Ministry of Education Evaluation of the Finnish National Innovation System Policy Report www.evaluation.f i This page is intentionally left blank for double-sided printing This page is intentionally left blank for double-sided printing Published on 28 October 2009 at 13:00 Finnish local time Evaluation of the Finnish National Innovation System – Policy Report www.evaluation.f i (Also available: Full Report) Chair of the evaluation panel: Professor Reinhilde Veugelers Katholieke Universiteit Leuven (Belgium) Other international panelists: Professor Karl Aiginger Austrian Institute of Economic Research (WIFO) Professor Dan Breznitz Georgia Institute of Technology (USA) Professor Charles Edquist Lund University (Sweden) Professor Gordon Murray University of Exeter (UK) Professor Gianmarco Ottaviano Bocconi University (Italy) Finnish panelists: Professor Ari Hyytinen University of Jyväskylä Research Professor Aki Kangasharju VATT, The Government Institute for Economic Research Adjunct Professor Mikko Ketokivi Helsinki University of Technology Head of Unit Terttu Luukkonen ETLA, The Research Institute of the Finnish Economy Research Director Mika Maliranta ETLA, The Research Institute of the Finnish Economy Professor Markku Maula Helsinki University of Technology Professor (Emeritus) Paavo Okko Turku School of Economics Research Director Petri Rouvinen Etlatieto Oy (a subsidiary of ETLA) Professor Markku Sotarauta University of Tampere Researcher Tanja Tanayama HECER, Helsinki Center of Economic Research and Etlatieto Oy Director Otto Toivanen HECER, Helsinki Center of Economic Research CEO Pekka Ylä-Anttila Etlatieto Oy (a subsidiary of ETLA) Publisher: Taloustieto Oy (on behalf of the Ministry of Education and the Ministry of Employment and the Economy) Helsinki University Print, 2009 Cover design: Porkka & Kuutsa Oy Cover photo: Kai Kuusisto / Plugi ISBN 978-951-628-490-6 1 Sounding Board Chairs of the sounding board: State Secretary Mikko Alkio (until 31 July 2009) Ministry of Employment and the Economy State Secretary Riina Nevamäki (since 1 August 2009) Ministry of Employment and the Economy Other members of the board: Ministerial Advisor Pirjo Kutinlahti Ministry of Employment and the Economy Director Anita Lehikoinen Ministry of Education State Secretary Heljä Misukka Ministry of Education State Secretary Velipekka Nummikoski Ministry of Finance Director General Petri Peltonen Ministry of Employment and the Economy State Secretary Terttu Savolainen Ministry of Social Affairs and Health Special Government Advisor Ilkka Turunen Ministry of Education Members of the research and support team Ali-Yrkkö, Jyrki; Autio, Erkko; Deschryvere, Matthias; Dixon, Roderick; Hyvönen-Rajecki, Kaija; Koski, Heli; Kotilainen, Markku; Kotiranta, Annu; Nikula, Nuutti; Nikulainen, Tuomo; Paasi, Marianne; Pajarinen, Mika; Palmberg, Christopher; Rogers, John; Saariokari, Pirjo; Tahvanainen, Antti; Takalo, Tuomas; Väänänen, Lotta. This Policy Report summarizes the key findings of the evaluation. The Full Report provides further details and elaboration. Some of the studies conducted to support the evaluation are also available separately: • Autio, E. (2009). High-Growth Firms in Finland: Issues and Challenges. ETLA Discussion Papers, 1197. • Deschryvere, M. (2009). A Comparative Survey of Structural Characteristics of Finnish University Departments. ETLA Discus- sion Papers, 1195. • Kotiranta, A., Nikulainen, T., Tahvanainen A-J., Deschryvere, M., & Pajarinen, M. (2009). Evaluating National Innovation Systems – Key Insights from the Finnish INNOEVAL Survey. ETLA Discussion papers, 1196. • Nikulainen, T., & Tahvanainen, A-J. (2009). Towards Demand Based Innovation Policy? The Introduction of SHOKs as Innovation Policy Instrument. ETLA Discussion Papers, 1182. • Tahvanainen, A-J. (2009). Finnish University Technology Transfer in a Whirl of Changes – A Brief Summary. ETLA Discussion Pa- pers, 1188. • Takalo, T. (2009). Rationales and Instruments for Public Innovation Policies. ETLA Discussion Papers, 1185. • Tanayama, T., & Ylä-Anttila, P. (2009). Tax Incentives as Innovation Policy Tool (in Finnish with an abstract in English). ETLA Dis- cussion Papers, 1189. Free electronic versions of all reports and studies as well as other related material are available at www.evaluation.fi. To obtain printed copies of the reports, please fill a form at the web site or contact Riikka Pellikka, Ministry of Employment and the Economy, [email protected], +358 50 302 7671. Contacts Pirjo Kutinlahti, Ministry of Employment and the Economy, [email protected], +358 10 606 3548 Petri Rouvinen, Etlatieto Oy, [email protected], +358 9 6099 0202 Ilkka Turunen, Ministry of Education, [email protected], + 358 9 1607 7299 2 Table of Contents Preface > 4 Executive Summary > 9 Overview and General Conclusions 1. Evaluation Task > 12 2. Future Challenges and Ongoing Reforms > 14 3. Policy Governance and Steering > 20 Six Main Points of View: Summaries by Sub-Panel 4. Broad-Based Innovation Policy > 34 5. Demand- and User-Driven Innovation > 42 6. Globalization of Business Activities > 52 7. Growth Entrepreneurship and Finance > 60 8. Geography of Innovative Activity > 70 9. Education, Research and the Economy > 78 Growth Strategy: A Strong Commitment to Education, Research, and Innovation 10. The Way Forward > 88 Bibliography > 90 Endnotes > 92 3 Preface In the fall of 2008 the Ministry of Education and the in implementing the Strategy and in steering the system Ministry of Employment and the Economy commis- towards a better future. sioned an international evaluation of the Finnish na- Our evaluation task is outlined in the original tional innovation system. As I was in the final months contract notice (ref. no. 2327/420/2008), as well as in of my term as an economic advisor at the Bureau of the evaluation brochure, prepared for the opening European Policy Analysis to JM Barroso, European press conference on 11 December 2008: The Minis- Commission, and not yet fully returned to my pro- tries specifically wanted an independent outside view of fessorship at Katholieke Universiteit Leuven (Belgium), the system. We were to look into the current and fu- the timing was perfect for me to learn about the fea- ture challenges and consider whether or not they are tures of the innovation system that continues to be sufficiently acknowledged and addressed. We were admired and imitated worldwide. to point out needs for institutional and policy adjust- ments and reforms, as well as to draw conclusions on policy governance and steering. Given the short time Shooting a moving target and broad coverage of our task, we were to evaluate the system as a whole rather than focus on individual The evaluation mission turned out to be challenging actors, organizations, and instruments. In our evalu- not only due to its considerable scope and shortness ation we looked particularly at whether public bod- of time, but also because of the several ongoing tran- ies and policies assist and incentivize both public and sitions in the Finnish system, in part induced by the private individuals and organizations in generating new innovation strategy (Aho, et al., 2008) that served and utilizing novel ideas. as our starting point; at least four major reforms ad- In collaboration with the two Ministries, the eval- vanced along with our evaluation and dozens of new uation panel settled on six main points of view in the policy initiatives have seen the light this year alone. evaluation (Exhibit 1); the basic choices of the Strat- Our solution to this moving target problem was to egy underlie each point of view. We organized our- employ heterodox approaches and work (partly) in selves into six sub-panels, one for each main point of smaller groups. Despite the evolving nature of the view. Based on the work by the sub-panels, we draw system, as well as the valuable and welcomed diver- our overall conclusions as the whole panel. sity in the opinions of the panel, we ended up with a Each sub-panel was led by an international ex- coherent joint view on conclusions that should help pert working with two Finnish ones: an academic Exhibit 1: The basic choices underlie the Global trends, national structures & their evolution, choices of the Finnish National Innovation Strategy six main points of view, each studied by a sub-panel led by an international BROAD-BASED DEMAND- & GLOBALIZA- GROWTH GEOGRAPHY EDUCATION, expert. INNOVATION USER-DRIVEN TION OF ENTREPRE- OF INNOVATIVE RESEARCH, POLICY INNOVATION BUSINESS NEURSHIP & ACTIVITY AND THE Source: The brochure prepared by the Ministry of Educa- ACTIVITIES FINANCE ECONOMY tion and the Ministry of Employment and the Economy for the opening press conference of the evaluation on 11 C. Edquist D. Breznitz K. Aiginger G. Murray G. Ottaviano R. Veugelers December 2008. T. Luukkonen M. Ketokivi P. Okko A. Hyytinen A. Kangasharju O. Toivanen M. Sotarauta P. Rouvinen P. Ylä-Anttila M. Maula M. Maliranta T. Tanayama Innovation activity in a world without borders Innovative individuals and communities Demand and user orientation Systemic approach The Finnish national innovation system and policy: policy/institutional reforms/adjustments to meet future challenges 4 scholar and an innovation researcher representing tical policy concerns. Finland is in a unique position ETLA. Given the task and the time, each sub-panel to lead innovation policy thinking globally by filling had to make hard choices as to its approach and em- these gaps in scholarly knowledge and by providing