Implementing Innovation and Industrial Policies

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1 Implementing Innovation and Industrial Policies Antti Valle Head of Innovation Policy Division Ministry of Employment and the Economy Warsaw, 2 February 2016

2 Growth drivers Labour policy Labour Competion & Regulation Growth Research & Innovation Financial markets Productivity Investments New technologies

3 Innovation gives a boost to the economy GDP/residents The relationship between the GDP and the Innovation Index (2013) Luxenburg Norway Switzerland Denmark Sweden Ireland Netherland Austria Iceland Finland Belgium France Germany UK Italy EU (28) Spain Greece Cyprus Malta Portugali Slovenia Lithuania Czech Estonia Latvia Slovakia Poland Hungary Romania Croatia Bulgaria 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 Innovation index Source: Innovation Union Scoreboard 2014, Eurostat

4 Innovations impact economic growth through many channels Technological development 0.35 percentage points of the average GDP growth came from ICT investments ( ). Creative destruction New enterprises will replace old, lowerproductivity enterprises. The resources are directed to more productive use. Investments in intellectual property corresponded to 0.5 percentage points of the average GDP growth in EU countries ( ). Growth of overall productivity Amounted to 0.7 percentage points of the average GDP growth ( ). Together, these elements amount to up to a half of the economic growth* * Varies depending on the country, its level of economic development and the economic cycle. Source: OECD Innovation strategy Figures from OECD countries, unless otherwise specified.

5 97,3 % of the world s R&D is performed by the top 40 nations

6 Strenghts of Finland's innovation system Intangible capital Intellectual assets Funding and support Source: European Commission; Innovation Union Scoreboard 2015

7 Slowed economic growth % The share of high-technology products in total import and export The key factors of economic growth, increase in productivity and amount of work, have slowed down - With the ageing population, the amount of work will also decrease in the future - Productivity decreases by decreasing high-technology production - The import of high-technology products has exceeded exports and the added value of the exports has decreased Source: Customs Tuonti Vienti

8

9 Finland is the leading country regarding innovation cooperation between companies and academia Innovation cooperation between companies, universities and R&D institutes Share of all innovating companies % Source: Eurostat, Community Innovation Survey

10 Finland's research and innovation funding Recipients of the funding Enterprise Tekes project funding Finnvera Finnish Industry Investment Enterprise networks Research networks Universities and research institutes Academy of Finland project funding SHOK research programmes STN* Academy of Finland programmes Tekes programmes Horizon 2020 Basic research Applied research Product development *STN = Strategic research council, Academy of Finland Source: Adapting Tekes Markets Object of funding

11 Research and innovation funding in the MEE administrative branch Ministry of Employment and the Economy R&I funding 890 million (2015) Public services for growth and internationalisation 33 million RDI funding aiming at growth and internationalisation Subsidies, loans, capital investments 567 million Investments in capital investment funds and directly in growth companies 105 million Administered funds 900 million Geological Survey of Finland 36 million TECHNICAL RESEARCH CENTRE OF FINLAND VTT Ltd 83 million Regional ELY Centres Internationalisation projects 20 million For supporting invention activities 2 million Loans and guarantees for starting business for growth and competitiveness for exports and internationalisation SME funding (2014) 1,003 million Guarantees issued (2014) 5,034 million

12 Demand and user driven innovation policy Demand-based innovation activities Increasing awareness and competence Innovative public procurement Solving great societal challenges Innovation-favourable legislation Standardisation Innovation-friendly markets Expanding markets More product, service and systemic innovations Activating and involving users RDI funding Identifying needs and trends Opening public data New methods of design Increasing awareness and competence User-driven innovation

13 Excellent flood risk warning system through innovative procurement The ELY Centre for Southwest Finland wanted to develop a system that would produce understandable flood warning based on official information. There was no ready-made solution. "With Tekes funding for innovative procurement, we could prepare innovative procurement better. We needed help for building the bidding so that we would obtain comparable bids. We defined the goal but left the implementation open. We received a system that would not have been possible, if detailed criteria had been set before the procurement." Olli-Matti Verta, Southwest Finland's ELY Centre. "Developing the service in cooperation with the authorities in your own country is a major advantage when you start marketing the product in the world." Teemu Virtanen, Dimenteq Oy

14 Major restructuring of the economy going on: growth to be sought from new areas Traditional cornerstones of our economy (paper and pulp, electronics industry) are decreasing in their role. Other industries have not been able to make up for the loss from these two sectors Need for new sources of growth with high value-added production and export opportunities Success in international competition requires specialising in our strengths New growth will be increasingly based on services, information and skills Sources of the new growth Bioeconomy and cleantech solutions Healthcare industry Intangible value creation Digitalisation

15 Bioeconomy will be the next wave of economy Bioeconomy uses biological natural resources in a sustainable manner Reduces dependence on fossil fuels, prevents impoverishment of ecosystems, promotes economic development and creates new jobs Finland has great potential to become a global pioneer in bioeconomy Aims of the Finnish Bioeconomy Strategy Competitive operating environment New business Solid competence foundation Accessibility and sustainability of biomasses Turnover 60 billion Share of employed people 13% Share of export 26% Target 2025: Turnover grows to 100 billion and Creates 100,000 new bioeconomy jobs.

16 Finland a globally leading country in cleantech solutions Cleantech solutions cover products, services and processes that promote the sustainable use of natural resources and reduce emissions Strengths of Finnish companies: wind power energy from waste/biomass energy efficiency services LED illumination solutions smart electricity metering indoor air cleaning Objectives of the strategic programme Promotes the business, growth, innovation and internationalisation in the field The global market growth forecast is over 800 billion in : Turnover of the field in Finland 25 billion; 2,000 enterprises. Target 2020: Turnover of the field in Finland 50 billion, 3,000 enterprises, 40,000 new jobs.

17 New growth from health sector Growth strategy for the health sector's research and innovation activities Finland has excellent possibilities for being a global leader in health and wellbeing research, business and renewing services Goal: to expedite the growth of health business for the benefit of enterprises, research and the health of the citizens Means: the growth is based on Finnish innovations, research and developing operating environment. New investments are important for the sector. The health sector is one of the fastestgrowing markets in the world. A new glimmer in Finland's export statistics 5 billion in turnover 500 enterprises 20,000 employees 2.8 billion of exports Implementation: MEE, MSAH, MEC, Academy of Finland Tekes

18 The significance of intangible capital as a source of economic growth is growing Value is increasingly created with intangible factors and less with physical products. Digitalisation and increasing weight of services emphasise this trend and offer new ways of creating value Investments in intangible capital and its utilisation have become key sources of productivity and economic growth According to OECD, in developed countries, these exceed investments in fixed capital 25% of the productivity of work in OECD countries originates from investments in intangible capital Requires a new way of thinking and expertise

19 Areas of intangible capital Digitalised data Software Databases Innovative property Research and product development Intellectual property rights Design Economic competences Human capital Processes and systems Organisational structures Business models Market intelligence Networks Brands In addition, for example values, culture and work atmosphere are covered by intangible capital Source: OECD. The definition of intangible capital is based on OECD s definition of knowledge-based capital.

20 Design at cross-section of the society User-oriented work and living environment Testing and manageability of new solutions Brand and IPR Traffic as a service Comfortable and working environment Products and production Availability of services User-oriented design Source: Tekes Service design MEE

21 Game industry 180 companies, turnover 800M in 2013 Aurubis Finland Ltd. Facade integrated solar thermal systems Chempolis Ltd. Non-food cellulosic bioethanol and biochemicals Multiouch Touchscreens for multi-user applications ZenRobotics Ltd. Robotic waste sorting system Regea and BioMediTech Stem cell based products for repair of bone defects in the facial and cranial area

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