Small Nations, Big Innovation: What Israel and Estonia Can Learn from Each Other 

Estonia and Israel may be small, but their impact on global innovation is anything but. Estonia has built one of the world’s most advanced digital governments, where nearly all public services are online. Israel has developed a thriving startup ecosystem, known for transforming research into real-world solutions.

Despite their different approaches, both countries have embraced technology to compete on a global scale. During his visit to Israel, Estonian President Alar Karis met with Avi Hasson, CEO of Startup Nation Central, to discuss how the two nations can learn from each other. Their conversation explored digital transformation, education, entrepreneurship, and the need for global collaboration. 

View the full video here and keep reading for key insights:

Estonia’s Digital Transformation 

When Estonia regained independence in the early 1990s, it faced the challenge of building a modern economy from scratch. Instead of adapting outdated infrastructure, the country built a digital-first system that transformed government operations and citizen services. 

President Karis explained that Estonia had an opportunity to start fresh. “We needed young leaders with bright minds who could focus on the future. We placed trust in technology from the very beginning.” 

A key milestone in this transformation was the introduction of compulsory digital ID cards, which allowed Estonia to move nearly all government services online. “If you want to set up a company in Estonia, it takes 20 minutes, sometimes even less,” he said. “That’s the kind of efficiency we’ve built into our system.” 

This digital-first approach has not only streamlined government processes but has also made Estonia a model for other nations looking to modernize their public services. 

Education and the Changing Role of Universities 

Both Estonia and Israel see education as the foundation of innovation. However, the role of universities is shifting as skill-based training programs gain popularity. 

President Karis pointed to a growing trend where people can complete short-term training programs and secure high-paying jobs. “Today, someone can take a six-month online course from Google or Amazon and land a job making $60,000 a year. That creates competition—not just between universities, but between universities and private sector training.” 

This shift challenges academic institutions to rethink their role. Rather than focusing solely on degrees, they need to prioritize applied research and stronger industry collaboration. “Companies no longer hire based on where you studied,” he said. “They care about what you know and what you can do.” 

Israel has already built strong connections between academia and industry, ensuring that research leads to practical applications. Estonia, with its strong digital infrastructure, is working to develop similar models. 

Turning Research into Entrepreneurship 

Estonia’s economy has been shaped by digital innovation, but its academic culture has been slower to embrace commercialization. Unlike in Israel, where university research frequently leads to startups, Estonia’s academics have traditionally focused on publishing rather than building companies. 

“In Estonia, if you’re a professor, you focus on research and publications. You don’t necessarily think about launching a company,” said President Karis. 

Israel has taken a different approach, where research is expected to lead to commercial success. “In Israel, we don’t wait for things to be perfect before launching,” said Hasson. “We push forward, iterate, and improve along the way.” 

President Karis acknowledged that Estonia is still working to create a stronger startup culture within its universities. “I actually co-founded a startup when I was a professor. I later sold my stake when I became a university rector. It was a successful exit, but that’s still not the norm in Estonia. We need to encourage more researchers to think this way.” 

By fostering an environment where academia and entrepreneurship intersect, Estonia hopes to build on its existing strengths and create new economic opportunities. 

Building Global Companies from Day One 

Neither Estonia nor Israel has a large domestic market, which means that companies must think internationally from the start. This necessity has shaped both nations into outward-facing economies. 

President Karis emphasized that Estonia’s economy is closely tied to its neighbors. “If Sweden’s economy slows down, Estonia’s economy feels it. We are deeply connected to our region, which means we always have to think beyond our borders.” 

Israeli startups also develop their products with international markets in mind. Hasson reinforced the idea that small countries cannot rely on local customers alone. “No company, no university, and no country is big enough to innovate alone. Collaboration is what drives real breakthroughs.” 

One of the most valuable insights from their discussion was the role of multidisciplinary teams in innovation. President Karis reflected on his own experiences. “Sometimes, the best ideas come from the coffee room. When people from different disciplines and cultural backgrounds challenge each other’s thinking, that’s when real innovation happens.” 

By fostering stronger collaboration, both between disciplines and across national borders, Israel and Estonia can continue to drive technological advancements on a global scale. 

Looking Ahead: Strengthening Collaboration 

As the conversation concluded, President Karis extended an invitation for Israeli entrepreneurs and innovators to visit Estonia. “You need to come see it. We are a digital country, and I think there is so much we can learn from each other.” 

Hasson responded with a laugh. “That’s a dangerous invitation… when Israelis visit, they stay!” 

President Karis reassured him with a smile. “That’s fine. But remember, we have winter. Minus 25 degrees will send them back home quickly.” 

Beyond the humor, the exchange highlighted the real potential for deeper collaboration between Estonia and Israel. Whether in digital governance, education, or entrepreneurship, both nations have valuable insights to share. 

Estonia and Israel have proven that size is not a limitation when it comes to innovation. Their commitment to technology, education, and entrepreneurship has made them global leaders in their respective fields. As Estonia looks to strengthen its startup ecosystem and Israel refines its digital infrastructure, there are real opportunities for collaboration. By learning from each other’s successes and challenges, these two nations can continue shaping the future of technology and economic growth. 

Continuing to exchange ideas and build partnerships, Israel and Estonia are creating a model for how small nations drive big innovation. We call this innovation diplomacy.