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Finland is a northern European economy with an industrial structure dominated by high technology and medium-high technology. It has a strong and sustained technological specialisation in ICT (Panel 3). Overall, the Finnish STI system performs well by OECD standards. An Action Plan for Research and Innovation Policy (TINTO) has been implemented since December 2012 with a renewed focus on education and an emphasis on research and innovation at all levels.

Hot Issues

Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.

Improving the governance of innovation system and policy

In September 2013, the Finnish government adopted a Resolution on Comprehensive Reform of State Research Institutes and Research Funding, which focuses on building up multidisciplinary, high-level research of significant societal relevance and research in support of government decision making. The resolution covers reorganisation of PRIs, reallocation of some public research funding to competitive research funding, and creation of a new, strategic research funding instrument within the Academy of Finland to support long-term research on challenges facing Finnish society. The Team Finland Strategy published in June 2013 (see below), which is becoming an essential element of Finnish STI policy, will be updated annually but not continually reinvented, in order to maintain its long-term perspective and continuity. A first-ever evaluation of the Research and Innovation Council (RIC) was conducted to support the development and strengthening of the operation of the RIC. Its recommendations are under consideration by the government. The government is also carrying out the Central Administration Reform Project (KEHU) to improve co-ordination and coherence in government.

Improving returns and impact of science

While Finland has a strong public research sector, universities and PRIs perform less well than those of other leading countries in filing for patents (Panel 1p). Until recently, Tekes, the Finnish funding agency for innovation, has emphasised research projects to address business needs. Recognising the importance of bringing entirely new businesses to life, Tekes has launched New Knowledge and Business from Research Ideas as a new type of funding for public research which allows scientists to explore an idea not only in the research phase but also in terms of its transformation into new businesses through commercialisation.

Innovation to contribute to sustainable/green growth

In spring 2014 the government adopted strategies on cleantech and bio-economy. The goal is to accelerate growth, create new businesses and renew traditional industries through innovation. In June 2013, the government adopted a decision-in-principle on the promotion of sustainable environmental and energy solutions (cleantech solutions) through public procurement. This encourages the public sector to make creation and implementation of clean-technology solutions a reference for public procurement.

Business innovation, entrepreneurship and SMEs

Finland’s BERD intensity is well above the OECD median (Panel 1d). BERD is primarily performed by the high-technology manufacturing sector and large firms such as Nokia (Panel 2). Overall patent applications and patenting by young firms rank at the top of the OECD mid-range (Panel 1f, i). To increase firms’ R&D activity and create new high-value-added jobs, Finland introduced a fixed-term R&D tax incentive for 2013-14. Moreover, the Smart Procurement Programme (2013-16) aims to create new market opportunities for SMEs and produce ground-breaking innovative solutions to serve the needs of the Finnish public sector. In 2013 the government adopted an extensive growth funding programme (2014-17) for start-up and new innovative companies.

Addressing challenges of STI globalisation and increasing international cooperation

With international co-publications above and international co-patenting below the OECD median, Finland’s position in international co-operation on science and innovation is mixed (Panel 1q, r). To exceed the EU average in the stock of FDI as a share of GDP (46.6% in 2012) by 2020 from its current level (36% in 2012), the government adopted in December 2012 a decision- in-principle, Team Finland – Strategy for Promoting Foreign Investment. Rather than creating a new initiative or adding a new layer of bureaucracy, this strategy seeks to improve the efficiency of existing FDI promotion efforts by bringing them under a single umbrella. By doing so, the government wishes to create a clear, flexible and customer- oriented model so that key actors at home and abroad work towards a coherent strategic goal. In addition, international companies conducting R&D activities in Finland can apply for Tekes’ funding even without being registered in Finland or having a Finnish partner.

Country Charts

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Selected Highlights

New challenges

The Strategic Centres for Science, Technology and Innovation (SHOK) are public-private partnerships for innovation to meet the needs of Finnish industry and society in the next five to ten years. They focus on energy, environment, bioeconomy, health and well-being, ICT, and metal products and mechanical engineering. SHOK activities are being developed on the basis of the international evaluation of SHOKs in 2013.

Universities and public research

Finland has a strong science base, high public expenditure on R&D, highly ranked universities and a high rate of scientific publications relative to GDP (Panel 1a, b, c). According to the Resolution on Comprehensive Reform, PRIs will be reformed. A new funding model for universities was introduced in 2013, with greater emphasis on quality, effectiveness and internationalisation, and strategic funding to support universities’ profiles and their diversity has been increased. The new funding model will be reviewed in 2015. A new Polytechnics Act is to take force from the beginning of 2014 to help polytechnics to meet changes and challenges in Finnish workplaces and society by shifting responsibility for their basic funding to the state and by granting them the status of independent legal persons.

Innovative entrepreneurship

The Finnish government’s venture capital activities for start-up funds will be transferred from Finnvera to Tekes from July 2014, with an annual budget of USD 22 million (EUR 20 million) and hopes of leveraging at least an equivalent amount from private VC sources. The Funding Scheme for Young Innovative Companies is intended to run in its current form until the end of 2014 and is then expected to continue in a modified form.

Clusters and regional policies

From 2014 the Centre of Expertise Programme (OSKE 1994-2013) will be replaced by INKA, the Innovative Cities Programme (2014-20). The programme has selected 12 urban regions in which to create and strengthen internationally attractive innovation clusters. TheWitty City Programme (2013-17) supports collaborative projects between business, municipalities and research organisations to provide companies with opportunities to bring new products and services to the market.The new INKA programme has incorporated the EU smart specialisation concept. A synchronised national and regional innovation strategy was updated in 2013 when city regions organised large-scale planning in order to participate in INKA.

Skills for innovation

All human capital indicators for Finland are above the OECD medians (Panel 1t, u, v, w). Adults’ ability to solve technical problems and 15-year-olds’ performance in science are outstanding, and the high rate of doctoral graduates in science and engineering indicates a secure supply of the highly skilled for STI. The government’s Action Plan for Gender Equality 2012-15 promotes equality between women and men and combats gender- based discrimination in education. The Ministry of Education and Culture uses several measures to make research careers attractive and aims at 1 600 doctoral graduates a year over 2013-16. A national working group of the Science Education Programme 2013-14 will review overall science education with a view to stimulating more interest in science and research among children and adolescents.