Embracing the Knowledge Economy

Embracing the Knowledge Economy

The Dynamic Transformation of the Finnish Innovation System

New Horizons in the Economics of Innovation series

Edited by Gerd Schienstock

In an astonishingly short period of time, Finland has developed into one of the world’s leading knowledge societies whilst retaining a comprehensive welfare state. The book traces this rapid transformation from a resource-based to a knowledge-based society. The authors describe the country’s strengths and weaknesses in the new economy and demonstrate how Finland has been able to catch-up with the leading industrial countries by exploiting new techno-organizational opportunities. Experts from different fields provide rich empirical material on Finnish industries, firms, regions and institutions, and the role they have played in the transformation process. The book also details the business and economic restructuring which was required, and explores new trends in the country's science, technology and innovation policy.

Chapter 3: The evolution of the Finnish ICT cluster

Laura Paija and Petri Rouvinen

Subjects: innovation and technology, innovation policy


Laura Paija and Petri Rouvinen 3.1 INTRODUCTION Despite bankrupted dotcoms and collapsed market valuations of technology companies, it is generally agreed that information and communication technologies (ICTs) have indeed induced a new techno-economic paradigm or the third industrial revolution. Consequences of this revolution have been particularly pronounced in Finland. In the late 1990s Finland, besides the United States, became known as the leading new economy, or a country where ‘… the 21st century is in beta’ (Wired magazine, September 1999). This reputation was primarily earned by the rapid growth of and heavy specialization in mobile telecommunications equipment manufacturing. As a user of ICT, Finland is advanced but not exceptional as compared to other high-income countries (see, for example, Koski, Rouvinen and Ylä-Anttila 2002a). Koski, Rouvinen and Ylä-Anttila (2002b) show that ICT-related production has an intensifying concentration tendency and that laggards in ICT provision rarely catch up, let alone leapfrog the leaders. In other words, originally ICTspecialized countries tend to become more so. Finland is a rare exception to this rule. During the 1990s it went from being one of the least ICT-specialized industrialized countries to becoming the most specialized one. Figure 3.1 below shows the situation in the year 2000. Finland is the only country that ranks high according to all of the three indicators considered. This chapter studies the evolution of the Finnish ICT sector as well as the dynamics and interactions behind its success. We also discuss future developments and speculate as to what might lie ahead....

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