Business with New Technology The Finnish Innovation System
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1 Business with New Technology The Finnish Innovation System Dr. Mika Aalto Head of Division, Strategic Growth Branches Ministry of Employment and the Economy BioKokkola & NanoKokkola
2 Outline Finnish industry - and Finnish economy - is going through a major restructuring Many building blocks for future success exist There is some room for improvement in seeking growth New industrial policy report Spearheads of growth: Bioeconomy Spearheads of growth: Cleantech Spearheads of growth: Digitalization
3 Finland s two key export sectors have fallen sharply 6 Paperiteollisuus Forest industry Elektroniikkateollisuus Electronic industry Osuus % of GDP bruttokansantuotteesta, % Source: Statistics Finland Lähde: Tilastokeskus. 3
4 DM Jobs in the private sector have decreased especially in industy Work force, 1,000 persons Source: Statistics Finland, National Economics 2012
5 DM Labour productivity in the private sector has collapsed in Finland due to structural changes Labour productivity in industry and private services Index, 1995=100 Source: OECD STAN 2013
6 GDP growth in Finland Source: Prof. Matti Pohjola, Aalto U
7 Innovation Union Scoreboard 2014
8 Innovation Union Scoreboard 2014
9 IMD World Competitiveness Report 2014
10 World Economic Forum
11 R&D funding in state budget (approx. 2 billion euro in total p.a., 1,1%/GDP) University central hospitals Other D&D Government research institutes Academy of Finland Tekes Universities
12 Finland s university, polytechnic and research institute landscape 14 universities 25 polytechnics University (blue) Polytechnic (green) Research institute (red) 18 state research institutes (2012)
13 DM Public funding for R&D in companies % Source: OECD, Research and Development Database
14 DM Finland is the leading country in innovation cooperation between companies and research sector Tekes plays a significant role in creating innovation partnerships between companies, universities and research organisations. Share of innovating companies % Source: Eurostat, Community Innovation Survey
15 ...innovation is not only about science and R&D......business is not only about technology...
16 Know-how (science, technology) Three dimensions of innovation promotion Demand Innovations Users R&D UDI Businesses & clusters New and growing firms Public services UDI = Using Doing Interacting
17 Vision of the new industrial policy During the preparation of the new industrial policy, the following future vision was formulated: The Finnish industry has deep insight in development of global markets, carries out business in a variety of areas, renews itself continously and produces high value to the Finnish national economy. Reaching this vision depends primarily on the companies success (eg. competitive products, successful leadership and management) A well-thought industrial policy and smart measures on the public side can facilitate this success.
18 What kind of growth areas are needed? The global development and competition make it all the time more difficult to predict the development of a certain industrial sector, making it more probable that those predictions will fail. A small country with limited resources, like Finland, has to inevitably make choices. It is beneficial for a small economy to make choices that are as cross-cutting as possible, have impact on most sectors of business and industry and which appear to be most potential for Finnish success. The choice of these focus areas should be based, at least, on the following principles: Focus area cuts across most areas of business and industry. Finland has strong knowledge in the focus area, or the knowledge can be built within reasonable time frame. Focus areas create a positive impact in creating sustainable growth of economy and continuous renewal. Focus area is suitable to a small and open economy such as Finland.
19 Focus areas for growth 2014 Goal: Create strong growth in the Finnish economy Tekes Tesi Finnvera Finpro ELYt VTT Others Cleantech Bioeconomy Digital business Renewal through innovations Public funding instruments and growth companies Team Finland, exports, internationalization and investments MEE growth program Governments growth package Hallituksen panostukset kasvun tukemiseen Strengthening the competitive edge in business environment Utilizing strengths of Finland
20 Sustainable growth from bioeconomy The forest bioeconomy perspective
21 Bioeconomy: The next economic wave GDP and wellbeing Fossil economy Natural economy The next wave of economy is bioeconomy, which produces economic growth and wellbeing. Finland is a bioeconomy superpower. We have plenty of natural resources, expertise and agility.
22 Bioeconomy: Born from necessity 30 % more water 50 % more food Due to population growth, by 2030 the world will need: People are forced to find alternatives to non-renewable raw materials. Climate change Scarcity of non-renewable raw materials etc 45 % more energy
23 Bioeconomy: Bioeconomy is the solution Sustainably uses biological natural resources to produce goods, energy, food and services Aims: decrease dependency on fossil raw materials prevent deprivation of ecosystems promote economic development and create new jobs
24 Bioeconomy s significance in Finland Turnover 60bn Finland seeks to increase its bioeconomy output to 100bn euros by 2025 and to create 100,000 new jobs in the process. Share of employment 13% Bioeconomy combines wood processing, chemistry, energy, construction, technology food and health. Share of exports 26% About half of Finland s bioeconomy consists of forest bioeconomy.
25 Strategic goals Implementation and monitoring Finland s bioeconomy strategy 1. COMPETITIVE ENVIRONMENT FOR BIOECONOMY 2. NEW BUSINESS FROM BIOECONOMY 3. STRONG KNOW-HOW BASE FOR BIOECONOMY 4. USABILITY AND SUSTAINABILITY OF BIOMASS Sustainable bioeconomy solutions are the basis of Finland s welfare and competitiveness.
26 Bioeconomy value chains Wood processing Chemistry Biomass Energy Food Construction Ecosystem services Products Expertise Bioeconomy value chains produce goods, services and solutions sustainably and through clean technologies e.g. cleantech
27 Government Strategy on Promoting Cleantech Business
28 Cleantech Cleantech refers to products, services and processes, which promote the use of natural resources while reducing emissions in the environment Cleantech is not a specific industry but the use of clean technology spread throughout all industrial branches. Cleantech includes Energy efficient products and materials and services enhancing energy efficiency Totally new materials Bioenergy, equipment and components and also traditional end-of-pipe and end-of-stack technology etc.
29 Vision and Strategy Vision Finland is a global super power in cleantech business in 2020 Strategic targets The country brand attracts foreign investments The visibility of Finland in the international decision making will grow Finland strengthens its position in cleantech innovations
30 Numerical Targets Turnover* 25 B 50 B 75 % exports new cleantech jobs Energy and forest industry cleantech business to be added
31 Priority Actions for the Strategy Implementation 1. Cleantech up to a top theme of the country brand 2. Advancing investments 3. Creating demonstration environments 4. Cleantech Finland Board
32 Digitalization
33 ICT 2015 Program Four critical paths Construction of a national service architecture Ten-year research, development and innovation program ICT 2023 A diverse funding programme to cover the funding needs of start-ups and growing companies Establishing an ICT Expert Group under the Prime Minister s office
34 Re-inventing the industries and enhancing competitiveness Higher value added and productivity Services and digitalization are cross-cutting through all business and industrial sectors New value and innovation through novel combinations of ideas and knowledge Industries Services Digitalization
35 Conclusion Finland will get back on the growth track Finnish industry - and Finnish economy - is going through a major restructuring we have to re-invent ourselves and innovate to create new growth Many building blocks for future success exist strong knowledge base, RDI funding, natural resources, industrial base, many companies operating in global markets There is some room for improvement in seeking growth more emphasis on the market needs (demand side) more balanced approach to innovation vs. research broad-based innovation, incl. immaterial values, services, etc. more entrepreneurs, start-ups and growth companies Spearheads of growth: Bioeconomy Cleantech Digitalization
36 Thank you!! Mika Aalto
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