Periodic Reporting for period 1 - PEER (The Political Economy of E-Residency)
Período documentado: 2020-08-01 hasta 2022-07-31
In 2015, Estonia launched its e-residency program that enabled foreigners to gain a digital presence, granting an access to Estonia’s e-services, e.g.,to form companies online. Over 90,000 e-residency permits have been granted, and over 20,000 companies founded. But how does the proliferation of e-residency program impact the EU-level efforts of international tax cooperation, and the concept of economic citizenship? Should the e-residency initiative be seen as a new solution to the challenges of the EU's Digital Single Market, or does it accelerate race to the bottom in regulation? How does it affect the Estonian government and the entrepreneurs? It was found that on the one hand, the program has genuinely helped small freelancers and entrepreneurs to conduct business and access relevant markets in Europe and beyond. On the other hand, it has also created major governance challenges, as thousands of foreign entrepreneurs have made Estonia their home base. The authorities have been unable to effectively these entrepreneurs. The problems has been particularly visible in the Estonian cryptocurrency industry, which is largely run by foreigners and which utilizes e-residency. There should be stronger intra-governmental cooperation and broader international exchange of information on foreign entrepreneurs. Such reforms carry urgency, as many countries are establishing online company management systems.
The project aimed at understanding how the Estonian e-residency program impacts the EU-level efforts of international tax cooperation, as well as the concept of economic citizenship that underlies the international tax system? Should the e-residency initiative be seen as a new solution to the governance challenges of the EU's Digital Single Market, or does it rather accelerate international race to the bottom in business regulation? How does the initiative alter the self- perception of both Estonian government and the entrepreneurs that use e-residency?
Answers to these questions were sought from 30 interviews, insights gained from three seminars that discussed the e-residency and the Estonian anti-money laundering controls, as well as from an extensive range of policy documents, transcripts from governmental hearings and other such sources that either conveyed or assessed governmental work related to e-residency. Media materials and quantitative analysis of permits related to Estonian cryptocurrency trading licenses – many of which utilized companies formed under e-residency – were also used. Information on cryptocurrency trading permits were compared with the data obtained from international corporate financial account database Orbis to study board interlocks between Estonian-based cryptocurrency companies and companies registered in known tax havens.
The project involved various kinds of transfer of knowledge between the home and the host institution. First, such transfer of knowledge occurred in regular staff seminars, which convened over Zoom during the pandemic restrictions, in an annual retreat of the faculty, and in informal settings within and outside the department. Second, the project involved two coauthored articles with staff members of the host institution, which also contributed to joint outreach work for the general public. Third, parts of this transfer of knowledge was forward-looking, with collaboration activities in at least one major grant application that is in works in fall 2022. Fourth, the project involved participation in the grading of numerous Master’s Theses as well as in grading one thesis for the Erasmus Master’s Program.
Tentative outcomes of the project were disseminated in seminars and conferences, including a panel organized in the Nordic Development Days in 2021, and presentations at the staff seminars of the host department. The Finnish embassy in Tallinn was interested in this research, which was disseminated to them in in-person meetings and in writing. This correspondence also resulted in an invitation to contribute to a hearing organized for the joint cooperation report between the governments of Finland and Estonia.
One of the anticipated articles is in peer review as a shorter Research Note at the Transnational Corporations journal of the United Nations Conference on Trade and Development. Research Notes convey policy-relevant research for the wide global readership of the journal both in academia as well as in policy circles.
Answers to these questions were sought from 30 interviews, insights gained from three seminars that discussed the e-residency and the Estonian anti-money laundering controls, as well as from an extensive range of policy documents, transcripts from governmental hearings and other such sources that either conveyed or assessed governmental work related to e-residency. Media materials and quantitative analysis of permits related to Estonian cryptocurrency trading licenses – many of which utilized companies formed under e-residency – were also used. Information on cryptocurrency trading permits were compared with the data obtained from international corporate financial account database Orbis to study board interlocks between Estonian-based cryptocurrency companies and companies registered in known tax havens.
The project involved various kinds of transfer of knowledge between the home and the host institution. First, such transfer of knowledge occurred in regular staff seminars, which convened over Zoom during the pandemic restrictions, in an annual retreat of the faculty, and in informal settings within and outside the department. Second, the project involved two coauthored articles with staff members of the host institution, which also contributed to joint outreach work for the general public. Third, parts of this transfer of knowledge was forward-looking, with collaboration activities in at least one major grant application that is in works in fall 2022. Fourth, the project involved participation in the grading of numerous Master’s Theses as well as in grading one thesis for the Erasmus Master’s Program.
Tentative outcomes of the project were disseminated in seminars and conferences, including a panel organized in the Nordic Development Days in 2021, and presentations at the staff seminars of the host department. The Finnish embassy in Tallinn was interested in this research, which was disseminated to them in in-person meetings and in writing. This correspondence also resulted in an invitation to contribute to a hearing organized for the joint cooperation report between the governments of Finland and Estonia.
One of the anticipated articles is in peer review as a shorter Research Note at the Transnational Corporations journal of the United Nations Conference on Trade and Development. Research Notes convey policy-relevant research for the wide global readership of the journal both in academia as well as in policy circles.
While some of the results of the project – and their anticipated impact – was prolonged due to long peer review processes and rejections from journals, the project has already made a significant impact in several fronts. Moreover, the potential impact of the forthcoming articles is significant. The results of the project have already been publicized to hundreds of thousands of people in Finland, based on one of the anticipated articles, in addition to informal promotion of the findings to relevant journalists. This media outreach will continue in connection of the eventual publication of the peer reviewed articles.
While the difficulties of the covid-19 pandemic impacted the original research and publication plans, the project has managed to limit its impact. In terms of research outputs, the project originally anticipated producing two research articles and editing a Special Issue. This plan has been revised to a) one single-authored research article, which is currently on second peer review round at Citizenship Studies, b) another co-authored research article (will be submitted to Review of International Political Economy in November, and c) a shorter, co-authored and policy-focused research article, which is currently in peer review at the UNCTAD's Transnational Corporations Journal.
All these articles carry potential for making significant conceptual and empirical advances in their fields. The first article makes an argument for building bridges between the bourgeoning research agenda on the commercialization of citizenship and the debates on the political economy of holding companies within the Global Political Economy (GPE) scholarship. The article aimed at Transnational Corporations Journal argues that both GPE researchers and policy-makers have ignored the impact that the growing use of foreign holding companies by small-scale entrepreneurs has for global governance. Finally, the article that will be submitted to Regulation and Governance carries potential of unearthing significant new data on the geographical linkages of the booming Estonian cryptocurrency industry, which is built on the foundation laid by the e-residency system.
The potential socio-economic impact of these articles is significant in the EU, the OECD and other relevant organizations. The op-ed that that was published at the Maaseudun Tulevaisuus newspaper was a major new opening in Finland, given that it discusses e-resiedency and financial market regulation in the context of Russian sanctions and the possibilities of evading them, which is currently a topic of great interest. Finally, the report that the Finnish embassy at Tallinn produced that was mentioned earlier was distributed to some 200–400 civil servants in the Ministry.
While the difficulties of the covid-19 pandemic impacted the original research and publication plans, the project has managed to limit its impact. In terms of research outputs, the project originally anticipated producing two research articles and editing a Special Issue. This plan has been revised to a) one single-authored research article, which is currently on second peer review round at Citizenship Studies, b) another co-authored research article (will be submitted to Review of International Political Economy in November, and c) a shorter, co-authored and policy-focused research article, which is currently in peer review at the UNCTAD's Transnational Corporations Journal.
All these articles carry potential for making significant conceptual and empirical advances in their fields. The first article makes an argument for building bridges between the bourgeoning research agenda on the commercialization of citizenship and the debates on the political economy of holding companies within the Global Political Economy (GPE) scholarship. The article aimed at Transnational Corporations Journal argues that both GPE researchers and policy-makers have ignored the impact that the growing use of foreign holding companies by small-scale entrepreneurs has for global governance. Finally, the article that will be submitted to Regulation and Governance carries potential of unearthing significant new data on the geographical linkages of the booming Estonian cryptocurrency industry, which is built on the foundation laid by the e-residency system.
The potential socio-economic impact of these articles is significant in the EU, the OECD and other relevant organizations. The op-ed that that was published at the Maaseudun Tulevaisuus newspaper was a major new opening in Finland, given that it discusses e-resiedency and financial market regulation in the context of Russian sanctions and the possibilities of evading them, which is currently a topic of great interest. Finally, the report that the Finnish embassy at Tallinn produced that was mentioned earlier was distributed to some 200–400 civil servants in the Ministry.