North Karelia´S Smart Specialization Strategy

North Karelia´s Smart Specialization Strategy

FOREWORD

We are living in the Europe of regions. Thus, at Technology and materials is another theme in the regional level, we follow the EU strategies our smart specialisation basket. Applications and try to think on how we could contribute to in fotonics, material technology, and ICT offer those, and how to put them into practice. promising future prospects. North Karelian enterprises are creating innovative materials, such as The basic idea of smart specialisation stems films for mobile phone screens and wood-plastic from the EU 2020 strategy which calls for smart, composites. The development efforts aim at cre- sustainable and inclusive growth. The smart part ating an innovative milieu by investing in favour- of the strategy emphasises education, research able infrastructure for those enterprises. and innovation. The second aspect, sustaina- bility, focuses on building a resource efficient, Finally, the third theme in our smart speciali- low-carbon economy. The third point, inclusive sation strategy is our knowhow related to Rus- growth, refers to social inclusion and employ- sia. This is rather obvious as North Karelia is ment generation. the easternmost province in Finland sharing 300 kilometers of border with Russia. There are Forest-bioeconomy is an essential theme in the about 1,6 million border crossings at Niirala’s North Karelian application of smart specialisa- border crossing each year. An important tool in tion. It is based on more innovative utilisation of the development work for cross-border cooper- our forest resources. In 2013, the city of Joen- ation is the Karelia ENI Programme, which is a suu, the regional capital, was nominated by the programme implemented in the regions Kainuu, Finnish government to be the centre responsi- North Karelia and Oulu in Finland and in the re- ble for the coordination of bioeconomy related public of Karelia in Russia. development activities in Finland. This is a great honour for us, and at the same time, a respon- North Karelia, together with the other regions lo- sibility with a heavy workload. cated in the northern part of the EU, can make an essential contribution to the smart, sustain- North Karelia is a European forerunner in the able and inclusive growth of Europe. For exam- use of renewable energy. Almost two-thirds of ple, we can provide solutions for the challeng- the energy used in North Karelia comes from re- es caused by climate change and increasing de- newable sources – mainly from wood energy. Ac- mand of energy. At the same, we can show new cording to the regional climate and energy pro- opportunities for entrepreneurship and econom- gramme, the goal is that North Karelia should ic development. be completely fossil fuel free by 2030.

Pentti Hyttinen Region Mayor of North Karelia

Contents

1 Background...... 6 1.1 Smart specialisation and Europe 2020 strategy...... 6 1.2 Regional Council of North Karelia...... 6 1.3 North Karelia region...... 6

2 North Karelia’s smart specialisation strategy...... 8 2.1 Background for and approaches towards specialisation in innovation...... 8 2.2 Theme-/cluster-specific choices...... 8 2.3 Support by other processes, programmes and projects for the choices...... 9 2.4 Changes needed and new openings in the near future...... 9 2.5 The profile of the region’s innovation environment and its relation to national/European innovation activities...... 10 1 Background

1.1 Smart specialisation accordance with the Land Use and Building Act. Of special importance are the tasks of promot- and Europe 2020 ing the interests of the region, independent de- strategy velopment and formation of a common will to as- sert it for the benefit of 166,000 North Karelians. According to the definition by the European Commission, national/regional research and in- 1.3 North Karelia region novation strategies (RIS3 strategies) concerning smart specialisation are integrated, location-spe- General cific programmes for economic change. North Karelia has always been a place where east and west meet. With 1.6 million cross- In line with the Europe 2020 strategy, the deci- ings a year, the Niirala border crossing point in sion makers must take into account how the dif- Tohmajärvi is the third busiest in Finland. The ferent components of the smart, sustainable and big Russian markets are close by and Russian inclusive growth are interconnected. By mod- tourists contribute to the growth of the region’s ifying these activities according to the region, tourism, commerce and services. The compe- the integrated smart specialisation strategies re- tence-based growth industries of the future, for- spond to complicated development challenges. est bioeconomy and new technologies and ma- RIS3 strategies support the creation of knowl- terials, have taken off in North Karelia due to edge-based employment and growth not only the active research carried out at the University in leading research and innovation centres but of Eastern Finland located in Joensuu. The re- also in regions lagging behind and in rural areas. gion’s traditionally strong industries include the forest, metal, extractive and food industries. The 1.2 Regional Council of headquarters of the European Forest Institute is in Joensuu. The region’s undisputable strength North Karelia is forest bioeconomy, and more than 500 companies whose operations involve bioeconomy This document presents North Karelia’s smart can be found in the region. The turnover of these specialisation strategy and provides background companies is over €1.7 billion, and they employ to make it a part of the operational environment more than 6,000 people. In addition, there are of the region’s development. The document was more than 600 experts employed in this field in drawn up by the Regional Council of North Kare- the region: researchers, developers, trainers and lia, a federation of municipalities that includes as administrative employees. members all the 13 municipalities in North Ka- relia. There are 45 employees under the man- North Karelia invests in the welfare of people and agement of Dr. Pentti Hyttinen, Region Mayor, the environment. The carbon footprint of North at the Council’s office. The Regional Council’s Karelians is, in fact, 36% smaller than that of an objective is to make North Karelia an ever bet- average Finn. The region is a pioneer in the use ter place to live, study, work, and operate as an of renewable energy and, in particular, bioener- entrepreneur. The Council’s role in the develop- gy: renewable energy accounts for 63 percent ment of the region is, first and foremost, to be of the total energy consumption, which is high the cooperation leader of all the different actors even on an international scale. North Karelia is and players in the area. The Council’s duties in- also a model area in energy self-sufficiency: ap- clude the development of the region, planning of proximately 70% of the energy consumed is pro- land use and promotion of the region’s interests. duced in the region. The Council’s legislative responsibilities include the duties specified by the legislation for the re- Hilly landscapes covered with trees and dotted gional development authority and the duty of with numerous meandering rivers and many looking after the regional land use planning in lakes are characteristic of North Karelia. One of Finland’s best-known national landscapes is Education the Koli area with its many hills located in Liek- North Karelia is an education region. Apart from sa by the Lake Pielinen. In North Karelia, the training experts for its own areas, in certain fields four seasons have a clear rhythm, and a snowy the region also trains them for the needs of the winter is guaranteed every year. whole country and even for international roles. The share of students of the population is, in Competitiveness and business fact, higher than the average. The challenge is North Karelia has a diverse industrial structure. to make the students stay in the region once they There are several quite strong industrial sec- have completed their studies. Due to the popula- tors and companies in the region. Moreover, po- tion’s age structure, the adult population’s edu- tential growth areas can be found in the area. cation level in the region is lower than the aver- An example of this is bioeconomy, where there age in the country. In 2012, the share of qualifi- have been significant investments in the relat- cation holders among those over 15 years of age ed development projects. Joensuu’s strong ex- was 68% (the country as a whole 68.5%), and pertise in bioeconomy was also nationally rec- the share of those with a higher education de- ognised when it was appointed to the lead role gree was 23.2% (the country as a whole 28.7%). in the Bioeconomy INKA programme (the only The figures have improved during the past few leading role in the Innovative Cities programme years. However, in respect to holders of high- in the whole of Eastern Finland). er education degrees, this hasn’t led to bridging the difference with the figures of the whole coun- As far as business and entrepreneurship are try. However, for secondary education qualifica- concerned, the situation in North Karelia is am- tions, the figures for the region (44.8% in 2012) bivalent: on one hand, the prospects of the re- are better than the country’s average (39.9%). gion’s important growth businesses are, at least to some degree, quite positive, and many com- Population pany investments are on their way; on the oth- At the end of 2013, the total number of North er hand, the development prospects of the in- Karelians was 165,445. The share of females dustry based on domestic markets and that of of the region’s population is 50.3% and that of the travel industry are somewhat weaker (The men 49.7%. Within the region, the differences strong growth in the share of Russian travellers among the population structure and migration is reversing due to the decrease in the exchange are great. There is a clear trend of population rate of the rouble, among other things.). concentrating in the Joensuu urban region. The population in the peripheral areas of the region In North Karelia, the gross regional product per is declining. An important portion of North Ka- capita was €27,126 in 2011, which is 77.5% of relians (56%), nevertheless, continues living in the overall national level. At the end of 2012, rural areas. there were 8,594 companies in the region. The number of the companies has grown, as the The growth in unemployment has slowed down. number of start-ups has increased by more than At the end of 2013, the degree of unemployment one thousand in comparison with 2005. In North was 16.7%, and the number of unemployed job Karelia, the number of businesses in relation to seekers was 12,427. In the short term, no turna- the population has traditionally been, with the round towards better prospects can be expected. exception of agricultural entrepreneurs, below The reason for this is the fragile growth of export the average figures in the country. On the other sectors and uncertainty around public financ- hand, if we compare the share of entrepreneur- es (especially those of municipalities), which re- ship in the employment, the figure in North Ka- flects on businesses in local markets. relia is the fourth highest in the country. 2 North Karelia’s smart specialisation strategy

2.1 Background for and faces in North Karelia’s Centres of Expertise programme and, as the latest, the growth strategy approaches towards of the Joensuu urban area. Joensuu is playing specialisation in inno- the leading role in the theme of bioeconomy of vation the Innovative Cities programme.

North Karelia is internationally known as a hub of 2.2 Theme-/cluster-specific forestry expertise. This expertise has undergone choices long-term strengthening. A slightly newer field of specialisation is the expertise in technology and materials, where the expertise in photonics with North Karelia has specialised in the following its internationally high level is at the lead. North themes: Karelia’s third special feature is its location as 1 The new era of natural resources: Russia’s neighbour. With its border area loca- Forest bioeconomy tion, the region has developed extensive long- In its own areas of strength, North Kare- term cooperation with its Russian partners. lia is the world’s leading expertise hub in forest bioeconomy. The important areas Behind the specialisation of innovation activities of strength are forest bioenergy, decen- are the strategic choices of the region’s R&D or- tralised biorefinement and wood mate- ganizations, the company structure in the area, rials, forest technology and the logis- creation of the expertise and innovation struc- tics of wood procurement, bioinforma- tures of the region’s strong sectors during the tion economy (for example, forest in- earlier regional programming periods, policies ventories and management of forest in- defined in North Karelia’s regional programme, formation) and sustainable multiuse of the development of the clusters and their inter- forests and nature.

FOREST TECHNOLOGY RUSSIAN BIOECONOMY AND MATERIALS KNOW-HOW

• Forest based bioenergy • Photonics • Sustainable use and • Decentralized bio-refinery • Material knowledge refinery of natural and wood based materials • ICT programming resources • Forest technology and logis- • Metal- and plastic • Cooperation in technol- tics of forest harvesting products, composites ogy and research • Bioinformation economy • Russian tourism and • Sustainable multiuse of services forests and natural • Business skills resources

NEW ERA OF NATURAL GROWTH AREAS RUSSIA AS RESOURCES! FOR THE FUTURE! A TRUMP CARD!

Picture 1 Smart specialization Strategy foci of North Karelia – Special strengths and growth themes! 2 Future growth areas: Joensuu has the lead role, nationally, in the INKA Technology and materials programme’s bioeconomy theme. Together with The top priority areas are photonics, the national bioeconomy strategy, the INKA pro- materials expertise, metal and plastics gramme creates for Finland’s bioeconomy a new products of high value and ICT solu- operation environment based on open innovations. The region is showing a high pro- tion, competence, fast prototyping and experi- file as a manufacturing network of met- mentation; and comprehensive demonstration al as well as plastic products systems capabilities. It will also be the world’s most at- and mechanical engineering systems, tractive operational environment for bioeconomy in which precision technology, automa- companies to develop and establish themselves. tion, various manufacturing methods, Thanks to the measures taken in the INKA pro- special components and composite ma- gramme, Finnish bioeconomy expertise is inter- terials are combined. nationally identified and recognised as a particu- 3 Russia as a trump card: larly good example of an efficiently overhauled Russia know-how industry structure, of new important innovative As the third top theme, the internation- products and an operation environment that in- ally recognised cluster of Russia exper- spires and attracts company business and where tise collects together and integrates ex- the national network of green growth – the bio- tensive and diverse cooperation with economy demonstration platforms and compre- Russia in various fields. The objectives hensive industrial development services devel- in the development of the innovation en- oped in the country – plays a central role. vironment are growth in commerce and travel with Russia, close and well-func- tioning cooperation relations with the re- 2.4 Changes needed and gion’s key sectors, sustainable use and new openings in the further processing of natural resources, near future cooperation in technology, development of logistics, strengthening of business expertise in companies and strengthen- The most important openings are related to the ing of Russia expertise. strengthening of the chosen themes (forest bioeconomy, technology and materials, and Russia The smart specialisation themes mentioned expertise) and to creative integration of strong above are supported by the development of competence areas to these. The core in the de- competitive industries and businesses in the re- velopment of innovation environment is in in- gion’s key clusters (forest and energy, technolo- creasingly transforming world-class expertise to gy industry, stone and extractive industry, food, products for business. In this, the central role is ICT, production of culture and well-being, and played by the strengthening of entrepreneurship travel). In future, the themes of smart speciali- and business expertise, diverse and innovative sation will serve particularly the development of combination of the existing strengths and areas the interfaces between these industries and cre- of expertise, international reach and targeting of ative combination of the fields of competence. investments to attract these to the key areas of competence. It is important that also the market- ing and communications of the region highlight 2.3 Support by other the chosen smart specialisation themes and the processes, programmes related top expertise.

and projects for the The Bioeconomy INKA programme is being choices shaped into an integrated programme where the seamless cooperation between forest econ- The smart specialisation strategy relies on the omy and agrobioeconomy provides the players region’s strategic choices. Those involved in with synergic operation models, joint develop- the support of the growth and development of ment and application possibilities for technolo- the region’s central industrial environment have gies and research and company networks for created a common view about the choices for bioeconomy. An essential feature is also the growth. The INKA programme and the Stabili- combination, across interfaces, of various ex- ty and Growth Pact support the implementation pertise fields. The aim of the INKA programme is of the themes. create different new urban-focused, flexible and gy, expertise in 3D and expertise in gaming will fast demonstration opportunities and pioneering serve as the fundamental technologies and com- markets. The tools for these include innovative petences. public procurements, construction of urban infrastructure to function as companies’ develop- The manufacturing network of metal as well as ment platform and distinctive demonstration and plastic products systems and mechanical engi- piloting platforms. The centremost bottleneck for neering systems will innovatively combine pre- commercialisation is related to the demonstra- cision technology, automation, various manufac- tion of innovations and to the first commercial turing methods, special components and com- applications. The implementation of the Bioeco- posite materials. Service business will notably nomy INKA is, in fact, largely formed around the increase. development of these demonstration platforms. In the near future, a new potential theme where The intention is that the national and regional the needs of the ageing population are taken into priority measures will target the following four account from the viewpoints of various fields is themes: knowledge and learning among older people. 1. National bioeconomy as a brand and new business concepts 2. Sustainable bioeconomy processes and 2.5 The profile of the logistics region’s innovation 3. Downstream bioeconomy products environment and its 4. User experience and anticipation in bioeconomy’s value networks. relation to national/ European innovation The photonics competence cluster in Joensuu activities will be strengthened and its activities in future will be directed more and more towards applications and commercialisation. The University The special strength of North Karelia in the Eu- of Eastern Finland recently established the In- ropean environment is its unique forest exper- stitute of Photonics, and the competence cluster tise. Photonics and materials expertise represent has been able to recruit many notable experts, the international top in the technology and ma- especially for the commercialisation of photon- terials theme. North Karelia is a nationally im- ics. Joensuu’s appeal has increased on a num- portant cluster of Russia expertise. ber of counts. For the coming years, the important development targets include increased Joensuu is playing the leading role in the theme cooperation in research with international busi- of bioeconomy in the INKA programme. Joen- nesses and possible establishment of research suu’s strength in the bioeconomy theme is forest centres as well as locations of new companies bioeconomy, Seinäjoki’s urban region is respon- to Joensuu. In the future, photonics interfaces sible for agrobioeconomy and Jyväskylä’s urban and application targets can be found for exam- region for constructing a bioeconomy community ple in bioeconomy and ICT software production. that manages its resources in an intelligent way.

The future ICT software production will produce more and more solutions for bioeconomy and for the area of well-being, as well as leisure time For further information please visit experiences. Solutions for teaching technolo- www.pohjois-karjala.fi/en

Regional Council of North Karelia Pielisjoen linna, Siltakatu 2, FI-80100 Joensuu, FINLAND I Tel. +35813 337 4700 I Fax +35813 267 4730 [email protected] I www.pohjois-karjala.fi I Business ID 0927140-5