Estonia is entering a new phase of digital transformation, seeking to turn its world-leading digital government and strong ICT sector into broader productivity gains across the economy. Artificial intelligence offers major opportunities, but realising its potential will require wider adoption by businesses, stronger skills, and continued innovation in the public sector.
By Zuzana Smidova, OECD Economics Department
Estonia is widely recognised as a global pioneer in digital government, and the ICT sector accounts for over 9% of value added in the economy, one of the highest shares in the OECD (Figure 1). Early investments in digital infrastructure, interoperable public services and data have created accessible digital public services, and the private ICT investment continues to remain strong.
Building on these strong foundations, the country is now entering a new phase in which the key challenge is to translate digital capabilities into broader productivity gains across the economy. While average productivity growth has been strong over the past two decades, it has decelerated before the pandemic, and more recent developments have been affected by the downturn amid high inflation. At the aggregate level, labour productivity reached around 89% of the EU average in 2021 but fell to 79% in 2025 (OECD, 2026).
Recent OECD research suggests that potential aggregate productivity gains from AI can be significant, adding on average 0.4 to 0.9 percentage points of annual growth in labour productivity (Filippucci, Gal and Schief, 2024).
Estonia’s public sector has embraced advanced digital tools, including Artificial Intelligence (AI). More than 130 AI-related projects have been implemented across public institutions, ranging from automated transcription in courts and Parliament to AI-enabled monitoring of environmental conditions.
The public sector has become an important testbed for AI solutions, helping to demonstrate the potential of these technologies. One example is the Bürokratt, a network of AI-powered virtual chatbots used across the government websites that allows citizens to ask questions, identify relevant public authorities, and explain procedures step-by-step. In the future, it should become a single interface for most of the governmental services.
In education, the AI Leap programme represents one of Estonia’s most ambitious efforts to integrate AI into teaching and learning at scale. Launched in 2025, the initiative aims to equip both students and teachers with the resources needed to build AI literacy and effectively incorporate AI tools into learning processes.
Building on Estonia’s earlier “Tiger Leap” programme in the mid-1990s —which played a key role in establishing basic digital skills and infrastructure in schools—the AI Leap programme focuses on practical integration into teaching and learning. Rather than treating AI as a standalone subject, the programme provides access to AI-based educational tools and supports teachers in embedding these technologies into everyday classroom practice.
Early implementation has already reached a substantial scale, with tens of thousands of upper-secondary students gaining access to AI tools and thousands of teachers receiving training. The programme includes the development an Estonian version of ChatGPT that is designed not to provide direct answers, but to guide students in problem-solving, critical thinking, and independent learning. The programme also places strong emphasis on teacher support and capacity building, recognising that successful adoption depends on educators’ ability to use AI confidently and effectively.
Despite these achievements, challenges remain. AI adoption and digital innovation are still concentrated in specific use cases and sectors, such as ICT, and other knowledge-intensive sectors (Figure 2). Unlocking further gains will require scaling up these efforts and embedding digital technologies more deeply across public administration and the wider economy. Several policy priorities emerge for Estonia’s next phase of digital transformation.
First, strengthening support for enterprise adoption of digital technologies and AI across all sectors is essential. While many firms use digital tools for administrative functions, adoption in production and core operations remains limited. Expanding demonstration programmes and supporting firms in integrating digital tools into business processes can help unlock productivity gains.
Second, strengthening digital and AI skills across the workforce and the public sector is a key priority. While Estonia has strong foundational skills and the AI Leap program demonstrates current focus on the education system, demand for advanced ICT and AI capabilities is growing. Expanding upskilling and reskilling programmes, particularly for the existing workforce, will be essential to support wider adoption.
The experience of Estonia highlights that digital transformation an ongoing process. The country’s strong digital foundations provide a solid basis for leveraging AI as a part of its next phase of digital transformation.
References:
Filippucci, F., P. Gal and M. Schief (2024), Miracle or Myth? Assessing the macroeconomic productivity gains from Artificial Intelligence, OECD Economics Department Working papers, OECD Publishing.
OECD (2026), Economic Surveys: Estonia, 2026, OECD Publishing