Some Facts and Figures ... and Thoughts on the Finnish Innovation Environment

1. Some Facts and Figures ... and Thoughts on the Finnish Innovation Environment TimoKekkonen, Confederation of Finnish Industries EK

2. Innovation drives growth • Intangible investments have a growing importance in productivity growth and in the creation of wealth • Investments in intangible assets accounted for ⅔ – ¾ of labour productivity growth in many OECD countries • Firms invest as much in intangible assets related to innovation (R&D, software, skills, organisational know-how, branding,…) as in traditional capital (machinery, equipment, buildings,…) 2

3. Some strengths of the Finnish Innovation System • Openness of the economy • Favourable framework conditions, e.g. macroeconomic stability • High level of education • Sizeable R&D expenditure • Strong ICT sector • Long-term commitment to education and research • Close co-operation within the system • Radically optimistic entrepreneurial culture gaining ground • Start-up of several reforms • …

4. Finland in international comparisons 1/3 Finland ranks highly in competitiveness and innovation. According to Innovation Union Scoreboard 2010, Sweden, Denmark, Finland and Germany are the Innovation leaders and all show a performance well above that of the EU27. ITIF ranked Finland second with R&D input and personnel, venture capital, productivity and trade indicators. A survey measuring the achievement of the EU’s Lisbon goals published in 2008 indicated that Finland was the most competitive economy in the Union. Finland came top in productivity development and human capital. Based on the Lisbon Review, Finland was third in competitivenesscomparison in the EU in 2008. Finland was on top in innovation and R&D and in enterprise environment, as well as in sustainable development. According to WEF, Finland was the fourth most competitive country inthe world in 2011. The top three countries were Switzerland, Singapore and Sweden. Finland rates also as one of the innovation powerhouses. Sources: EU, The Innovation Union Scoreboard 2010; The Information Technology and Innovation Foundation ITIF; The Atlantic Century II European Growth and Jobs Monitor 2008; The Lisbon Council & Allianz Dresdner Economic Research: The Lisbon Review 2008;WEF: The Global Competitiveness Report 2011-2012 DM 36054

5. Finland in international comparisons 2/3 IMD ranked Finland 15th in overall competitiveness in 2011. The threemost competitive countries were Singapore, USA and Hong Kong. Based on the comparison of the European Commission in 2005, Finland was among the leading countries in investing into knowledge-based economy and performance of the economy. In the Canadian Performance and Potential 2005-2006 comparison, Finland was among the four gold medallist when OECD countries were compared by economic, societal and environmental indicators. In a comparison made by the University of United Nations, Finlandwas ranked second in overall ranking. Finland was also rankedsecond in education, technology and information indices. According to the OECD PISA 2006 study, young Finns were first inthe OECD in sciences, second in mathematics and reading. Sources: IMD: World Competitiveness Yearbook 2011; Key Figures 2005 on Science, Technology and Innovation; Performance and Potential 2005-06, The World of Canada, Trends Reshaping Our Future, 2005; United Nations University, The Millennium Project 2001; PISA 2006 Science Competencies for Tomorrow's World. OECD 2007. DM 36054

6. Finland in international comparisons 3/3 Wellbeing and sustainable development Wellbeing Assessment is a method of assessing sustainability thatgives people and the ecosystem equal weight. The Wellbeing Index (WI) is the combination of indicators related to human wellbeing (HWI, Human Wellbeing Index) and ecosystem Wellbeing (EWI, Ecosystem Wellbeing Index). Published in 2001, The Wellbeing of Nations surveys 180 countries. In this comparison Sweden ranks 1st and Finland 2nd. The 2008 Environmental Performance Index (EPI) ranks 149 countries on 25 indicators tracked across six established policy categories: Environmental Health, Air Pollution, Water Resources, Biodiversity and Habitat, Productive Natural Resources, and Climate Change. Finland is ranked 4th. The Human Development Index (HDI) ranks 179 countries by acomposite measure of life expectancy, education and income level.Iceland is at the top of HDI 2008, followed by Norway, Canada, Australia and Ireland. Finland is ranked 12th. Sources: Robert Prescott-Allen (2001), The Wellbeing of Nations. A Country-by-Country Index of Quality of Life and the Environment; WEF: Yale and Columbia Universities; UNDP, HumanDevelopment Report 2008; The Environmental Performance Index 2008 DM 36054

7. EU member states’ innovation performance Sweden, Denmark, Finland and Germany are innovation leaders in the EU. SII points 2010 (Summary Innovation Index) 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Source: Innovation Union Scoreboard (IUS) 2010 DM 36054

8. Innovation and competitiveness Finland was ranked second with R&D input and personnel, venture capital, productivity and trade indicators. Source: The Information Technology and InnovationFoundation ITIF; The Atlantic Century II, Benchmarking EU & US, Innovation and competitiveness DM 36054

9. Competitiveness Total ranking 2011-2012 WEFGlobalcompetitiveness IMDTotalcompetitiveness 2010 2011 2011 5 3 4 1 10 14 12 26 20 1 7 6 8 23 13 Switzerland SingaporeSweden USA Germany Netherlands Denmark Japan Great Britain Hong Kong Canada Taiwan Qatar Belgium Norway 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 1 3 2 4 5 8 9 6 12 11 10 13 17 19 14 Finland 4 7 15 Sources: WEF, The Global Competitiveness Report 2011-2012 and IMD World Competitiveness Yearbook 2011 DM 36054

10. Innovation index Points according to WEF The Innovation index covers quality of research institutions, company spending on R&D,university and industry research collaboration, availability of scientists and engineers,utility patents and intellectual property protection. Source: WEF, The Global Competitiveness Report 2010-2011 DM 36054 and 789348

11. Science and innovation profile of Finland Finland is a pioneer in many aspects of innovation activities. Source: OECD Science, Technology and Industry Outlook 2010. DM 36054

12. Finland leads in technology and innovation Ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Measurements of the comparison are R&D investments as percentage of GDP, scientific and engineering researchers per capita and patents per capita. Source: Martin Prosperity Institute: Global technology rankings. DM 36054

13. Ranking of EU countries The Lisbon Review Totalrank Sustainabledevelopment Enterprise environment Information society Network industries Innovation and R&D Social inclusion Liberalisation Financial services Sweden Denmark Netherlands Luxembourg Germany Austria France Great Britain Belgium Ireland Estonia Cyprus Slovenia Czechia 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 5 3 2 7 9 6 10 4 14 13 8 16 12 17 2 1 3 5 12 4 8 9 7 6 10 14 21 11 13 1 7 5 2 6 4 3 11 10 8 9 14 13 18 12 2 8 4 7 5 1 6 3 9 11 18 13 10 15 20 1 3 6 7 2 9 4 5 14 11 17 10 12 19 15 4 2 7 6 1 17 10 12 11 8 5 3 13 15 19 3 2 1 4 5 9 8 13 14 6 11 16 7 15 10 1 3 5 6 7 2 4 9 10 11 8 14 18 12 16 Finland Source: WEF, The Lisbon Review 2010 DM 36054

14. R&D investments in some countries Percentage of GDP 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Source: OECD, Main Science and Technology Indicators DM 36109 and 36054

15. Public sector’s share of total R&D fundingin 2009 % Source: Eurostat DM 36109 and 36054

16. Companies’ share of total R&D fundingin 2009 % % Source: Eurostat DM 36109 and 36054

17. Exports of Finnish goods have decreased significantly with slow recovery as a result of the global crisis Exports of goods by country 1995 = 100 Value index, national currencies, seasonal adjusted 3 month moving average. Source: OECD Main Economic Indicators 2012 DM 36054 and 928485

18. Exports´ share of GDP in 2009 % Source: Statistics Finland DM 36054

19. High tech exports in some countries % of total exports Exports of Finnish high tech products totalled 4.6 billion euros in 2011, i.e. 8 % of total exports of goods. Sources: Eurostat and Finnish Customs DM 32186 and 36054

20. Industrial production has grown rapidly in Finland, but the global crisis has reduced production more than in other developed countries Volume index of industrial production 1995 = 100 Source: Eurostat, METI, OECD DM 36054 and 928485

21. Labour productivity growth in the total economy in 2001-2010 Average annual growth % Source: OECD DM 36054

22. Reserve of foreign direct investments % of GDP Source: UNCTAD, World Investment Report 2011. DM 36054

23. Business R&D input in Finland by sectors *) estimate based on queries and other calculations Source: Statistics Finland Total 4.9 billion euros in 2010 Billion euros 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 DM 36100

24. Key actors of the Finnish innovation environment Finnish IndustryInvestment Ltd Invest in Finland Private investmentsin innovation Sitra Finpro Investors EU structural fundsfor innovation Business Angels Finnvera Associations Companies Regional Councils Inventions Key actorsof the Finnishinnovation environment National Board of Patentsand Registrations of Finland Regional ELY Centres Polytechnics Research institutes Centres of Expertise Universities Technology Centres Academy of Finland Tekes Strategic Centres for Science,Technology and innovation Ministry of Education and Culture Research andInnovation Council Other ministries Ministry of Employmentand the Economy Investments in different sectorslike environment, health and traffic National public investment ininnovation and know-how DM 36100

25. Something has to change. We need ... • new measures to promote entrepreneurship – growth companies • more non-technological innovations • a more efficient and focused public innovation system • more international mobility • to increase productivity with new working models