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Study on the Progress of Growth Areas Final report STUDY ON THE PROGRESS OF GROWTH AREAS The study was commissioned by the Ministry of Economic Affairs and Communications, and paid for by using the technical assistance funds of the 2014–2020 Structural Funds. AUTHORS OF THE STUDY: Siim Espenberg, University of Tartu Kaidi Nõmmela, University of Tartu Erkki Karo, Tallinn University of Technology Egert Juuse, Tallinn University of Technology Kadri Lees, University of Tartu Veiko Sepp, University of Tartu Sille Vahaste-Pruul, University of Tartu Jari Romanainen, Technopolis Group Eesti OÜ QUALITY EXPERT: Meelis Kitsing, Professor of the Estonian Business School and Head of Economics and Finance Department at Estonian Business School, expert on smart specialisation The authors of the study would like to thank the representatives of the client Laura Arengu, Priit Tinits, Sille Kraam, Joel Peetersoo and Karel Lember, who were of great help in conducting the study, and all sectoral experts, interviewees and survey respondents, who took the time to contribute to the study. In addition, the authors would like to thank experts from the University of Tartu and Tallinn University of Technology – Uku Varblas, Jaan Masso, Rainer Kattel and Margit Kirs. REFERENCE: Espenberg, S., Nõmmela, K., Karo, E., Juuse, E., Lees, K., Sepp, V., Vahaste-Pruul, S., Romanainen, J. (2018). Study on the progress of growth areas. University of Tartu, Tallinn University of Technology and Technopolis Group Eesti OÜ. ISBN: 978-9985-4-1134-6 (pdf) THE STUDY WAS CARRIED OUT BY the Centre for Applied Social Sciences (CASS) of the University of Tartu, Ragnar Nurkse Department of Innovation and Governance of Tallinn University of Technology and Technopolis Group Eesti OÜ. The Centre for Applied Social Sciences (CASS) of the University of Tartu (www.rake.ut.ee) is a network- type applied research centre with a mission to promote knowledge-based decision-making in Estonian society. In addition to the CASS team, experts from the University of Tartu and, where appropriate, from outside, are included in their research to ensure the highest quality. The CASS network includes social scientists, as well as representatives from the field of medicine, science, technology and humanities. Ragnar Nurkse Department of Innovation and Governance of Tallinn University of Technology (www.ttu.ee/nurkse) is one of the leading social science research centres in Estonia in the fields of innovation research and governance. The institute employs four laureates of the National Science Prize in Social Sciences. The Institute is also one of Estonia’s most active partners in the European Union Framework Programme for Research and Innovation (H2020). Technopolis Group Eesti OÜ (www.technopolis-group.com) is a representative of the international research consortium Technopolis Group in the Baltics. Technopolis Group was founded in Brighton in 1989 and currently has eight offices both in Europe and Latin America. Technopolis Group Estonia has been operating independently in the Baltic and Nordic markets since 2011. The core business of Technopolis Group is the conduct of research, analysis and evaluation in various policy areas. The strengths of Technopolis are its access to international expertise and its extensive skills in assessment and analysis techniques. CONTACT DETAILS: Siim Espenberg +372 5901 0758 [email protected] http://skytte.ut.ee/et/rake Study on the progress of growth areas Table of contents 4 Table of contents Summary ................................................................................................................................................. 5 Introduction .......................................................................................................................................... 15 Methodology of study ........................................................................................................................... 17 1. Determination of growth areas and identification of companies ................................................... 27 2. Development of entrepreneurship in growth areas ..................................................................... 36 2.1 Development of economic indicators of growth niches in 2012 and 2016 .......................... 36 2.2 R&D cooperation networks of growth fields ........................................................................ 52 2.2.1 R&D cooperation in growth fields ................................................................................. 52 2.2.2 R&D networking and business growth.......................................................................... 53 2.2.3 The role of collaborative relationships in corporate R&D activities ............................. 55 2.3 Factors and trends most influencing the development of growth fields ............................. 58 2.3.1 (Re)definition and delimitation of growth fields .......................................................... 58 2.3.2 Relationship between policy measures and development of growth fields ................ 62 2.3.3 Benefits and problems of support measures from a business perspective .................. 65 3. Proposals ....................................................................................................................................... 69 3.1 Proposals for determination, monitoring and analysis of growth areas .............................. 69 3.2 Policy recommendations to support the development of growth areas ............................. 74 References ............................................................................................................................................ 79 Annexes ................................................................................................................................................. 81 Annex 1. Description of growth niches ..................................................................................... 81 Study on the progress of growth areas Summary 5 Summary Developed under the auspices of the European Union (EU), the smart specialisation concept aims to develop regional innovation policy through the determination of regional competitive advantages and prioritisation. Member States have been implementing the concept of smart specialisation for almost 10 years, but to date the success of this concept has not been clear and there are no common principles for its assessment. In Estonia, the national principles of smart specialisation and its implementation have been developed since 2012. During this time, prioritised growth areas have been developed, their selection process analysed and several other analyses have been carried out, however, it remains unclear, which companies belong to the growth areas of smart specialisation and how the growth areas have developed since their selection. The purpose of this study is to identify the growth areas selected by the Estonian Development Fund, identify the companies belonging thereto by growth niches, analyse their development and volume in the Estonian economy, and make proposals to support the development of growth areas in the future. Therefore, the authors of this study wish to develop a basic methodology for assessing the progress of growth areas, which can be applied both in Estonia and with some improvements in other EU Member States, and which can be further developed in future studies. For the best results, different stakeholders were involved in the study and several data collection and analysis methods were used. The definition of growth areas was based on the distribution of the fields developed by the Estonian Development Fund and their descriptions. The definition of growth areas and the identification of companies were based on existing data sources and expert assessments. Growth areas were defined by 10 characteristics that the companies could comply with in order to be part of the growth niches of smart specialisation. A total of 14 data sources (databases, pre-compiled lists, etc.) were used to identify the companies that meet the criteria. The selection of companies was based on the view that a company must meet at least one of the criteria to be on the list of growth niche companies. The list was prepared as at November 2018. The analysis of the growth areas was carried out using the information contained in the annual reports of the companies and the data of the Commercial Register (the surveyed years were 2012 and 2016), and interviews with business representatives and focus group interviews with business representatives, professional associations and academic experts were conducted. In addition, an online business survey was conducted and international practices were analysed. On the basis of the information collected by various methods, an overview of the progress of the growing areas was prepared and suggestions were made to support their development, which were validated by a panel discussion of sectoral experts. The study was carried out in close collaboration with the client and a smart specialisation quality expert was involved in the study. The first part of the study identified growth areas, established companies belonging thereto and analysed their economic performance across growth niches. As a result of the determination of growth areas, a total of 1700 companies were included in the growth niches in 2012 and 2409 in 2016, with at least one employee and sales incurred during the financial year. The identification of companies revealed that many belong to more than one growth niche
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