Some Facts and Figures ... and Thoughts on the Finnish Innovation Environment

Timo Kekkonen, Confederation of Finnish Industries EK

Innovation drives growth

• Intangible investments have a growing importance in productivity growth and in the creation of wealth

• Investments in intangible assets accounted for ⅔ – ¾ of labour productivity growth in many OECD countries

• Firms invest as much in intangible assets related to innovation (R&D, software, skills, organisational know-how, branding,…) as in traditional capital (machinery, equipment, buildings,…)

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Some strengths of the Finnish Innovation System

• Openness of the economy• Favourable framework conditions, e.g. macroeconomic stability • High level of education• Sizeable R&D expenditure• Strong ICT sector• Long-term commitment to education and research• Close co-operation within the system• Radically optimistic entrepreneurial culture gaining ground• Start-up of several reforms• …

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Finland in international comparisons 1/3Finland ranks highly in competitiveness and innovation.

According to Innovation Union Scoreboard 2010, Sweden, Denmark, Finland and Germany are the Innovation leaders and all show a performance well above that of the EU27.

ITIF ranked Finland second with R&D input and personnel, venture capital, productivity and trade indicators.

A survey measuring the achievement of the EU’s Lisbon goals published in 2008 indicated that Finland was the most competitive economy in the Union. Finland came top in productivity development and human capital.

Based on the Lisbon Review, Finland was third in competitivenesscomparison in the EU in 2008. Finland was on top in innovation and R&D and in enterprise environment, as well as in sustainable development.

According to WEF, Finland was the fourth most competitive country inthe world in 2011. The top three countries were Switzerland, Singapore and Sweden. Finland rates also as one of the innovation powerhouses.

Sources: EU, The Innovation Union Scoreboard 2010; The Information Technology and Innovation Foundation ITIF; The Atlantic Century II European Growth and Jobs Monitor 2008; The Lisbon Council & Allianz Dresdner Economic Research: The Lisbon Review 2008;WEF: The Global Competitiveness Report 2011-2012

09-2011DM 36054

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Finland in international comparisons 2/3

IMD ranked Finland 15th in overall competitiveness in 2011. The threemost competitive countries were Singapore, USA and Hong Kong.

Based on the comparison of the European Commission in 2005, Finland was among the leading countries in investing into knowledge-based economy and performance of the economy.

In the Canadian Performance and Potential 2005-2006 comparison, Finland was among the four gold medallist when OECD countries were compared by economic, societal and environmental indicators.

In a comparison made by the University of United Nations, Finlandwas ranked second in overall ranking. Finland was also rankedsecond in education, technology and information indices.

According to the OECD PISA 2006 study, young Finns were first inthe OECD in sciences, second in mathematics and reading.

Sources: IMD: World Competitiveness Yearbook 2011; Key Figures 2005 on Science, Technology and Innovation; Performance and Potential 2005-06, The World of Canada, Trends Reshaping Our Future, 2005; United Nations University, The Millennium Project 2001; PISA 2006 Science Competencies for Tomorrow's World. OECD 2007.

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Finland in international comparisons 3/3Wellbeing and sustainable development

Wellbeing Assessment is a method of assessing sustainability thatgives people and the ecosystem equal weight. The Wellbeing Index (WI) is the combination of indicators related to human wellbeing (HWI, Human Wellbeing Index) and ecosystem Wellbeing (EWI, Ecosystem Wellbeing Index). Published in 2001, The Wellbeing of Nations surveys 180 countries. In this comparison Sweden ranks 1st and Finland 2nd.

The 2008 Environmental Performance Index (EPI) ranks 149 countries on 25 indicators tracked across six established policy categories: Environmental Health, Air Pollution, Water Resources, Biodiversity and Habitat, Productive Natural Resources, and Climate Change. Finland is ranked 4th.

The Human Development Index (HDI) ranks 179 countries by acomposite measure of life expectancy, education and income level.Iceland is at the top of HDI 2008, followed by Norway, Canada, Australia and Ireland. Finland is ranked 12th.

Sources: Robert Prescott-Allen (2001), The Wellbeing of Nations. A Country-by-Country Index of Quality of Life and the Environment; WEF: Yale and Columbia Universities; UNDP, HumanDevelopment Report 2008; The Environmental Performance Index 2008

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EU member states’ innovation performance

Source: Innovation Union Scoreboard (IUS) 2010

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0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

Sweden, Denmark, Finland and Germany are innovation leaders in the EU.

SII points 2010 (Summary Innovation Index)

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Innovation and competitiveness

Source: The Information Technology and InnovationFoundation ITIF; The Atlantic Century II, Benchmarking EU & US, Innovation and competitiveness

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Finland was ranked second with R&D input and personnel, venture capital, productivity and trade indicators.

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Competitiveness

Sources: WEF, The Global Competitiveness Report 2011-2012 and IMD World Competitiveness Yearbook 2011

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Total ranking 2011-2012

IMDTotal

competitiveness2010

WEFGlobal

competitiveness2011

534

11014122620

1 768

2313

4

132

45896

12111013171914

123 56789

10111213141516

157

2011

SwitzerlandSingaporeSweden

USAGermanyNetherlandsDenmarkJapanGreat BritainHong KongCanadaTaiwanQatarBelgiumNorway

Finland

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Innovation index

The Innovation index covers quality of research institutions, company spending on R&D,university and industry research collaboration, availability of scientists and engineers,utility patents and intellectual property protection.Source: WEF, The Global Competitiveness Report 2010-2011

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Points according to WEF

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Science and innovation profile of Finland

Source: OECD Science, Technology and Industry Outlook 2010.

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Finland is a pioneer in many aspects of innovation activities.

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Finland leads in technology and innovation

Measurements of the comparison are R&D investments as percentage of GDP, scientific and engineering researchers per capita and patents per capita.Source: Martin Prosperity Institute: Global technology rankings.

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12

34

56

78

910

1112

1314

1516

1718

Ranking

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Ranking of EU countries

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The Lisbon Review

Info

rmat

ion

soc

iety

Inno

vatio

n

and

R&D

Lib

eral

isatio

n

Totalrank

Networ

k

ind

ustri

esFin

ancia

l

ser

vices

Enter

prise

env

ironm

ent

Socia

l i

nclu

sion

Sweden

DenmarkNetherlandsLuxembourgGermanyAustriaFranceGreat BritainBelgiumIrelandEstoniaCyprusSloveniaCzechia

Finland284751639

111813101520

13672945

14111710121915

42761

17101211

853

131519

3214598

1314

61116

71510

13567249

1011

814181216

1532796

104

1413

8161217

2135

1248976

1014211113

1752643

1110

89

14131812

123456789

101112131415

Susta

inab

le

deve

lopm

ent

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R&D investments in some countries

Source: OECD, Main Science and Technology Indicators

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5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Percentage of GDP

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Public sector’s share of total R&D fundingin 2009

Source: Eurostat

11-2011DM 36109 and 36054

%

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Companies’ share of total R&D fundingin 2009

Source: Eurostat

11-2011DM 36109 and 36054

%%

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Exports of Finnish goods have decreased significantly with slow recovery as a result of the global crisis

03-2012DM 36054 and 928485

1995 = 100

Exports of goods by country

Value index, national currencies, seasonal adjusted 3 month moving average.

Source: OECD Main Economic Indicators 2012

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Exports´ share of GDP in 2009

Source: Statistics Finland

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%

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High tech exports in some countries

Exports of Finnish high tech products totalled 4.6 billion euros in 2011, i.e. 8 % of total exports of goods.Sources: Eurostat and Finnish Customs

03-2012DM 32186 and 36054

% of total exports

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Industrial production has grown rapidly in Finland, but the global crisis has reduced production more than in other developed countries

03-2012DM 36054 and 928485Source: Eurostat, METI, OECD

Volume index of industrial production

1995 = 100

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Labour productivity growth in the total economy in 2001-2010

Source: OECD

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Average annual growth

%

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Reserve of foreign direct investments

Source: UNCTAD, World Investment Report 2011.

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% of GDP

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Business R&D input in Finland by sectors

*) estimate based on queries and other calculationsSource: Statistics Finland

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Billion euros

Total 4.9 billion euros in 2010

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

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Key actors of the Finnish innovation environment

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Key actorsof the Finnish

innovation environment

Finnish IndustryInvestment Ltd

Business AngelsInvestors

Companies

Research institutes

Universities

Academy of Finland

Research andInnovation CouncilMinistry of Employment

and the EconomyOther ministries

Ministry of Education and CultureTekes

Technology Centres

Centres of Expertise

Polytechnics

Regional ELY Centres

Regional Councils

Finnvera

Finpro Sitra

AssociationsInventions

EU structural fundsfor innovation

Private investmentsin innovation

Invest in Finland

National Board of Patentsand Registrations of Finland

Investments in different sectorslike environment, health and traffic

National public investment ininnovation and know-how

Strategic Centres for Science,Technology and innovation

Something has to change. We need ...

• new measures to promote entrepreneurship – growth companies

• more non-technological innovations

• a more efficient and focused public innovation system

• more international mobility

• to increase productivity with new working models

•

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