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  • Estonia might be a country that you've only hear about on the Eurovision Song Contest...

  • If you are one of the few people who actually watch that.

  • But the reality is Estonia is a pioneering country in many fields, some might even call

  • it the Silicon Valley of Europe.

  • Companies like Skype and TransferWise were both created here.

  • This is surprising given that just 30 years ago, this country was part of the Soviet Union.

  • In fact, geographically Estonia's situation is far from ideal.

  • Their weather there is pretty terrible and they have fewer than three hours of daylight

  • in some winter months.

  • Plus, they have a never-ending demographic crisis that seems almost impossible to resolve.

  • Unlike most countries, the female population of Estonia is significantly higher than the

  • male population.

  • This means, people find it harder to find a partner and have children.

  • This is why every year Estonia maintains a course of population reduction.

  • And yet, despite all of this, Estonia is still the most technologically modern country in

  • all of Europe.

  • In fact, it is the only nation where the access to internet is recognized in the Constitution.

  • But what makes Estonia get into our Countries Hall of Fame is the so-called E-RESIDENCY.

  • This means: any person, no matter where are they from, can fill a form and become a virtual

  • citizen of the country.

  • But what does this really mean?

  • Today, we are going to explain you this, but before we get into that, let´s look back

  • at their history.

  • TITLE: THE FIRST VICTIMS OF VLADIMIR PUTIN

  • In 1991, Estonia got its independence from the Soviet Union.

  • Yes, other countries like Belarus or Ukraine did at the same time.

  • But in those cases, their new democratically elected governments had a strong influence

  • from the former communist elite.

  • Estonia was different.

  • Their first democratic Prime Minister, Mart Laar, formed a cabinet with an average age

  • of 30 years old.

  • These where young people with new ideas and who had no debts with the Soviet old guard.

  • This is how Estonia opened their economy to the international market.

  • They adopted a capitalist system and a fairly unique political system that would become

  • well known for its minimalism.

  • Actually, this is the word that defines Estonia better than any other: MINIMALISM.

  • Even their flag is a simplistic representation of their traditional landscape.

  • Even their taxation follows a so-calledflat rate tax system.”

  • What does this mean?

  • Well, here everyone pays the same percentage of tax, no matter how much do they earn.

  • In this case, their income tax is just 20%.

  • With these policies, it´s easy to understand why they quickly attracted foreign investments,

  • especially from Finland and other Scandinavian countries.

  • Nonetheless, this was not enough to grow at the rate they wanted.

  • At the beginning of the 90s, just half of the population had phones in their homes.

  • Further the infrastructure, built during the Soviet era, were far from acceptable.

  • And as you can imagine, this is not a great set up for a country wanting economic recovery.

  • Since they had no money to build physical roads, they decided to invest what they had

  • in virtual roads: the country's telecommunications.

  • And, 15 years later, Estonia was the first country on Earth to implement an electronic

  • voting system.

  • But hold on a second because all these reforms didn´t come for free.

  • During these 15 years of forward progress, the Russian minority that used to rule over

  • Estonia became politically isolated.

  • This is why in 2007, the Kremlin, with Putin in office, decided to act.

  • This is how the first cyber attack in history was organized.

  • And yes, a cyber attack on a government that relied heavily on a digital infrastructure

  • became a big deal.

  • During the attack, Estonia lost their administration - which meant even the hospitals couldn't

  • function.

  • This is why, since that day, NATO has based their cyber-security headquarters in Tallinn,

  • the Estonian capital.

  • But that was not the end of Estonia's problems

  • TITLE: THE FINANCIAL CRISIS

  • Two years later, in 2009, the financial crisis struck the Estonian economy hard, which was

  • especially exposed because of it's significant foreign investment.

  • All of a sudden, the government had no money.

  • Plus, this was the time when they were supposed to adopt the Euro as their currency.

  • So, even if they wanted to switch, they didn't have the money to set up a new currency in

  • the country.

  • So they had two options: cut spending or raise taxes dramatically.

  • Unlike other countries like Spain, Estonia took the first option.

  • In a matter of months the Government fired over 10,000 workers, which was a third of

  • their entire staff.

  • Politicians lowered their salaries and froze all state investments, including many construction

  • projects.

  • All of these budget cuts caused the Estonian GDP to fall 14% that year.

  • To make a comparison, the US, at their worst moment, saw their GDP fall just 8%.

  • Nonetheless, after going through a terrible 2009, Estonia started to recover immediately.

  • Since they didn't raise taxes and their business policies were quite flexible, many

  • of those who lost their jobs started their own companies.

  • Now, let´s take a look at their unemployment chart

  • Between 2008 and 2009, Estonia went from a 4% unemployment rate to a 19% rate.

  • At the time, this was the highest rate in all of Europe, even bigger than Spain or Greece.

  • However, in just two years, they cut this figure in half.

  • And now, they have a admirable 6%.

  • The same goes for their salaries.

  • Today, a person who works in Tallinn is making more money than most people in Southern Europe.

  • In summary: Estonia is a model for other countries to follow.

  • And now we're going to have a look to see what they key aspects were that made this

  • country quite so successful.

  • TITLE: DIGITAL ADMINISTRATION

  • Estonia pioneered the creation of thedigital ID card.”

  • Now many other countries are copying this modelbut it's never been quite as successful

  • as the original.

  • The reason is that the ID card is actually useful.

  • For instance, during the elections, any citizen can take this card, connect it to a computer

  • and vote no matter where they are.

  • There is no need for registration.

  • This is particularly convenient if you are on holiday or if you live in another country.

  • Every expat knows the hassle of voting while abroad - waiting at the embassy to cast a

  • ballot.

  • Further, there have been many elections where the votes coming in from abroad get lost

  • In Estonia you can use your ID card to do any kind of paperwork with the government

  • including paying taxes.

  • And forget about those long forms that other tax authorities insist you fill out.

  • In Estonia, you can everything using your mobile phone in a matter of minutes.

  • In fact the government has access to the banks, so they can easily find out your income.

  • This happens in every other country, including the US.

  • The only difference is that in Estonia, they think it's stupid to ask the same question

  • twice.

  • So you simply go over your citizen profile, confirm all the data, and pay in one click.

  • But hold on a minute because the best is yet to come...

  • Imagine that one government official wants to spy on personal data.

  • Well, then you will get a notification on the control panel of your government profile.

  • You can even see, exactly who the person is who is looking at your information and even

  • request an explanation on why is he or she doing that.

  • This means, Estonia has way more transparency and privacy controls than any other democracy.

  • But if you still think this is not enough, here it comes the thing that puts Estonia

  • over the top...

  • TITLE: ESTONIAN E-RESIDENCY

  • We have all heard about big companies that place their fiscal headquarters in Panama

  • or Luxembourg.

  • However, this kind of tax structure is almost impossible for an SME or a freelancer.

  • Well, in Estonia they realized that they needed new citizens.

  • As I said, the country faces a demographic crisis and their weather sucks.

  • This is why in 2014 they decided to offer their cutting-edge administration to the whole

  • world, no matter where a person comes from.

  • And now you might wonder: why is this useful?

  • Of course, this is not the equivalent to a citizenship visa and you can't use it as

  • a passport.

  • But it is a digital identity issued by an European Government, and it helps if you want

  • to make international transactions or open a bank account in Estonia.

  • Something that might be useful if you are watching this video from a place like Ukraine

  • or Venezuela.

  • This virtual card also makes it even easier for you to start a company in Estonia without

  • moving there or doing a lot of complex paper work.

  • OK, now I can hear you now saying

  • Estonia is a fiscal haven, right?

  • Well, sorry, but no...

  • Corporate tax in Estonia is about 20%, which is the same as they pay in Finland for example.

  • What Estonia offers are two things: rule of law and simplicity.

  • Maybe you think that's too little to offer?

  • But, they have already had over 10,000 people register - in just two years.

  • Among them, there is the Japanese Prime Minister, Shinzo Abe.

  • In other words, Estonia has invented a brand new concept: theliquid citizenship.”

  • And now here is our question for you: Do you think other countries will follow this model?

  • There will be a time where everyone chooses Estonia citizenship?

  • You can leave your answer in the comments below.

  • And don't forget to subscribe.

  • We put out brand new videos every Monday and Thursday so subscribe and you won't miss

  • any post.

  • If you want to find more information, check the links on the description box below.

  • If you liked this video, give us a thumbs up.

  • And as always, I'll see you in the next video.

Estonia might be a country that you've only hear about on the Eurovision Song Contest...

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Is ESTONIA the European SILICON VALLEY? - VisualPolitik EN

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    joey joey posted on 2021/04/03
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