Public Policy Innovation Design: Lessons from Estonia and Finland

Abstract

This study aims to (1) examine the context, characteristics, processes, and outcomes of public policy innovation design through international case studies, and (2) compare the factors contributing to the success and/or failure of public policy innovation design in Estonia and Finland.  

The research method employed in this study was documentary research, with a specific focus on two countries: Estonia and Finland. Estonia was selected because it adopts a public policy design that emphasizes creating new opportunities for the nation, while Finland represents a country that has public policy innovation design focused on solving national issues through a quasi-experimental approach. In Finland’s case, the population was divided into two groups: an experimental group in which the government implemented new public policies, and a comparison group that continued to operate under existing policies. The data employed in this study were secondary sources obtained from various types of documents, including academic works such as research studies, research articles, and books, as well as official government documents, evaluation reports from government agencies, and reports issued by international organizations. To enhance the credibility of the findings, data triangulation was conducted. Content analysis was employed for data interpretation, with information categorized according to key dimensions: context, characteristics, policy implementation processes, evaluation, outcomes, and comparative analysis.

The findings reveal that (1) Estonia's e-Residency program, the world's first "Transnational Digital Identity," emerged from the government's strategic goal to expand its economy and global influence by transcending geographical and demographic limitations. This conceptual innovation was implemented through multi-agency collaboration and is subject to continuous improvement based on both quantitative and qualitative evaluations. In contrast, Finland's universal basic income experiment was a process innovation designed to address a complex and costly social welfare system. The policy process involved transforming an ideological concept into a testable agenda via a randomized controlled trial. However, the Finnish government opted not to extend the policy experiment due to its failure to demonstrate a significant positive impact on employment. (2) The success of Estonia's policy is attributed to several key factors: strategic leadership and political consensus; the role of policy entrepreneurs in driving the national agenda; a robust digital infrastructure; an agile legal framework; a platform-based business ecosystem; and effective multi-agency collaboration. Finland's experiment presents a dual perspective. As a social innovation, it succeeded due to its scientific design, proven positive effects on public well-being, its role in reframing the policy debate, and its function as a model for experimental governance. Conversely, from a political standpoint, it is largely viewed as a failure because it did not achieve its primary employment objective, the program was discontinued, and the projected fiscal cost of a full-scale UBI policy was deemed exceedingly high.