Knowledge for Africa s Development: Innovation, Education, and Information and Communications Technologies Johannesburg, South Africa, May 8-10, 2006 DEVELOPING AND IMPLEMENTING KNOWLEDGE STRATEGIES EXPERIENCES IN FINLAND Finland as a Knowledge Economy Elements of Success and Lessons Learned http://info.worldbank.org/etools/docs/library/201645/finland_es.pdf Professor Jorma Routti Helsinki University of Technology & CIM Creative Industries Management Former President of Sitra & Director General of Research DG of European Commission www.cimfunds.com jorma.routti@cimfunds.com

Finland Europe World

Knowledge Economy Index 1995

Strong Correlation: GDP/Capita & KEI Regression KEI 2002 and GDP per capita 2002 40,000 GDP per capita 2002 (1995 constant US$2002) 35,000 R 2 = 0.66 USA Finland Ireland 30,000 25,000 UK 20,000 Taiwan 15,000 Korea Slovenia 10,000 Brazil South Africa 5,000 Turkey Poland Africa India China Russia Ethiopia Ghana Jordan 0 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Knowledge Economy Index 2002 Source: KAM Africa GDP/capita = $2624

Stages of Industrial and Economic Development FOREST-BASED INDUSTRIES MACHINERY, ENGIN. IND. FOREST-BASED IND ICT, ELECTRONICS MACHINERY, ENG. FOREST-BASED IND CHEMICALS

The Four Pillars of the Knowledge Economy Economic and Institutional Regime Interconnected Interdependent Education Information Infrastructure Innovation cjd cjd

Ave RGDP per capita growth 1991-2003 (%) 15 Largest Economies: GDP 2003 (Trillions of US$) 8.0 China $1.32t 6.0 South Korea $0.73t 4.0 India $0.56t United States $9.46t 2.0 Spain $0.76t United Kingdom $1.39t 0.0 Brazil $0.81t Italy $1.24t Canada $0.75t France $1.83t Germany $2.71t 0 10,000 20,000 30,000 40,000 50,000 Real GDP per capita 2003 Japan $5.88t cjd cjd

Real GDP (PPP): Projections 2004-2015 (Using 1991-2003 Average Growth Rates) Trillions of 1995 international $ 16 India China Brazil Canada France Germany 14 Italy Japan Mexico Russian Federation United Kingdom United States China 12 United States 10 India 8 6 Japan Canada Germany Italy Brazil United Kingdom France Mexico Russian Federation 4 2 0 2003 2005 2007 2009 2011 2013 2015 cjd cjd

Securing Competitiveness in the Forest Industry Cluster A11/ 99-08 INFORMATION TECHNOLOGY sensors, measuring and control computational intelligence, simulation and machine vision multimedia and telecommunication tomography FORESTRY ENERGY AND ENVIRON- MENTAL TECHNOLOGY biofuels, combustion technology ecobalances closed cycles energy-saving and emissions MANUFACTURING TECHNOLOGY forestry machines process and production machinery material technology F O R E S T I N D U S T R Y Pulp and paper technology Wood products industry Machines, machinery and processes CHEMICAL TECHNOLOGY paper and bleaching chemicals surface treatment substances pigments, adhesives BIOTECHNOLOGY enzymes rot prevention gene technology CONSTRUCTION AND WOOD TECHNOLOGY modification of wood construction technology and architecture logistics, assembly MARKETS quality competitiveness price competitiveness environmental expertise

Finland s share of the World s... forest resources softwood growing stock % timber removal harvesting of industrial wood forest industry output forest industry exports paper and paperboard exports printing and writing paper exports paper machinery exports pulp machinery exports 0 5 10 15 20 25 30 35 40 (Source: Finnish Forest Industries Federation 2003)

Forest Industry Cluster versus Niche Strategy Timberjack Forest Harvestors Pulp Mills Sunds Design, manufacting and maintenance Valmet Paper Machines Design, manufacturing and remote operations Poyry Design and Consulting Production Focus on specific market segments and products World wide marketing Paper, cardboard, packaging material South America, South Africa, Indonesia Cultivated Forests and Bulk Manufacturing

Industrial Production at 2000 prices Bill. EUR 12 10 8 6 Electronics Metals and engineering Pulp and paper Chemicals Textiles and apparel 4 2 0 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 Sources: Statistics Finland, ETLA.

ICT sector s share in value added, employment and R&D Ireland Finland Korea USA New Zealand Sweden Hungary UK Netherlands Belgium Japan Czech Rep. Norway Canada Denmark France Portugal Austria Australia Spain Italy Germany Mexico Slovak Rep. Greece ICT value added (% of business sector tot., 2000) 0 4 8 12 16 Total Communic. & other eq. Computer & office eq. Services Finland Sweden Canada Japan UK Netherlands Belgium France Norway Denmark Austria USA Korea Italy Australia Czech Rep. Spain Mexico Germany Portugal ICT employment (% of business sector tot., 2000) 0 2 4 6 8 10 Communic. & other eq. Computer & office eq. Services Finland Korea Sweden Japan USA Canada Ireland Netherlands Germany France Belgium UK Denmark Norway Italy Australia Spain Czech Rep. Poland R&D in ICT (Selected ICT ind., % of GDP, 2000) 0 1 2 Manufacturing Services (for those avail.) pekka_ya/esitelmä15092003/k16

Nokia and ICT Cluster 1988 sales USD 5 billion 1988 1988 market capitalization USD 1.4 B Floorings 1% Chemicals 2% Machinery 4% Electrical Wholesale 4% Mobile Telephones 5% Telecommunications 5% Rubber 6% Information Systems 23% Cables 9% Paper 10% Consumer Electronics 31% 2005 sales USD 42 billion 2006 market capitalization USD 90 billion, Mobile Phones 60% Infrastructure 33% Other 7% 1988 1998 2006

Co-operation between companies and universities and research institutes J05/ 00-06 Norway UK Sweden FINLAND Portugal Austria Netherlands Ireland Italy France Denmark Germany Belgium EU Share of innovative companies having co-operation agreements with universities (1994-1996) 0 20 40 60 % Norway UK Sweden FINLAND Portugal Austria Netherlands Ireland Italy France Denmark Germany Belgium Share of innovative companies having co-operation agreements with public research institutes (1994-1996) EU Source: Eurostat, Enterprise DG, 2nd Community Innovation Survey 0 20 40 60 %

Sources: OECD, Main Science and Technology Indicators database, Statistics Finland (Finland 2002) and Statistiska centralbyrån (Sweden 2001, estimate). Docs 36109 02-2003 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 R&D input in some OECD countries Percentage of GDP 4.5 OECD total 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 est. Israel Sweden FINLAND Japan Iceland USA South Korea Germany France Singapore Denmark Canada Great Britain Austria Norway China

The share of high tech exports in some OECD countries 1988-2001 Exports of Finnish high tech products totalled 9.9 billion euros in 2001, i.e. 21 % of total exports of goods. 30 25 20 15 % of total exports of goods EU USA Japan United Kingdom Netherlands FINLAND Switzerland France Sweden Germany Denmark 10 5 Norway 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: Statistics Finland, according to the OECD product catalogue defined in 1995 Docs 32187 B 03 /02-03

Innovation and Funding System Company R&D Private Business Angels Venture Funds Technology Funding Public Research Councils Universities Research Institutes Sectorial research Basic research Applied research Business R&D Business development Marketing Internationalisation

NATIONAL STRATEGIES AND CONSENSUS BUILDING Participants: Objectives: Instruments: Topics: Government: Adoption: Members of Parliament, Media Leaders, Civil Servants Labour Movement, Industry Organizations, Academia Growth, Employment, Balance, Low Inflation Fiscal Policy, Taxation, Incentives, Echange Rates, Interest Rates Globalization, Integration, Trade, Social Policy, Regional Policy, Education, Research, Industry, Agriculture, Banking, Environment, etc. Macroeconomics and Microeonomics Framework Simulation Models, Economic Advisors New EU Members, Latin America, Africa, WB

TIME ENERGY - INFORMATION E = 0 T = max I = max I = 0 E = max T = 0 Jorma.Routti@cimfunds.com