The Dynamic Transformation of the Finnish Innovation System
New Horizons in the Economics of Innovation series
Edited by Gerd Schienstock
Chapter 4: Innovation and absorptive capability in the traditional industries: The case of the Finnish wood products industry
* Christopher Palmberg 4.1 INTRODUCTION The exaggerated fixation on a narrowly defined set of so-called high-tech industries, both in empirical research and in policy discussion, undeservedly takes attention away from the more traditional and less R&D-intensive industries that still constitute a major sector in most industrialized countries. Finland is an interesting country in this respect, since the industrial structure underwent a rather radical transformation in the 1990s, mainly due to the emergence of diversified electronics, as well as ICT-related, industries. In statistics produced by the OECD, this transformation is reflected in the doubling of Finland’s share of total exports of high-tech products during the same period (OECD 1999). Despite this indisputably positive trend, there is more to it once we get behind the data. In particular, the role of one firm – namely the role of Nokia – in this transformation is striking. At the turn of the century, Nokia accounted for close to one third of the total R&D spending, as well as roughly one fourth of the total Finnish exports (Ali-Yrkkö et al. 2000; Ali-Yrkkö and Hermans 2002). Furthermore, when looking at the contribution of different industries to the total volume of production in the manufacturing sector, it is clear that Finland still to a significant extent relies on the more traditional industries, such as the forestry- and metals-based industries, despite the emergence of the electronics and ICT-related industries (Figure 4.1). Thus, the further fostering of the high-tech industries is not the only issue of concern in the Finnish...
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