HDForum2006 KE Finland Jorma Routi

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World Bank HD Forum 2006 Multi-Sectoral Perspective on the Contribution of Tertiary Education to Innovation and Competitiveness World Bank,Washington DC, 30 October 2006 KNOWLEDGE ECONOMY STRATEGIES - EXPERIENCES IN FINLAND Professor Jorma Routti CIM Creative Industries Management & Helsinki University of Technology jorma.routti@cimfunds.com jorma.routti@hut.fi Former President of Sitra & Director General of Research DG of European Commision

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Fundamental changes taking place Globalization Transportation and communications costs down Global information and media Regional integration (NAFTA, EU, ASEAN+3) Trade liberalization and increased competition Value added by MNCs is 27% of global GDP in 2002 Digital revolution Knowledge-based economies World Bank Studies, Korea, China, Japan, India, Finland

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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: 

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

Education and Innovation Challences: 

Education and Innovation Challences Education is the fundamental enabler of the knowledge economy and a key to competitiveness and growth Critical no longer basic or even secondary but higher education and the constant upgrading of skills Increasing competition for people with high level skills Education couples with research and innovation New division of labor, First and Second Unbundling

R&D input in some OECD countries: 

R&D input in some OECD countries Sources: OECD, Main Science and Technology Indicators database, Statistics Finland (Finland 2002) and Statistiska centralbyrån (Sweden 2001, estimate). Docs 36109 02-2003 USA Japan Germany Sweden Great Britain France Austria FINLAND Denmark OECD total 3.5 3.0 2.5 2.0 1.5 1.0 4.0 Percentage of GDP est. Canada Israel 4.5 0.5 Iceland South Korea Singapore China Norway

The share of high tech exportsin 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. Source: Statistics Finland, according to the OECD product catalogue defined in 1995 The share of high tech exports in some OECD countries 1988-2001 Norway USA Japan United Kingdom Netherlands FINLAND Switzerland France Sweden Germany Denmark Docs 32187 B 03 /02-03 % of total exports of goods EU

Securing competitiveness inthe Forest Industry: 

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 A11/ 99-08 Securing competitiveness in the Forest Industry FORESTRY MANUFACTURING TECHNOLOGY forestry machines process and production machinery material technology INFORMATION TECHNOLOGY sensors, mea suring and control computational intelligence, simulation and machine vision multimedia and telecommunication tomography

Forest Industry Cluster: 

Forest Industry Cluster Brasil, South Africa, China, Indonesia Manufacturing and Operations Valmet Paper Machines Design, manufacturing and remote operations Production Focus on specific market segments and products World wide marketing Paper, cardboard, packaging material Poyry Design and Consulting Pulp Mills Sunds Design, manufacting and maintenance Timberjack Forest Harvestors

Composition of Regional Economies United States, 2001: 

Composition of Regional Economies United States, 2001 Share of Employment Employment Growth, 1990 to 2001 Average Wage Relative Wage Wage Growth Relative Productivity Patents per 10,000 Employees Number of SIC Industries Note: 2001 data, except relative productivity which is 1997 data. Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

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Average Regional Wage, 2001 Share of Traded Employment in Strong Clusters (LQ > .8), 2001 y = 96.736x + 16218 R2 = 0.377 New York, NY Bay Area, CA Boston, MA Determinants of Regional Prosperity Cluster Strength and Wage Levels Source: County Business Patterns; Michael E. Porter, The Economic Performance of Regions”, Regional Studies, Vol. 37, 2003

Co-operation between companies and universities and research institutes: 

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

Telecommunications and Nokia's Change: 

Telecommunications and Nokia's Change Net sales USD 5.2 billion 1988 Market capitalization USD 1.4 billion at year end 1988 Net sales USD 19.9 billion 1999 Market capitalization USD 236.5 billion, as of February 28th 2000

Services in the Mobile Information Society: 

Services in the Mobile Information Society Information Entertainment e-shopping and banking Voice Corporate access and e-mail e-education Video

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FOCUS IN THE VALUE CHAIN

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s SOCIAL & HUMAN CAPITAL TECHNOLOGY & INNOVATION RESEARCH CAPACI TY ABSORTION CAPACITY SUPPLY USERS CREATORS DEMAND

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s SOCIAL & HUMAN CAPITAL TECHNOLOGY & INNOVATION RESEARCH CAPACI TY ABSORTION CAPACITY SUPPLY USERS CREATORS DEMAND JAPAN USA IRL ITA SWE DE FR UK FIN

Innovation environment in FinlandResources and funding: 

DM 32190 04-2004 Copyright © Tekes Innovation environment in Finland Resources and funding Private Basic research Applied research Business R&D Business development Marketing Internationalisation R&D at companies 3,375 The figures represent the total extent of each organisation in million euros in 2002. In parenthesis the share that is funded from the State budget. The funds of Tekes, the Academy of Finland and Innofin are funded entirely from the State budget. Public

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CONSENSUS PROGRAMS IN FINLAND ECONOMIC POLICY AND NATIONAL STRATEGIES Participants: Members of Parliament, Media Leaders, Civil Servants Labour Movement, Industry Organizations, Academia Objectives: Growth, Employment, Balance, Low Inflation Instruments: Fiscal Policy, Taxation, Incentives, Echange Rates, Interest Rates Topics: Globalization, Integration, Trade, Social Policy, Regional Policy, Education, Research, Industry, Agriculture, Banking, Environment, etc. Government: Consencus Building, Trade-offs Simulation Models, Economic Advisors Adoption: Baltic Countries, New EU Members, Latin America, WB

TIME – ENERGY - INFORMATION: 

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