Impact Assessment in the Policy Cycle in Finland

1. Impact Assessment in the Policy Cycle in Finland Improving impact assessment for policy making Belgian EU Presidency Conference – Brussels, December 8th 2010 Jari Hyvärinen Tekes, Finnish Funding Agency for Technology and Innovation DM

2. Goal of the Presentation • I present new evaluating tools to analyze the socio-economic effects of Tekes activities in parallel with Tekes impact goals. • The impact goals are economic renewing, environment and well-being. • My aim is to find more suitable road-maps how Tekes funding and activities can be grouped to more controllable items. • I emphasize several improvements by combining the Tekes impact goals and the steps of impact model (inputs and resources, activities, results, and impacts on economy and society) in order to improve evaluation quality and evaluation tools. DM

5. Tekes R&D funding in 2009 Total 579 million euros and 2,177 projects Figures include 12 million euros from the Workplace Development ProgrammeTYKES and 22 million euros funding from EU Structural Funds. Research fundingfor universities,research institutesand polytechnics236 million euros R&D grants to companies and public organisations 246 million euros R&DLoans to companies97 million euros DM 624592 and 607668

6. Focus of Tekes funding in 2009 165 mill.euros • 238 mill.euros • 212 mill.euros • 53 mill.euros • 234 mill.euros 50 % of the funding • 41 %of the funding • 37 %of the funding • 9 %of the funding • 41 %of the funding Tekes funding for the service sector Tekes funding for energy andenvironment targets Tekes funding for applications andutilisation of ICT Tekes funding for the wellbeingand health theme Tekes funding for non-technicaldevelopment (the business andservice concepts, branding, practices, management and organising of work,design, consumer behaviour...) DM 624592

7. Expertise and networks for innovations Tekes's services Funding for innovative R&D and business Networking Finnish and global companies and researchers Tekes is non-profit and takes no equity or ownership on intellectual property. Customers Finnish and international companies located in Finland Universities, research institutes, hospitals etc. Resources Budget: 600 million euros annually Personnel: 360 in Finland and abroad Public agency under the Ministry of Employment and the Economy DM 607668

8. Evaluation Process in Tekes • Post-project evaluation • Final project reports • 3 years after project reports • Data Warehouse • Tekes program evaluations • Strategic innovation research reports • Other publications: • Journal articles • Other research reports • Several surveys, evaluations and official summations • Pre-project evaluation • Evaluation of the project: • Eval project tool • Asta client tool • Risks • Challenges • Goals • Novelty value • Co-operation • Exploitation of results • Commercialisation • etc • Evaluation during the project • Project interim reports • Project executive group meetings DM

9. New economic growth model – sources of economic growth Technical and non-technical innovationsImmaterial capitalCreative individuals and communitiesMarket orientation Labour Economic growth Increase in exports Know-how Education Improvement inemployment Research Knowledge Growth in productivity Regional development Technology Innovation Growth in well-being Capital Customer and user orientationPioneering markets Open innovations According to the new growth models, economic growth is rooted in education, research and technology. DM 218475

10. Tekes programmes in brief • Steering group • Companies Research projectsat universities andresearch institutes Grants Tekes Synergy Networking Part financing • Preparation • Coordination • Decisionmaking Grants Loans Capital loans Company R&Dprojects Effective utilisation of research results is ensured by schedulingthe projects of research institutes and universities concurrentlywith company R&D projects, and by networking with them. DM 30256

11. Innovations are profitable investments for the future Impact Tekesobjectives • Knowledge, educationand culture • Productivityand renewal • Environment • Wellbeing Output A wellbeingsociety and environment • Innovations: products and services, processes, organization and methods • New firms, business areas and services • Growth of firms and internationalization • Productivity • Utilization and spillovers of new knowledge and know-how Productivityand renewalof industries Activities • R&D and innovation activities • Education • New methods and networking Input Capabilitiesin innovationactivities • Investment in intangible and tangible capital • Existing knowledge, information and know-how DM 218475

12. Direct effects of Tekes to innovation activities of companies Amount of R&D&I Increase of R&D Investments The impact goals: economic renewing Increase of R&D resources Toivanen & Niininen (2000); Ali-Yrkkö & Pajarinen (2003); Ebersberger, (2005, 2006); Ali-Yrkkö (2004, 2005, 2008) Ali-Yrkkö, & Maliranta (2006) Kiuru et al.. 2008; Lehtoranta et al.. 2008 Einiö 2009 Characteristics of R&D&I Increase of risks and challenges Broadening of projects/ innovation activities Vaihekoski et al. (2003);.Pekkanen et al.. (2004); Ebersberger (2005); Hovi et al. (2006), Tekes client inquiries and technology programs, Kiuru et al.. 2008; Lehtoranta et al.. (2008); et al.. Working methods Tekes Funding and Priorities New/ deeper co-operation and networking Correlation between Tekes and the specific indicator has statistical significance using national accounts. Scope of Innovation co-operation Vaihekoski et al. (2003); Ebersbergeri (2005); Hovi et al. (2006); ), client inquiries and technology programs, Kiuru ym. 2008; Lehtoranta etc. (2008); Lemola et al.. (2008); Link between Tekes and the specific indicator has been established through project evaluations and/or company surveys General link between innovation activities and the specific indicator has been established in previous research Vaihekoski et al. (2003); Pekkanen et al.. (2004); Miettunen & Nissinen (2000) Direct economic impacts on firm’s business activities (liquidity, profitability etc.)

13. Results of Innovation Activities in Firms Increase of results Tangible The impact goals: economic renewing New product innovations New process innovations Patents etc. Correlation between Tekes and the specific indicator has statistical significance using national accounts. i.e. Tanayama (2002), Ebersberger 2004, 2005; Hyytinen & Toivanen (2005); Hovi (2006) Kiuru et al. 2008; Lemolaet al. (2008), et al. Intangible Link between Tekes and the specific indicator has been established through project evaluations and/or company surveys New working method innovations Tekes Funding and Priorities Improvements of competences i.e. Pekkanenym. (2004 several Tekes client inquiries and technology program evaluations, (Ahonen et al. 2008) General link between innovation activities and the specific indicator has been established in previous research Increase of innovation activities Spread of knowledge and know-how i.e. Rouvinen (2007); Lemolaym. (2008); several Tekes client inquiries and technology program evaluations; Autio et al. (2008) Spillovers Increase of absorption capabilities Quicker implementation of new technologies More effective applications of knowledge

14. Impacts on Innovation Activity in Firms New products and services More efficient production processes The impact goals: economic renewing Strenghtening of business processes Rantala (2003,2006); Pekkanen et al. (2004); Lehtoranta et al. (2008); several Tekes client inquiries and technology program evaluations More commercializations Strenghten ing od value chains and nets Tekes Funding and Priorities Vaihekoski et al. (2003); Pekkanen et al. (2004); Hovi (2006); Lemolaym. (2008); several Tekes client inquiries and technology program evaluations New business ideas and areas Internationalization New social networks Ahonen ym. 2008, several Tekes client inquiries and technology program evaluations; Lemola et al. (2008) Strenghtening national and sectoral knowledge base Correlation between Tekes and the specific indicator has statistical significance using national accounts. More efficient distribution of work Link between Tekes and the specific indicator has been established through project evaluations and/or company surveys New research areas General link between innovation activities and the specific indicator has been established in previous research

15. Impacts on Productivity and Renewing Production effectiveness Improved labour productivity The impact goals: economic renewing More efficient techcnologies Productivity Renewing of firms (new firms in the market) i.e. Rouvinen (2002) Rantala (2003, 2004, 2006) Maliranta (2002 , 2005) Ali-Yrkkö & Maliranta (2006) Piekkola (2006) Huovari & Lehto (2009) several Tekes client inquiries and technology program evaluations. Success and growth of firms i.e. Miettunen & Nissinen (2000); Vaihekoski ym. (2003); Pekkanen et al. (2004); Ebersberger (2005); Ali-Yrkkö (2005), Hovi (2006); Lehtoranta et al. (2008); Koski (2008) Tekes Funding and Priorities New firm entry Renewing of Business Life i.e. Maliranta (2002 , 2005) several Tekes client inquiries and technology program evaluations; Structural change of industrial and d service sectors Correlation between Tekes and the specific indicator has statistical significance using national accounts. Link between Tekes and the specific indicator has been established through project evaluations and/or company surveys General link between innovation activities and the specific indicator has been established in previous research

16. Impacts on Innovation Activity: Direct Effects Results of Innovation Activities of Firms Impacts on Innovation Activity of Firms Impacts on Productivity and Renewing Amount of R&D&I Tangible New products and services Increase of R&D&I investments Production Efficiency New product innovations More efficient production processes Improved labour productivity Productivity Increase of R&D&I resources (jobs) New process innovations More efficient techcnologies Strenghtening of business processes Characteristics of R&D&I Patents etc. More commercializations Increase of risks and challenges New Firms in the market Intangible Strenghten ing od value chains and nets Broader range of projects and innovation activities Tekes Funding and Priorities New working method innovations Renewing of Business Life Success and growth of firms New business ideas and areas Working methods of innovation activity Improvements of competences New firm entry Internationalization New working methods and networking Increase of innovation activities Structural change of industrial and d service sectors New social networks Scope and scale of innovation co-operation Spread of knowledge and know-how Strenghtening national and sectoral knowledge base Correlation between Tekes and the specific indicator has statistical significance using national accounts. Direct impacts on profitability, liquidity and other indicators of economic performance More efficient distribution of work Spillovers Link between Tekes and the specific indicator has been established through project evaluations and/or company surveys Increase of absorption capabilities New research areas The impact goal: economic renewing More effective applications of knowledge General link between innovation activities and the specific indicator has been established in previous research Quicker implementation of new technologies

17. Innovation inputs and outputs 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Composite indicator for output Switzerland Germany Finland Sweden Denmark EU 15 Austria Great Britain Netherlands France EU 25 Ireland Belgium Italy Iceland Czechia Spain Slovakia Slovenia Norway Hungary Estonia Romania Poland Portugal Bulgaria Greece Lithuania Latvia 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 Composite indicator for input According to indicators used by the EU, innovation inputs produce outputs in line with expectations in Finland. Source: European Innovation Scoreboard 2007,EU Structural Indicators DM 36054 and 218475

18. The impact goals: environment Inputs Investment in intangible and tangible capital In 2009, Tekes funded about 230 million EUR towards innovative projects aimed at generating new know-how and new kinds of products, processes, and service or business concepts in the area of environment and climate change. Existing knowledge, information and know-how Already ended Tekes programs Activities R&D and innovation activities Development of sustainable energy and environment. Climate change has broad impacts on global economy, and it creates new business possibilities. Several programs have improved a national climate business cluster in Finland. New methods and networking Most programs have improved capabilities where research centers and universities have networked with each other (interdisciplinary activities),and with companies. Also international contacts with clients, networked firms and funders have increased. DM

19. Funding of energy and environmentarea in 2009, totalabout 230 M€

20. Water 2008-2012 (90 M€) Tekes Programs in Energy and Climate Change BioRefine 2007-2012 (200M€) • WOOD ENERGY 1999-2003 • WASTE ENEGY USE 98-01 • CODE 1999-2002 • FIRE PLACE 1997-1999 • WOOD SMALL USAGE 2002-2006 • DENSY 2003-2007 • FUSION 1999-2002, 2003-2006 • PROMOTOR 1999-2003 • PROCESS INTEGRATION 2000-2004 • CUBE 2002-2006 • CLIMTECH 1999-2002 • CLIMBUS 2004-2008 • STREAMS 2001-2004 • FINE 2002-2005 Sustainable community 2007-2012 (100 M€) Climate economy Electric vehicle Renewable energy Groove 2010 – 2014 (95 M€) Fuel cells 2007-2013 (144M€) Prepared programs 2005 2012 2014 2010

21. SHOK Programs – Energy and Enviroment Strategic centre for science, technology and innovation (SHOK) TIVIT FIMECC CLEEN FOREST CLUSTER Clean energy FCEP – Future Combustion Engine Power Plants EFFIMA- Energy & lifecycle efficient machines ELEMENT- Energy & lifecycle efficient metal prosesses Scarce resource solutions Future Biorefinery EffTech – Resource efficient production technologies Service business and innovations MMEA- Measurement, monitoring and Environmental Assessment Future Internet /Envitori -project Cooperative Traffic Intelligent systems and environments SGEM – Smart grids and energy market DM

22. The impact goals: environment Results Innovations: products and services, processes, organization and methods Long-distance and generic research has created new focus areas in climate business areas New skills on decentralized energy technologies and new promising innovations in Finland New methods of calculating energy efficiency in buildings, evaluation of life cycle costs and environment impacts New products, services and prosesses as well as new methods and programs New firms, business areas and services Development of energy use mechanics and integration of recycling Raising of knowledge and research in waste business, new firms and products. Growth of firms and internationalization Develop new technologies in export markets for example in small firewood production Utilization and spillovers of new knowledge and know-how Important role in knowledge updating and development as well as finding new specialists in climate and environment area. DM

23. The impact goals: environment • Impacts • Climate warming is a global challenge, but it creates talents for green economic growth • Environment and energy innovations change structures of global economy • International climate policy and agreements change operating environment of firms, because it channels investments and technology choices • Consumers and final users consume more ethically because worries about environment are increasing - for example - by comparing ecological foot prints. DM

24. The impact goals: environment Inputs Results Activities Impacts Sustainable energy and environment. New focus areas in climate business areas talents for green economic growth In 2009, Tekes funded about 230 million EUR Climate change and new business possibilities New skills on decentralized energy technologies Changes in structures of global economy Already ended Tekes programs • Development of energy use mechanics and integration of recycling National climate business cluster International climate policy change operating environment of firms Networking of research centers, universities and companies. Raising of knowledge and research in waste business More ethical consumption International co-operation DM

25. Environmental quality and growth competitiveness In Finland, investment in the quality of the environment and competitiveness complement one another. EPI-index *(2008) Switzerland Norway Sweden Finland Austria New Zealand France Iceland Canada Germany Great Britain Japan Denmark Spain Ireland Taiwan USA Australia Israel Netherlands Belgium 4.65 4.75 4.85 4.95 5.05 5.15 5.25 5.35 5.45 5.55 5.65 5.75 • Global Competitiveness Ranking (2008) * EPI = Environmental Performance IndexSources: WEF, Global Competitiveness Report 2008-2009 and Yale and Columbia universities: Environmental Performance Index 2008 DM 36054, 218475 and 640134

26. Ecological Footprint Source: WWF Living Planet Report 2008 DM

27. The impact goals: environment Inputs Results Activities Impacts Sustainable energy and environment. New focus areas in climate business areas talents for green economic growth In 2009, Tekes funded about 230 million EUR Climate change and new business possibilities New skills on decentralized energy technologies Changes in structures of global economy Already ended Tekes programs • Development of energy use mechanics and integration of recycling National climate business cluster International climate policy change operating environment of firms Networking of research centers, universities and companies. Raising of knowledge and research in waste business More ethical consumption International co-operation DM

28. The impact goal: well-being Inputs Investment in intangible and tangible capital A starting point is ongoing knowledge in client processes and services Cost-benefit analysis and implementation of most suitable results Existing knowledge, information and know-how Co-operation between shake-up of the health services and already well-working practices and methods, and share them with partners Duplication of processes and broad utilization Activities R&D and innovation activities In order to develop, produce and implementation a new kind of client-based services in co-operation with several partners, services methods and concepts in the social and health services New methods and networking Co-operation between public, private and third sector DM

29. The impact goal: well-being Results Implementations of new innovations and well-working methods and practices in order to improve productivity in the public social and health services More flexibility and client based behavior with co-operation between public, private and third sectors Consolidation of several data systems (for example patient registers) which improves the activities of whole wellbeing sector Well-being in working life and productivity DM

30. Tekes program – Innovations in social and healthservicesystem (SOTE) Goals in the social and health system Vision Quality Impact Effectiveness Availability Goals of the program More client based solutions More attraction to the sector Co-operation of public, private and third sector More choices to clients More deterrent activities DM

31. From equipment development to system development – from funder to goal seeker DM

32. The impact goal: wellbeing • Impacts • Economic prosperity creates prerequisites to increase well-being • National strengths are well-educated and capable citizens as well as long-life learning • Well-functioning education system is a basis for quality-based social and health system • Healthy and well-being employees are more productive and eager to learn more • New markets for companies in the well-being sector DM

33. The impact goals: well-being Inputs Results Activities Impacts Economic prosperity Develop, produce and implement new kind of client-based services Implementations of new innovations and well-working methods Ongoing knowledge in client processes and services well-educated and capable citizens, and long-life learning Co-operation with several partners, service methods and concepts Productivity • Flexibility and client based behavior Already ended Tekes programs Healthy employees and productivity Co-operation between public, private and third sector Consolidation of several data systems Implementation of most suitable results New markets for companies in the well-being sector Networking of research centers, universities and companies. DM

34. Thankyou! Further information about the impact of Tekes funding andexamples on innovations made in the projects andother results: http://www.tekes.fi/en/community/Results_and_impact/468/Results_and_impact/1283 Tekes Programs (http://www.tekes.fi/en/community/Networking/359/Networking/1294) Strategic centre for science, technology and innovation (SHOK) (CLEEN, http://www.cleen.fi/home/) DM