FINLAND LEAD EU ON RESEARCH AND DEVELOPMENT

The 2004 European Innovation Scoreboard confirms their leading position

The Lisbon European Council of 2000 established the strategic goal for the European Union (EU) to become the most competitive and dynamic knowledge-based economy in the world by 2010, with sustainable economic growth, more and better jobs and greater social cohesion. Innovation was recognized to be at the heart of the Lisbon process and the Lisbon Council asked the European Commission to develop and annually publish a European Innovation Scoreboard (EIS). The present document is the fourth edition of the EIS since 2000.

The EIS relies to a large extent on data from the third European Community Innovation Survey (CIS). This survey is the most important European source for dedicated innovation statistics and it is gradually being adopted by other European and non-European OECD countries. However, because the survey is conducted every four years, data from the latest CIS refer to innovation between 1998 and 2000. Since September 2004 the CIS has become legally binding and significant improvements of CIS methodology and timeliness are currently underway. Consequently, in the future some of the CIS data should become available on a bi-annual basis.

Innovation is defined as the renewal and enlargement of the range of products and services and the associated markets; the establishment of new methods of production, supply and distribution; the introduction of changes in management, work organization and the working conditions and skills of the workforce. To measure innovation performance, the EIS uses official statistics. The choice of indicators for the EIS has been coordinated with the "structural indicators" and the "R&D key figures".

The EIS 2004 covers the 25 EU member states, Bulgaria, Romania, Turkey, the associate countries Iceland, Norway and Switzerland, as well as the US and Japan. The indicators of the EIS summarize the main drivers and outputs of innovation. These indicators are divided into four groups. The EIS is drawn up using two indicators, measuring human resources, the creation of new knowledge, the transmission and application of knowledge, and innovation finance. A composite indicator provides an overview of national performances.

The EIS 2004 confirms Sweden and Finland as the EU' s innovative leaders, with Estonia and Slovenia leading the ten new member states. It also indicates that the gap between the EU and the US and Japan remains constant. The gap between the EU and the US can largely be explained by three indicators, according to the EIS: patents, percentage of the working population with tertiary education and research expenditure.
While Sweden and Finland maintain their leadership positions, they have lost momentum somewhat. Germany and Denmark are performing well above the EU average, with Denmark in particular moving ahead quickly. Other leading countries, such as The Netherlands, Ireland and France, are slowing down. Most of the new EU member states are catching up, although from relatively low levels. Portugal, Latvia, Cyprus, Hungary, Slovakia, Spain, Slovenia, Luxembourg and Poland are situated in the "catching up" quadrant.

Of note, the strong positive trends in most new member states are partly due to very low starting values for a few indicators. Some indicators, particularly for patenting, can also be very volatile as demonstrated by the significant drop in trend performance for Estonia as compared to last year. Slovenia maintains a strong trend performance combined with a current performance close to the EU 25 average. Iceland and Denmark are "moving ahead" with above average values for current performance and trend. Finland and Sweden are the top performers on the SII, but with below average trends. Both countries have recently adjusted their policy priorities towards faster growth in order to make their superior innovation performance sustainable. The situation in The Netherlands, France and Ireland appears to be less advantageous, because trend rates in these countries are quite far below the EU average.

Concerning Finland, let' s remind that, in the early 1990's, after the collapse of the Soviet Union, the country underwent a severe economic recession. But the means by which Finland managed to recover from it was essentially a determined effort to increase exports based on the development and utilization of high technology. The rapid economic boom in the latter half of the nineties was similarly founded on new technologies and their successful utilization.

Finland' s recent economic and social development is exemplary in many respects. This is evidenced by a number of international competitiveness reviews and other comparisons, in which Finland has gradually climbed to the top. This is not only a question of economic development but, for instance, of success in combining it and sustainable environmental policy. Alongside this positive development, there are other factors in which Finland has not fared as well. One legacy of the recession is the most severe problem currently facing Finland, unemployment, which remains at a high level despite the improving employment situation. Other phenomena include diverging regional development, dating from the nineties and a growing threat of exclusion and poverty in the domain of social development. In addition, the overall information society development in Finland is only at an average international level.

Finland has to renew its industrial, economic and social structures in a way which could be called dramatic. At the same time, this improved Finland' s position in international competition. The advanced education system and other high-standard infrastructures geared to implement Nordic welfare thinking provided decisive support in the transition. Finland' s strong input into research and technological development has further improved the development potential.

As we were recently told by leading scholars, economists, unionists and businessmen, for the Finns what the nineties taught, above all, was that success in creating innovation is a key asset for both business and societies. There is open, constantly growing international competition for innovations and their producers. Speed and flexibility, together with high-standard knowledge and know-how, are a strategic advantage in this competition. Countries which have these assets have an edge on others in seizing the opening opportunities. At present, Finland and Sweden are among these countries.