online. I was glad about this movement because I believed such effort would decrease corruption since, as you say, computer couldn’t be bribed; however, what happened then was that the process without any face-to-face interaction made the process significantly inefficient because of misunderstanding from distant communications, time-consuming nature of exchanging information through online platform. Especially in Indonesia, sometimes laws/regulations contradicted each other, which made junior level staffs at the agency, who dealt with these online application, totally stuck. I talked with my legal adviser about this issue, hearing from them that many foreign companies were facing similar problems after e-application was introduced. I suppose that this kind of phenomenon would be observed in other emerging economies, too. So, I wonder how Estonia overcame this hurdle of digitization.

  3. Thanks Eugenio for the informative and thoughtful post. I am heartened to learn of Estonia’s success in curbing corruption through eGovernance. The current government in India has also been focused on increasing transparency across the public administrative infrastructure. They have launched a comprehensive initiative to digotize public services through the Digital India programme. Several vocal critics of the government have questioned the wisdom of investing time and valuable public resources in implementing the Digital India initiative, given the apparent dearth of immediate results. However, Estonia serves as a welcome “proof of concept” that transparency through technology can result in superior outcomes for all stakeholders.

  4. Eugeniu, this was such an interesting post! Using technology to combat corruption was a very creative approach by the government. Furthermore, it seems that this approach has also helped citizens understand the government resources that are available to them. And widespread access to technology was a smart economic solution for a country that was deprived of natural resources. Like Iryna mentioned, I’m also curious to understand how other governments could adopt these policies and initiatives to reduce corruption in their countries.

  5. Very interesting, Eugeniu!
    In the 2015 Corruption Perceptions Index, Brazil is just a little better than Moldova, in 76th (38 points). So yeah, I know what you are talking about! (https://www.transparency.org/cpi2015/#results-table)
    We have been striving for many years to curb this problem here, and lately, there have been many arrests of corrupt politicians. Although that is encouraging, I believe that we should seek a sustainable way of keeping the country clean.
    The Estonian example is amazing, however, it would be difficult to implement in a country like Brazil (as mentioned by Iryna). On the other hand, however, it seems more feasible in Moldova. Do you think that is the case? I can see more similarities between Estonia and Moldova than between Estonia and Brazil or India. I’m interested to know your take on this. Is it crazy to think of applying this in Moldova?

  6. Hi Eugeniu! This is a very hopeful post on a very sobering topic!

    I can definitely appreciate how the interventions you listed can help reduce corruptions in lower levels of the value chain (e.g., removing middlemen), and, for certain items (e.g., voting), at the highest levels of the value chain. But what about day-to-day activities (government contract awards, provision of government offices, etc.)? I can imagine a lot of extensions of eGovernment in these areas, but how easily can those at the top manipulate what is being fed into the system? What incentives do those at the top have to ensure the system works well?

    Leah

  7. Eugeniu,

    Thank you very much for such a great post. I had no idea the Estonian government had developed this initiative. As you nicely outlined, leveraging the internet seems like a great way to increase accountability and cut-out any middle-men who may be unfairly profiting. You mentioned in the post potential concerns with data theft and less control over information flow. Do you think there are any potential concerns with data aggregation of citizens online? I am struggling to think of specific examples where online voting might aggregate more information on citizens than the system in the U.S., but are there any potential privacy concerns that Estonian citizens have? As other commenters have mentioned, it seems like other countries could definitely learn from Estonia’s model.

    Thanks again,
    Jess Delfino

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