- Blog article -

Should Finland double its R&D?

29 Mar 2018

Innovation is proven to be the single most efficient way to encourage growth and renewal. Should Finland once again be made the spearhead of innovation all others compare themselves to?

After a long recession, Finland’s economy is once again trending upwards. However, we cannot stop now: Finland is still lagging behind a lot of its competitors. Studies show that half of R&D conducted by companies around the world are directed to new openings, while in Finland the corresponding number is 14 percent. Innovation-based economic growth requires hefty public and private investments in RDI-activities and its prerequisites.

The Research and Innovation Council, led by Finland’s Prime Minister Juha Sipilä, announced their vision last autumn. A vision with a goal to make Finland the most magnetic and capable environment for experimenting and innovation.

To achieve this goal, we need both short- and long-term measures. Innovation activities’ significance is highlighted, when AI and digitalization cause rapid disruptions and the direction of progress is hard to predict. In a fast-changing world the flexibility of operation models is important.

RIC2030-vision’s most distinct substantial goal is to raise the combined investments of the public and private sectors in R&D activities to 4 percent of our gross domestic product (GDP). The target is great and supportable, but its execution requires concrete decisions and doing.

We can’t succeed without further investments from both the state and businesses. Achieving the aforementioned 4 percent goal in 2030 requires doubling the current 6 billion euros of R&D investments in Finland. There is no doubt this will not happen without an even more strategic collaboration between different players. Companies in the technology industry are responsible for approximately 70 % of businesses’ and 45 % of all of Finland’s R&D investments. Through other industries and public purchases, technology industry is an important innovation partner of the public sector as well.

The 4 percent goal is not equally divided to all actors. Most industries with an emphasis on innovation (energy, forest, chemistry) spend less than a percent share of turnover in R&D. Most companies in the technology industry should proportionately invest more than one tenth of their turnover to R&D. The government of a state can accelerate private investments by increasing public funding to privately-led research and innovation partnerships, new pilot projects and innovative acquisitions. Together we can make the country a better investing platform and acquire necessary new competences and professionals.

Collaboration between businesses and research institutes is an important tool to create innovation and new know-how. Privately directed projects ensure the birth of innovation: an invention doesn’t become an innovation until it succeeds in the market. By working with the industry research institutes can get their hands on vital research problems of the society and steer education in the correct track as well. With wide co-operation, the fruits of research are picked to be used also for the benefit of society.

Innovation is proven to be the single most efficient way to encourage growth and renewal. Thus, it’s essential that we invest in it both in economic incline as well as decline. While the investments by private businesses have taken a turn to growth, the government must follow. Public funding is known to significantly increase private companies’ RDI-investment. RDI-funding is not an expense, rather an investment in the future of Finland as a country.

With 4 percent we are setting the right level of ambition. Let’s make Finland once again the spearhead of innovation all others compare themselves to.

Pekka Koponen, CEO, Spinverse Group Oy

Chairperson of the Innovation working group of Technology Industries in Finland

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Link to the post by Tekniikka&Talous (28.3.2018, in Finnish)

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