Transformation of Innovation system in a Small Country elements of - - PowerPoint PPT Presentation

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Transformation of Innovation system in a Small Country elements of - - PowerPoint PPT Presentation

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Transformation of Innovation system in a Small Country elements of Success in Finland Pekka Yl-Anttila ETLA The Research Institute of the Finnish Economy AND Tarmo Lemola Ministry of Trade and Industry & Advansis Ltd/Oy The

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Transformation of Innovation system in a Small Country – elements of Success in Finland

Pekka Ylä-Anttila ETLA – The Research Institute of the Finnish Economy AND Tarmo Lemola Ministry of Trade and Industry & Advansis Ltd/Oy The First Globelics Conference, 3-6 November Rio de Janeiro

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Contents

  • Growth performance

– Long term view – The most competitive country in the world?

  • Crisis and structural change of the1990s
  • Finnish miracle/Finnish model of the information society

– The most ICT specialized country – Nokia – A big company in a small country

  • Role of science and technology policies

– Phases of development

  • Building the basic structures – 1960s and 1970s
  • Technology orientation phase – 1980s
  • Era of building the knowledge-based economy and NSI – 1990s

– How do we explain the Finnish miracle?

  • Creative destruction

– Lessons to be learned?

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SLIDE 3

pekka_ya/esitelmä15092003/k01

GDP/capita in Finland and OECD Europe (at 2002 prices – PPP)

Sources: OECD, Penn World Tables.

5000 10000 15000 20000 25000 1950 1960 1970 1980 1990 2000 Finland OECD Europe

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SLIDE 4

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Manufacturing output in Finland by industries (at 2002 prices)

Sources: Hjerppe-Hjerppe-Mannermaa-Niitamo-Siltari (1976), Statistics Finland, ETLA.

2000 4000 6000 8000 10000 1948 1958 1968 1978 1988 1998 Electronics & electrical eq. Metal & engineering Pulp & paper Chemicals Textiles & apparel

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SLIDE 5

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Share of manufacturing in GDP (%)

Sources: OECD, Statistics Finland, ETLA.

15 20 25 30 35 40 1950 1960 1970 1980 1990 2000 Finland Germany Sweden Japan UK

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SLIDE 6

pekka_ya/esitelmä15092003/k29

Finnish exports of goods by industry 1960-2002 (%)

Source: National Board of Customs.

15 15 15 9 7 11 9 15 7 2 4 11 28 17 18 24 20 42 40 30 31 27 16 15 8 6 12 4 1 8 7 6 20 0 % 20 % 40 % 60 % 80 % 100 % 1960 1970 1980 1990 2002* Wood products Pulp and paper Machines, machinery and vehicles Electronics and electro- mechanical products Basic metals and metal products Chemicals and chemical products Other goods

% of total exports of goods

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Export/import ratio of high-tech products

Source: OECD.

0.0 0.4 0.8 1.2 1.6 2.0 1980 1985 1990 1995 2000 Ireland Finland Sweden OECD EU

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SLIDE 8

pekka_ya/esitelmä15092003/k16

ICT sector’s share in value added, employment and R&D

Finland Sweden Canada Japan UK Netherlands Belgium France Norway Denmark Austria USA Korea Italy Australia Czech Rep. Spain Mexico Germany Portugal 2 4 6 8 10

  • Communic. & other eq.

Computer & office eq. Services

ICT employment

(% of business sector tot., 2000)

Ireland Finland Korea USA New Zealand Sweden Hungary UK Netherlands Belgium Japan Czech Rep. Norway Canada Denmark France Portugal Austria Australia Spain Italy Germany Mexico Slovak Rep. Greece 4 8 12 16 Total

  • Communic. & other eq.

Computer & office eq. Services

ICT value added

(% of business sector tot., 2000)

UK Finland Korea Sweden Japan USA Canada Ireland Netherlands Germany France Belgium Denmark Norway Italy Australia Spain Czech Rep. Poland 1 2 Manufacturing Services (for those avail.)

R&D in ICT

(Selected ICT ind., % of GDP, 2000)

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SLIDE 9

pekka_ya/esitelmä15092003/k04

Manufacturing productivity in selected countries (USA = 100)

Sources: Maliranta (1996), ICOP database, Groningen University.

20 40 60 80 100 120 1975 1978 1981 1984 1987 1990 1993 1996 1999 Finland Belgium Netherlands Sweden France West-Germany Japan Canada

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SLIDE 10

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Nokia’s contribution to GDP growth in Finland

Sources: Aliyrkkö et al., updated.

  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Nokia's contribution (percentage points) Electro-technical industry's contribution

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SLIDE 11

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NOKIA - a big company in a small country

Nokia’s share (2002) in: GDP Contribution to GDP growth R&D expenditure Exports Total employment Manufacturing employment Market value of Helsinki Stock Exchange 2.7 % 0.57 % 40 % 21 % 1 % 5 % 60 %

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S&T Policies – Phases of development

  • No ”Master Plan” in the 1990s

– roots in the 1970s and 1980s – designing of policie and creating competitive advantages take time – complementarities between policies, financial market liberalization, and institutional changes

  • Phases of development

– The building phase of the 1960s and 1970s

  • imitating, learning from others
  • building institutions & organizations

– Technology phase - 1980s

  • technology policy more target-oriented – National Technology Agency (Tekes) established
  • commercialization of technologies

– Era of national innovation system – 1990s

  • Finland the first country to adopt the concept
  • collaboration nationally and internationally, including industry/university collaboration
  • Interplay between education, science, technology, and commercialization
  • concrete target: increase in R&D expenditure
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SLIDE 13

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Innovation supporting organizations The system in the 1980s

Basic research Applied research Product development Commercialization Grants Loans Equity Services Universities Venture capital (Sitra) Tekes Kera & Guarantee Board Finpro FFI Academy of Finland Research institutes

Source: Evaluation of the Finnish Innovation Support System.

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SLIDE 14

pekka_ya/esitelmä15092003/k15

Basic research Applied research Product development Commercialization Grants Loans Equity Services Universities Academy of Finland Venture capital (FII, Sitra) Tekes Finnvera TE-Centers Finpro FFI Research institutes

Innovation supporting organizations The current system

Source: Evaluation of the Finnish Innovation Support System.

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SLIDE 15

pekka_ya/esitelmä15092003/k25

R&D expenditure, % of GDP

Sources: OECD, Statistics Finland.

1 2 3 4 5 1980 1985 1990 1995 2000 Sweden Finland Japan USA EU

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SLIDE 16

pekka_ya/esitelmä15092003/k08

Share of GERD performed by the business sector (%)

50 55 60 65 70 75 80 1980 1985 1990 1995 2000 Finland Sweden USA Japan (adj.) EU

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SLIDE 17

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Share of GERD financed by government (%)

10 20 30 40 50 1980 1985 1990 1995 2000 Finland Sweden USA Japan (adj.) EU

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Post-graduate degrees granted in natural sciences and engineering (1951-2001)

200 400 600 800

1950 1960 1970 1980 1990 2000

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SLIDE 19

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Share of tertiary type of graduates in engineering, natural sciences, mathematics and statistics, and computing, % of all graduates

10 20 30 40 50

Korea Germany Finland Switzerland France Ireland Sweden Czech Rep. Austria UK Japan Italy Turkey Mexico Spain Belgium Slovak Rep. Canada Denmark Australia Israel New Portugal Iceland Poland USA Netherlands Norway Hungary

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SLIDE 20

Lessons to be learned?

  • Finnish miracle?

– policies played a role, but it is not the whole story – business driven process

  • Models come and go

– Japan ranked the most competitive country in 1993(!) by IMD

  • Small country advantage?
  • Institutions matter

– Openness to the external world has to be combined with dense interaction (collaboration & networking) internally

  • Consistency of policies & long-term view

– Stability in the rules of the game