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.

The report is divided into five sections. The introductory section provides a brief outline of Finland and presents some current international comparisons where Finland has done particularly well and some famous Finnish innovations. To better understand the current situation in Finland a special focus is also laid upon the recent socio-economic developments during the last decades.

In the second section the attention is put on the present Finnish national innovation system. Here the most important actors as well as the institutional and legal framework for the innovation system are presented together with innovation intermediaries and some important organisations conducting R&D.

In the third section some selected areas of strength in the Finnish system are highlighted. These are the education system and the cooperation between universities and the private sector, the Finnish venture capital market and the regional dimension of the Finnish innovation system. These areas are considered to be particularly strong in Finland, both domestically and internationally.

The fourth section provides some examples of other countries that have used elements of the Finnish innovation system and provides some general policy recommendations for a successful innovation system.

In the last section the findings of the report are summarized.

This report has been prepared by the ERRIN Secretariat in co-operation with the Helsinki EU Office. (Executive Summary)

Download The Finnish National Innovation System

PDF format, 2.1MB, 31Pages.

This report has been prepared by the ERRIN
Author: Johan Ahlbäck
Secretariat in co-operation with the Helsinki EU Office.

Helsinki University Press
Helsinki 2005

Table of Contents
Executive Summary 1
1. Finland 3
1.1. Innovation and Competitiveness 4
1.2. Background 5
1.3. Finnish Innovations 8
2. The Finnish National Innovation System 9
2.1. Innovation Intermediaries 12
2.2. R&D Performers 14
3. Selected Areas of the Finnish Innovation System 14
3.1. The Finnish Education System 14
3.2. University Cooperation with private sector 17
3.3. The Finnish Venture Capital Market 18
3.4. The Finnish Regional Innovation System 19
3.4.1 The Centres of Expertise Programmes 19
4. Lessons Learned 21
5. Summary 23
References 24
Links 25
ERRIN Overview 27

Finland:

Finland has a population of just over 5 million, in an area of 338 000 km2 and is situated in northeastern part of Europe. Population density is only 17 persons per square kilometre but over 60 % of the population lives in urban areas. The Helsinki metropolitan area, consisting of the capital Helsinki and nearby cities Vantaa and Espoo, is the largest urbanised area and accounts for about one sixth of the country’s population. Other important cities are Tampere, Turku and Oulu with populations of between 100 000 and 200 000.

Finland became a Republic in 1917. The Head of State is the President, but ultimate power is vested in the Parliament. Since 1995 Finland has been a full member of the European Union and since 1999 a member of the European Monetary Union.

Finland’s economy is open and small in size and relies heavily on exports. Exports account for approximately one third of the GDP, of which 54 % go to the EU. The most important countries importing Finnish goods are Great Britain, Germany and Sweden as well as the United States and Russia. In recent years the trade with Russia has increased significantly and new important markets for Finland are opening in China.

Important export industries for Finland are transport equipment, metal and mechanical industries, wood and paper industries and communications technology. There is a certain dependence in Finland on the telecommunications company Nokia. Exports in electronic and electrical products, most of which are manufactured by Nokia, make up for almost a third of the total exports.

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