Estonia has maintained its position as the country with the competitive IT sector for two years running, according to the Future of IT report. Produced by Emerging Europe, a social enterprise and a growth hub focused on Central and Eastern Europe; the study considered the Estonian IT sector the strongest out of 23 neighbouring countries.
The report analyses the technology sector to understand how each country contributes to the size of the regional market. According to the 2023 edition, the Estonian IT sector is considered the most competitive in the Emerging Europe region for the second year in a row, followed by Lithuania, which gained one position since last year, and Poland, which lost one place. Estonia possessed the highest position in the region in 17 of 45 parameters, as well as topping one of four categories of the Index – Economic Impact.
Striving for excellency
What’s the secret? Estonia is a small country with a big reputation. With just over 1 million inhabitants, it’s recognized as a digital trailblazer and a paradise for entrepreneurs. In 2021, Estonia ranked first in Europe and second globally in the Digital Society and Economy Index, which measures the adoption and use of digital technologies in the economy and society.
Nearly all government services are available online, and the country has a transparent and straightforward tax system that is among the most friendly in the world. It’s no surprise that Estonia is a favoured destination for doing business, as foreign direct investments in Estonia hit an all-time high mark in 2022.
The ICT sector is one of Estonia’s most important and lucrative industries, with higher average wages than many other sectors of the economy. Education in the field is also on the rise, as the number of ICT specialists in Estonia has been growing steadily over the years, reaching 28,000 in 2021, up from 16,000 in 2012. More notably, in 2021, Estonia had the highest percentage of women studying ICT-related fields among European Union countries, with 38% of ICT graduates being women.
The ICT sector has also added more value to the economy during the Covid-19 pandemic, with a significant increase in ICT exports and value added to GDP. All of that happened with no compromise to security. In 2021, Estonia was ranked 3rd in the world in the Global Cybersecurity Index, which measures the level of commitment of countries to cybersecurity.
Building on a solid foundation
Estonia’s start-up ecosystem is already a heavyweight in the European tech scene, with an impressive 10 unicorns to its name, including Bolt, Veriff, Playtech and more. The country’s vibrant start-up scene is ranked 13th in the global top 20, and Estonia leads Europe in unicorns per capita, at 7.7 billion-dollar startups per 1M. The country has over 150 support organizations available to help businesses accelerate and has surpassed most European countries in terms of investment levels, VC investments per capita, and start-up creation.
Estonia’s policy front is also progressive, with its Digital Agenda 2030 strategy aiming to ensure that high-speed, dependable, and reasonably priced electronic communication connections are available throughout the country by 2030, regardless of location. Estonia’s Start-up Visa program has been instrumental in attracting start-ups to the country, with over 2,700 applications received since its launch in 2017. On top of that, Estonia’s e-residency program has attracted over 100,000 people from 170 countries, allowing them to establish and run an Estonian company remotely.
Crucially, doing business in Estonia is highly profitable for tech companies, as the country has the highest output per person employed in ICT, at 11,064 euros.
All these factors combined have made Estonia a top destination for businesses, entrepreneurs, and investors. With its leadership in tech start-ups and digital innovation, it’s no wonder that Estonia retains its top position in the IT Competitiveness Index for emerging Europe for the second consecutive year. With its affordable high quality of life, top-notch human capital, and trustworthy legal system, Estonia is one of the most favourable business climates in existence.
Read the full report here.
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