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Version: Final Date: 19 August 2011 Regional Innovation Monitor Regional Innovation Report (Eastern Finland/Itä-Suomi) To the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility Industries Kimmo Viljamaa Henri Lahtinen Advansis www.technopolis-group.com PREFACE The Regional Innovation Monitor (RIM)1 is an initiative of the European Commission's Directorate General for Enterprise and Industry, which has the objective to describe and analyse innovation policy trends across EU regions. RIM analysis is based on methodologies developed in the context of the INNO-Policy Trendchart which covers innovation policies at national level as part of the PRO INNO Europe initiative. The overarching objective of this project is to enhance the competitiveness of European regions through increasing the effectiveness of their innovation policies and strategies. The specific objective of the RIM is to enhance the scope and quality of policy assessment by providing policy-makers, other innovation stakeholders with the analytical framework and tools for evaluating the strengths and weaknesses of regional policies and regional innovation systems. RIM covers EU-20 Member States: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom. This means that RIM will not concentrate on Member States where the Nomenclature of territorial units for statistics NUTS 1 and 2 levels are identical with the entire country (Estonia, Latvia, and Lithuania), Malta which only has NUTS 3 regions, Slovenia which has a national innovation policy or Cyprus and Luxembourg which are countries without NUTS regions. The main aim of 50 regional reports is to provide a description and analysis of contemporary developments of regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Annual EU Regional Innovation Monitor reports. European Commission official responsible for the project is Alberto Licciardello ([email protected]). The present report was prepared by Kimmo Viljamaa ([email protected]). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Member States or the European Commission. Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear. 1 http://www.rim-europa.eu Table of Contents Executive Summary i 1. Main Trends and Challenges in the Regional Innovation System 1 1.1 Recent trends in regional economic performance 1 1.2 Recent trends in regional innovation performance 2 1.3 Identified challenges 3 2. Innovation Policy Governance 5 2.1 Degree of institutional autonomy 5 2.2 Institutional-set up, co-ordination and implementation mechanisms 5 2.3 Availability and use of policy intelligence tools 8 2.4 Key challenges and opportunities 9 3. Innovation Policy Instruments and Orientations 11 3.1 The regional innovation policy mix 11 3.2 Appraisal of regional innovation policies 14 3.3 Good practice case 15 3.4 Portfolio of innovation support measures 15 3.5 Towards smart specialisation policies 17 3.6 Possible future orientations and opportunities 18 Regional Innovation Monitor Appendices Appendix A Bibliography ................................................................................................19 Appendix B Stakeholders consulted .............................................................................. 20 Appendix C RIM Repository information.......................................................................21 Appendix D Explanation of factors of Innovation Performance, Governance and Policy ........................................................................................................................................ 22 Appendix E Statistical data ............................................................................................ 26 Appendix F RIM survey responses ................................................................................ 27 Figures Figure 1-1 Economic and innovation performance indicators for Itä-Suomi ................. 3 Figure 2-1 Governance, policy, and innovation performance factor scores for Itä- Suomi................................................................................................................................ 9 Tables Table 3-1 Existing regional innovation support measures.............................................13 Regional Innovation Monitor Executive Summary 1. Introduction: Main recent trends in the Regional Innovation System Itä-Suomi is one of the structurally more challenged regions in Finland. The per capita GDP in the region was €22,100 in 2007, 75% of the Finnish average and 88% of the EU average. The average annual real growth rate of GDP in Itä-Suomi between 2000 and 2007 was only 2.1%, 86% of the EU average. The region has suffered from high unemployment for a long time. Although unemployment has fallen in the 2000s, the unemployment rate, at 10.9% (2009), remains still above the EU27 average (7%). Ageing population and outmigration pose challenges to the economic performance of the region. The large contributions of agriculture (157% of the EU27 average) and public services (121%) in the economic structure are noteworthy. Despite its rather poor economic performance, Itä-Suomi has a lot of potential in terms of knowledge assets. The region has a rather high share of young people with a tertiary education and the share of people involved in life-long learning is also well above the EU average (206%). The innovation performance in the region has also been relatively good during recent years. Although the gross expenditure on R&D (GERD) was only 1.56% of GDP in 2006 (84% of the EU average) the GERD growth rate (6.7% between 2000 and 2007) has been significantly higher (159%) than in the EU as a whole. The proportion of SMEs innovating in-house has grown and is well above that of the EU. The innovative SMEs are also widely collaborating with others. 2. Major innovation challenges and policy responses The following challenges have been identified as the most important, based on the analysis made for the ERDF programme 2007-2013, Itä-Suomi Programme, Itä-Suomi Innovation Strategy and expert interviews. Challenge 1: Retaining educated workforce A high level of tertiary education can be considered as a strength of the region, and the general level of education of young people is quite good. The higher education Eastern Finland University (formed from a merger of two universities) provides a mix of education in several fields, many of which are relevant to the regional economy. The university is supported by four polytechnics, which are relatively tightly connected to the region in terms of focus and various forms of interaction with the government and the private sector. The biggest challenge in terms of education is to retain the educated workforce in the region (Puhakka et al., 2009). Challenge 2: Strengthening and focusing private sector innovation One of the key challenges in the region is the low level of business R&D, 40.6 % compared with EU27 average of nearly 64 % or the Finnish average of over 74 %. Although there are a few key companies active in the global market, on the whole the level of business innovation is well below that of other regions in Finland. This is partly explained by the industrial structure of the region, which is still quite concentrated on natural resources and agriculture. The level of patenting is also relatively low. The extent of expertise in key technological areas needs to be increased if a critical mass for R&D is to be reached. There is also a need to further support innovation in the private sector. There have been many initiatives to set up regionally networked clusters of expertise in the region, and while they have produced quite good results these initiatives have not boosted private sector innovation to an adequate extent. Regional Innovation Monitor i Continuous efforts are clearly needed to support innovation in SMEs using a broad based approach supporting innovation in organisational, market and process innovation as well as technological R&D. Challenge 3: Ageing population in a low population density area Ageing presents challenges for innovation and for the regional economy as a whole, but particularly to services, both public and private. The need for innovation is emphasised by the low population density in the region, which makes efficient service provision a challenge. There are several initiatives supporting the development of public services and information society in the region, which could be further developed. 3. Innovation policy governance There are no formal regional organisations covering the whole of Itä-Suomi related to innovation policy. At the regional (NUTS 3) level, regional councils are responsible for regional development, which incorporates innovation policy. Regional innovation policies are designed co-operatively by the regional
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