Finland is, with Sweden, one of the most innovative country in the world, and it is useful to have a look at why. I have thought that this European report prepared by ERRIN (European Regions Research and Innovation Network) would be useful for those who lack a proper introduction to the Finnish innovation system, and could inspire us.

Executive Summary

The industrial countries of today are experiencing processes that are shaping their societies and industries towards a knowledge-based economy. In this development the flow of goods in most economic fields will soon be replaced by the flow of knowledge and information. Together with increasingly intensive international competition, individual countries and regions are hard-pressed to improve their capabilities to rapidly generate and diffuse knowledge.

This generally means increasing financial support for R&D, improving cooperation between universities and the private sector as well as developing the economic and legal framework to better facilitate the creation of new knowledge and technological development.

In order to face this challenge, the European Union decided in the Lisbon summit 2000 to transform Europe into the most dynamic and competitive economy in the world. In the negotiations that resulted in the Lisbon strategy much attention was put on R&D and innovation as a way to go forward.
This report will take a closer look at how R&D and innovation is supported in Finland through the Finnish national innovation system. The national innovation system approach used in Finland stresses that the flows of information and technology between, people, enterprises and research institutions are the main sources of innovations.
Since the early 1990s Finland has experienced an economic growth and technological developments that has spurred great interest in several other countries. During the two last decades the country has renewed its entire industry base and multiplied its exports in high technology products. Coinciding with this development has been the recovery from the severe economic recession that hit Finland in the beginning of the 1990s. In light of the fact that the recession was the worst in the country’s independent history, the progresses made in Finland become even more impressive.
Today, Finland emerges as very innovative and competitive in international comparisons. Finland regularly ranks among the leading countries in the world. In many fields, such as public support for R&D and the amount of personnel employed in R&D, Finland is currently topping the charts.
The report is focused on the present Finnish national innovation system and the various institutions and activities that it comprises. It also includes some selected areas of strength of the innovation system. The aim of the report is to benchmark the Finnish national innovation system and find out if any lessons can be derived from the Finnish experiences.
From an ERRIN standpoint, this report is designed to further our efforts to better understand European success stories on research and innovation; to diffuse and disseminate those successes as widely as possible; and in so doing to provide regions with positive examples of how regions can meet the considerable challenges and opportunities posed by the Lisbon Agenda.

Lessons Learned

When countries develop innovation policies and national innovation systems they seldom blindly reproduce policies and methods from other countries. National governments take the uniqueness of their own countries, their industry and economy in consideration and adapt innovation policy according to these.

Nevertheless, it is also clear that policies and institutions in different countries are not only dissimilar but also better or worse. Those countries with the best policies and institutions achieve most of their potential, while other countries only achieve a fraction of this.

The Finnish National Innovation System has met great interest in several other countries. These include varying countries ranging from very competitive, such as the Netherlands and Switzerland, as well as countries with developing economies such as Estonia. Finland has also participated in several EU and Nordic projects providing good practices for innovation policy.

In the Netherlands concrete measures have been taken to strengthen the knowledgebased economy by learning from the Finnish model. In 2003 the Dutch innovation platform was installed, largely copied of the Finnish Science and Technology Policy Council. The Dutch Prime Minister chairs the innovation platform and other members include other ministers and representatives from the business community and knowledge institutes. The purpose of the platform is to provide guidelines for the innovation policy and function as a networking body between different actors in the innovation system. Also in Switzerland discussions on creating a similar body has followed after intensive studies of the Finnish model. Estonia, that celebrated its membership in the EU in 2004, is currently experiencing one of the most rapid economic growths in the Europe. To further strengthen this development, the country is promoting a technology and knowledge based strategy. In building up their own national innovation system they are frequently cooperating with Finnish actors.

Focusing on the Finnish experiences and looking at what other countries have learned from these, some general policy recommendations for a successful innovation system have been derived.
• Develop a holistic innovation system

A general lesson learned in Finland is that almost every field of policymaking is connected to innovation. The lack of sufficient coordination between sectoral policies leads to a waste of resources and loss of potentials. There is a need to develop a broad-based, holistic innovation system that goes beyond traditional industrial and technology policy. A successful innovation system must not only include science, educational and technology policy, butalso such varying policy-fields as competition and enterprise policy, environmental policy and labour policy, among others.
In order to manage such cross-sectoral policies general policy guidelines covering the
entire innovation system have to be developed.
• Establish a high priority innovation platform
A high priority innovation platform, such as the Finnish Science and Technology Policy Council, is a necessary core for a successful innovation system. The STPC has had two clearly positive effects in Finland. Firstly innovation policy has been given a high priority on the political agenda making cooperation and implementation more effective. Secondly the Council has had a positive networking effect, increasing the cooperation between important decision-makers in the public, private and academic sector.
• Promote networking as a top priority in funding and supporting innovation
Networking between different actors at all levels of the innovation system, not previously cooperating in the same fields has played a crucial role in Finland. In many respects, such as gathering financing, transferring information and technology as well as reaching a critical mass in various research areas, it has been necessary to broaden cooperation between actors in the innovation system.
Networking does not however happen automatically, but rather the right initiatives for actors to come together have to be created. The various R&D support programs, especially those conducted by Tekes, have frequently put networking as a main goal. The regional Centres of Expertise programmes have also been exemplary in this respect.

Summary
This report has dealt with the Finnish National Innovation System. The aim of the report has been to present the development of the system, the various actors and institutions it comprises, some selected areas of strength and some lessons derived from the Finnish experiences.
During the last decades Finland has experienced an impressive economic growth and development towards a knowledge-based economy. This development has been driven by a deliberate national strategy to enhance technological development and increase the support for innovation. Already during the 1980s important measures were taken to improve the country’s technological capabilities. In the 1990s the National Innovation System approach was adopted in the Finnish context and the sufficient institutional framework was developed to manage the system. Concurrently the support for R&D has constantly been increased, a developed infrastructure and services supporting innovation build up and cooperation between different actors in the innovation system enhanced. Today, Finland emerges as one of the most competitive and innovative countries in the world. Some areas in the Finnish context appear as especially strong. These include the Finnish education system and the cooperation between universities and the private sector. Also the Finnish venture capital market and the regional aspect of the innovation system stand out.
The lessons that can be derived from the Finnish National Innovation System are very general. They can be summarized in three policy recommendations: develop a holistic innovation system, establish a high priority innovation platform and promote networking in all innovation related activities.

The full report