The Baltic states are digital hotspots for some of Europe’s fastest growing industries, not the least of which being healthcare, medical technology, and healthcare IT. As a B2B comms agency, these are industries in which we have strong stakes and high capabilities. To this end, we had the privilege of traveling to Latvia, Estonia, and Lithuania as a delegation of the Bavarian economy. Our goal: seek innovation, deepen our knowledge, and forge new relationships.
As Flight BT336 lands in Vilnius, we can scarcely believe our eyes: Our bags beat us there and sit waiting on the conveyor belt. Baggage claim in real-time – that’s new, even for the frequent flyers among us. Is this but a metaphor for the speed with which the Baltic states are ushering in a new era?
Latvia, for example, can claim itself as the fastest growing mobile internet market in the world. In Estonia, it takes anywhere from ten minutes to two hours to open a business. And what does Lithuania bring to the table? “Basketball, beer, and the fastest broadband speeds in the world – seventh fastest worldwide,” explains Greta Abaravičiūtė of Invest Lithuania with a smile.
As linguistically and demographically diverse as the three Baltic states are, all of them have seized the opportunity presented by their regained independence in 1991 as a chance to mix traditional industry and the digital economy with an eye toward the future.
Fast Follower and Fintech
Of the three, Latvia is the fast follower: Their digital agenda emulates the Estonian model of e-government, and physicians and pharmacists have been committed to using the e-health system since 2018. In Latvia, as in its Baltic neighbors, a thriving startup scene has also been established; international venture capitalists have their eyes on the country, as do traditional investors.
But in spite of its unique differences, Latvia seems to have been ascribed at least one fate common to the Baltics: They need young, smart, and digitally socialized workers – exactly like the ones who have left the region by the tens of thousands over the past few years. Kaspars Grosu, who is responsible for digitalizing the University Children’s Hospital in Riga, describes their pain as a competition for scarce resources. “As an institution, we compete with private companies for IT talents that are already scarce. Without this gap in the workforce, our healthcare system would have already advanced by years.”
But is there a silver lining? According to Liene Putnina, yes. She works for Swedbank, promoting the growth of fintech in Latvia. For quite some time, she has been noticing a growing wave of talent and companies flowing back into the region. Ongoing uncertainty about the Brexit even accelerates this trend. The future, it would seem, is favoring the bold.
The northernmost of the Baltics – Estonia – is to this day the only completely digital state in Europe. Shortly after 1991, Estonian officials became aware of the considerable challenge it would be to provide a full range of public services to a country of just 1.3 million people. Out of this quagmire came the idea to simply make everything digital. 600 services, from the looking up of electronic patient records to voting in parliamentary elections, can be accessed and completed online. Every inhabitant, regardless of citizenship status, can organize their lives using a simple ID card. Data integrity is guaranteed by a number of measures, among them the X-Road – the backbone of e-Estonia. Invisible yet crucial, it allows the nation’s various public and private sector e-service information systems to link up and function in harmony.
Digitalization has long since become one of Estonia’s top exports. As we leave the airport and head into the city, we’re blinded by the shining Skype logo – it’s Estonia’s single most famous innovation. But its successors are already making waves. On the campus of Tallinn Science Park Tehnopol, mobile robots made by Starship weave around us, delivering food to employees. Back in Germany, Mercedes and Volkswagen utilize the same robots to transport materials and spare parts to the assembly line in their factories.
But let’s take a closer look at healthcare, the focus of our journey. Among other impressive statistics that we were privy to, one stood out: More than 60,000 people – around five percent of the Estonian population – have voluntarily participated in genome sequencing. The data is then anonymized and used in conducting comprehensive healthcare analyses. “It’s voluntary, and you also could choose commercial providers to do this,” remarks Deniss Ojastu, Head of Business Area at the globally successful software developer AS Helmes. He rhetorically adds: “But whom would you prefer to trust – a commercial company that owns your data or your national health administration where you take ownership?”
Trust in institutions, schools, the police, or the government in general is a precondition for creating democratic digital societies that work. I’ve experienced this sort of trust before in Finland. In Germany, we’re quick to dismiss smaller countries as less complex and under less public scrutiny than we are. Deniss Ojastu won’t let that slide. “We’re regularly having the same kinds of debates as Germany. Since we take them seriously, Estonia has manifold regulations and powerful barriers in place that prevent unauthorized access or data abuse. If, despite this, a physician managed to transfer your data illegally, he would be immediately stripped of his access.”
Old or New Economy? It’s About Striking the Right Balance
Another day, another change of scenery. We’ve landed in Lithuania, which, at 2.8 million inhabitants, is the largest Baltic nation. After having been enchanted by the picturesque old towns in Riga (Latvia) and Tallinn (Estonia), two things about the Lithuanian capital stand out: its skyline, where the baroque Italian flair of the city center is punctuated by skyscrapers, rising as if exclamation points; and the forest of cranes shrouding it all.
Yes, Vilnius is a boom town, and not just in terms of digitalization. Since 2000, Lithuania’s cumulative GDP growth has been the highest in Europe, thanks in no small part to traditional industries like mechanical engineering and manufacturing. In the Cushman & Wakefield 2018 Manufacturing Risk Index, it was ranked the second most attractive country in the world for manufacturing, behind only China.
“Take the automotive supplier Hella, for example,” suggests Greta Abaravičiūtė. “From the time they decided to build a factory in Lithuania to the time their workers first clocked in took just ten months.” Authorization, planning, installation, staff recruiting and training – it all happened at turbo speed. Things move at a similar pace for healthcare and life science: A company requesting a permit to do clinical testing will know in less than 60 days if they’ve received the government’s blessing.
The wage gap (compared to countries like Germany) has become a marginal consideration for investors in the Baltics. “We’re convinced by this location, the advanced infrastructure, and the country’s positive economic development,” states Karl-Christian Storz, Managing Director of Karl Storz SE & Co. KG. Estonia has been a pillar of the leading endoscope manufacturer’s global production strategy since 2004. Storz also considers “excellently qualified staff” a valuable asset. According to official statistics, 85% of young professionals have proficiency in English. More than half of them also have mastery over Russian, German, or a Scandinavian language. Plus, as stated by European Digital Women of the Year finalist Eglė Čiuoderienė, Lithuania is number one in Europe when it comes to women in tech.
Regarding the future of th
e internet and digital currency, you’ll find the Baltics are (of course) already ahead of the game. “One might think that blockchain will fundamentally change the way we store and share information over the coming years. That’s a fatal misunderstanding,” explains Justas Šireika, CEO of Vilnius Blockchain Centre. Why is this, Mr. Šireika? “Because the change is already happening. Therefore, we want to be Europe’s number one for blockchain education, start-up acceleration, and community events.”
Targeted innovation support from the government is helping drive this dynamic evolution. It’s why a Latvian start-up can be refunded 45% of the social taxes it pays for highly skilled employees. In Lithuania, starting a business can cost as little as 129 Euros. And in Estonia, retained and reinvested profits are taxed at 0%. That’s sustainable politics investing in the future.
Networking with Germany
When it comes to Germany, Baltic business leaders appreciate contacts and cooperation. “German manufacturing – with its leading role in Industry 4.0, profound technological know-how, and huge market volume – makes networking with German companies highly attractive, especially Bavaria, where much of the economic power is situated,” confirms Marko Lehes, CEO of Selfdiagnostics. The Estonian firm has already assumed a leading position in the German healthcare market due to the success of its professional grade diagnostic products, which offer lab-type precision for use at home.
And one more “German” thing: Whoever thinks that the Baltic states are digital evangelists without taking data security and data privacy highly serious is wrong. We experienced just how seriously they take such concerns without letting them hamper progress. No one has said it better than Piret Hirv, Manager of the Health Tech Department of Tehnopol Tallinn: „We have to make data secure. But we shouldn’t secure data from being used.”
(English by: Alexander Bragan, Athens, GA, U.S.)