Innovation

Finland has been setting research and development (R&D) intensity targets for almost 50 years. This paper explores the Finnish national policy experience in fostering public and private investments in R&D. Three key insights are the following: a) a systemic and integrated policy approach needs an impactful co-ordination and governance mechanism; b) a balanced innovation system with well-working joint public-private partnership efforts and mechanisms will do better in absorbing shocks; c) a key strategy to absorb shocks to the economy and society is to invest in long-term capabilities. This study also provides an overview of the factors influencing the level of R&D intensity. The current 4% target to be reached by 2030 was set in 2019 but thus far relatively few policy actions have been introduced to operationalise it. With these dynamics and uncertainty, it remains to be seen if the target will be reached by 2030.

Although Finland achieved a widely acclaimed transformation to become a leading knowledge-based economy in the late 20th century, the 2009 recession and disruptive change contributing to a deep restructuring of the information and communication technology (ICT) industry and the downsizing of traditional sectors have weighed on the economy, productivity growth and international competitiveness. Numerous policy reforms have since been undertaken, and public and private investment, especially in applied R&D, has been cut back. Strengthening and lifting Finland’s innovation system out of a period of uncertainty requires a coherent and unified new vision for science, technology and innovation (STI), renewed investment and policy instruments. This vision should be oriented towards renewal tackling societal challenges and developing new knowledge-based competitive advantages at global scale. Success calls for better co-ordination and co-operation among policy actors and national and regional-levels, and further internationalisation.