Finland as a Knowledge Economy 2.0 as a Knowledge Economy Finland Public Disclosure Authorized Public Disclosure Authorized DIRECTIONS IN DEVELOPMENT Science, Technology, and Innovation Halme, Lindy, Piirainen, Salminen, and White White Salminen, and Piirainen, Lindy, Halme, Finland as a Knowledge Public Disclosure Authorized Economy 2.0 Lessons on Policies and Governance Kimmo Halme, Ilari Lindy, Kalle A. Piirainen, Vesa Salminen, and Justine White, Editors THE WORLD BANK Public Disclosure Authorized Finland as a Knowledge Economy 2.0 DIRECTIONS IN DEVELOPMENT Science, Technology, and Innovation Finland as a Knowledge Economy 2.0 Lessons on Policies and Governance Kimmo Halme, Ilari Lindy, Kalle A. 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Library of Congress Cataloging-in-Publication Data has been requested. Finland as a Knowledge Economy 2.0 • http://dx.doi.org/10.1596/978-1-4648-0194-5 Contents Foreword xi Acknowledgments xiii Contributors xv Key Definitions xix Abbreviations xxi Overview 1 Introduction: Finland’s Economic Transition 2 Background: Evolution of Finland’s Knowledge Economy Policy 5 Embracing Industrial Renewal 7 Education as Competitive Paradigm 10 Governing the Knowledge Economy Ecosystem 11 Implementing Innovation Policy 13 Monitoring and Evaluating Investments 15 Knowledge Economy and Globalization 18 References 20 Chapter 1 Introduction: Finland’s Economic Transition 21 Kimmo Halme, Vesa Salminen, and Kalle A. Piirainen Industrial Transformation until the 1990s 21 Role of the ICT Sector 22 The New Knowledge Economy 23 Aim and Structure of the Book 25 References 27 Chapter 2 Background: Evolution of Finland’s Knowledge Economy Policy 29 Tarmo Lemola Reform of Basic Structures (1960–) 29 Technology Push (1980–) 31 Out of Recession (1990–) 32 Finland as a Knowledge Economy 2.0 • http://dx.doi.org/10.1596/978-1-4648-0194-5 v vi Contents Knowledge Economy in a Globalizing World (2000–) 36 Conclusion 39 References 42 Chapter 3 Embracing Industrial Renewal 45 Vesa Salminen and Kalle Lamminmäki Reasoning Behind: Current Economic Environment in Finland 45 Increasing Global Competition 49 The Ongoing Industrial Transformation 51 Future Prospects of the ICT Sector 54 Summary and Key Messages 57 References 58 Chapter 4 Education as Competitive Paradigm 61 Katri Haila Reasoning Behind: Finnish Educational Success 61 Systematic Long-Term Investments 62 Efficient Steering Combined with Local Autonomy 64 Comprehensive Educational Structure 65 Educating Educators as a Key to Success? 68 New Needs Call for Adjustments 69 Summary and Key Messages 72 References 75 Chapter 5 Governing the Knowledge Economy Ecosystem 77 Kimmo Halme, Kimmo Viljamaa, and Maria Merisalo Reasoning Behind: A Changing Ecosystem 77 A Shared Vision and a Strategy that Supports It 80 Building Consensus and Engaging Stakeholders 84 Horizontal Collaboration across Ministries 86 Governance within Policy Sectors 88 Looking Ahead 90 Summary and Key Messages 93 References 95 Chapter 6 Implementing Innovation Policy 97 Kaisa Lähteenmäki-Smith Reasoning Behind: Implementing Innovation Policy in the Finnish Context 97 Implementing the Knowledge Economy at the National Level 99 Implementing a Knowledge Economy at the Regional and Provincial Levels 103 Finland as a Knowledge Economy 2.0 • http://dx.doi.org/10.1596/978-1-4648-0194-5 Contents vii Cross-Sectoral Implementation: The SHOKs 105 Summary and Key Messages 111 References 112 Chapter 7 Monitoring and Evaluating Investments 113 Kalle A. Piirainen Reasoning Behind: Monitoring and Evaluation as Mechanisms for Policy Learning 113 Basic Setup for Learning by Evaluating 117 System-Level Evaluations 118 Institution- and Program-Level Evaluations 121 Learning from Others and Transferring Good Practices 123 Institutional Devices for Learning 124 Summary and Key Messages 126 References 128 Chapter 8 Knowledge Economy and Globalization 131 Hannes Toivanen Reasoning Behind: The New Globalization of Innovation 131 New Globalization, New Forms of Collaboration 135 Best Results through Joint Doing and Learning 140 Summary and Key Messages 144 References 146 Chapter 9 Conclusion and Lessons Learned 149 Kimmo Halme, Kalle A. Piirainen, and Vesa Salminen Understanding the Challenges from Global Trends 149 Education as Competitive Paradigm 151 Governing the Knowledge Economy Ecosystem 151 Enabling Innovation Policy 151 Monitoring and Evaluating Investments 152 Knowledge Economy and Globalization 152 Final Remarks 153 References 156 List of Actors and Useful Links 157 Boxes O.1 Key Messages from Chapter 2 7 O.2 Key Messages from Chapter 3 9 O.3 Key Messages from Chapter 4 11 O.4 Actors and Institutions in the Finnish Knowledge Economy 12 Finland as a Knowledge Economy 2.0 • http://dx.doi.org/10.1596/978-1-4648-0194-5 viii Contents O.5 Key Messages from Chapter 5 14 O.6 Key Messages from Chapter 6 15 O.7 Key Messages from Chapter 7 17 O.8 Key Messages from Chapter 8 19 1.1 Finland Fact File 24 2.1 Actors and Institutions in the Finnish Knowledge Economy 38 2.2 Key Messages 41 3.1 Nokia: Highlighting the Need for Constant Renewal 48 3.2 Innovation Mill: Promoting Entrepreneurial Activity 51 3.3 Demola: Facilitating Open Innovation 52 3.4 Forum Virium: Developing Digital Services 53 3.5 Nokia Bridge Program 54 3.6 Game Industry and Information Security Cluster 56 3.7 Key Messages 58 4.1 History of the Finnish Education System in Brief 63 4.2 Core and Local Curricula for Basic Education: Guaranteeing Equal Quality and Enabling Autonomy 65 4.3 Evaluating Education 66 4.4 Teacher Education in Finland 69 4.5 Aalto University: Adjusting to Needs at the Structural Level 72 4.6 Aalto Factories and the Center for Entrepreneurship: Adjusting to New Needs within Higher Education 73 4.7 Key Messages 74 5.1 Research and Innovation Policy Guidelines for 2011–15: Streamlining the Finnish Innovation System 79 5.2 National Innovation Strategy Process in Finland 82 5.3 Joint Action Plan and Policy Framework for Demand- and User-Driven Policy 84 5.4 Research and Innovation Council: Strategic Development and Coordination of Agenda Setting