GovTech News

GovTech — innovative technologies and digital products tailored for the public sector — is one of the most exciting areas in digital governance and is currently experiencing a significant breakthrough. According to the World Economic Forum, the global GovTech market is expected to double within the next decade and reach $9.8 trillion. How can Lithuania best leverage its potential in this field, and what can we learn from European leaders?

A Trillion-Dollar Market Fueled by Rising Expectations

It is forecasted that by 2035, the global GovTech market will be equivalent to half of China’s GDP. The rapid growth can be attributed to three main factors: rising citizen and business expectations for public services and their efficiency; increasingly complex public sector challenges that can no longer be addressed using conventional methods; and greater access to data and technology.

These trends create new opportunities for both startups and other innovation-driven companies as well as for the public sector. For startups, this means a new potential market where they can offer cutting-edge technological solutions. For the public sector, it’s a chance to better understand citizen and business needs and provide more efficient tools and services.

Collaboration Between Startups and the Public Sector: Mutual Benefits

In Lithuania, the GovTech market is estimated to be worth around €200 million. When we think of public sector IT tools, we usually imagine databases, accounting software, and other digital products that help transition processes from paper to digital environments. However, the opportunities to apply innovation in public institutions are far broader.

Best practices are already being implemented in Lithuania. Over six years of operation, the GovTech Lab at the Innovation Agency has strengthened ties between the public sector and startups and contributed to solving more than 100 public sector challenges by developing innovation prototypes and testing existing innovations in the market. We’ve observed that collaboration in developing GovTech solutions allows public institutions to view long-standing problems from a new perspective and experiment with potential solutions. Meanwhile, businesses gain valuable insights into public and citizen needs, which they can use to develop GovTech products.

For example:

• Kaunas District Municipality, in collaboration with the startup Agrodronas, developed a solution using drones and artificial intelligence to detect and assess damage to crops caused by wild animals.

• The Centre of Registers and AAI Labs used blockchain technology to ensure transparency and will soon launch a solution that speeds up processes during general shareholder meetings.

• Dubysa Upland School in Šiauliai District, together with Baltic Consol Line, developed an AI-based data analysis tool — a digital assistant for teachers that recommends personalized content to students based on their interests.

The public sector can be attractive to startups not only due to market size and potential growth but also because of its reliability as a client. Moreover, solutions developed for one institution can often be adapted for others, both in Lithuania and abroad, since many public sector challenges are similar worldwide.

Lithuania’s Potential in the GovTech Space

Lithuania ranks 14th out of 33 countries in the Digital Government Index, indicating solid progress in public sector digitalization. However, there’s still room for improvement.

Lithuania is undoubtedly a leader in data management — the country performs well above the OECD average. This means we’ve already built a strong data infrastructure ensuring that data in the public sector is accessible, shared, and used purposefully. Lithuania also scores high in openness and transparency, particularly in the use of digital technologies and open data. Surpassing the OECD average in this area shows that attention to transparency increases public trust in institutions.

Nevertheless, some areas need further improvement:

• Proactivity: We need to invest more in anticipating citizen needs and offering solutions before they are requested. Currently, only a small portion of public services are truly tailored to real user needs.

• Monitoring and evaluation of digital strategies: Although we have strategies in place, we often lack mechanisms to measure their real impact. Without comprehensive monitoring systems, it’s difficult to ensure that projects bring the desired outcomes.

Lithuania already excels in data and digital infrastructure. Moving forward, we could make even greater strides by embracing a more proactive mindset and involving citizens and businesses more deeply in service development. With more focus on these areas, Lithuania could undoubtedly rise to an even stronger position in the global digital governance landscape.

What Can We Learn from Europe?

Key themes in public sector innovation across Europe include strengthening digital infrastructure, using open data, integrating platforms, and ensuring security. European countries are eager to innovate, actively investing in solutions that make government services faster, simpler, and more accessible. For instance, the Digital Europe Programme has a budget of €7.5 billion, of which €2.1 billion is allocated to the development of artificial intelligence (AI).

Denmark, a leader in digitalization, places particular emphasis on collaboration. Cooperation between institutions, businesses, academia, civil society, and users is a cornerstone of their digital strategy and a catalyst for innovation. Special attention is paid to co-creating public services with users. Denmark has developed and shared numerous methodologies and tools worldwide to build user-centric services. It also has a deep-rooted tradition of experimentation, dating back to the 16th–17th centuries. As a result, both the public sector and society value experimentation as a means of continuous learning essential to improving public services.

In Norway, which established a Ministry of Digitalization and Public Governance last year, GovTech innovations are a top priority. By 2030, it is expected that AI will be used in all public administration institutions. However, it’s important to emphasize that in both Norway and Denmark, digitalization is not seen as an end in itself but as a tool to more effectively address societal challenges such as labor shortages, aging populations, and shrinking regions. These changes are grounded in scientific research and actively involve researchers and funding from the EU’s Horizon programs.

Drawing from our European partners’ best practices, we see that to truly address public sector and societal challenges, we must take a systemic approach. Technology is critical — it enables opportunities that wouldn’t exist otherwise — but it’s only one part of the solution. It’s essential to consider the entire process and clearly define what other changes (regulatory, procedural, behavioral, or resource-related) are needed to solve the issue.

Moreover, the public sector must invest in employee competence development. Technology is only as effective as our ability to use it.