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 14: Finnish science and technology policy

Tarmo Lemola

Subjects: innovation and technology, innovation policy


Tarmo Lemola 14.1 FROM DEEP RECESSION TO RAPID ECONOMIC GROWTH After the favourable economic development of the 1980s, the Finnish economy was suddenly plunged into an exceptionally severe crisis in the early 1990s. The economic collapse of 1991–93 was, in terms of output and employment, more serious than had ever been witnessed by any industrial state since World War Two (Kiander and Virtanen 2002). During 1991–93 the Finnish GDP shrank by 12 per cent. Employment fell by 18 per cent and asset prices plummeted. The unemployment rate rose from 3.5 per cent in 1990 to 18.4 per cent in 1994. In many ways the economic crisis was a collective nightmare that shook the whole Finnish society. However, Finland recovered from the recession almost as quickly and surprisingly as it had plunged into it. This was largely achieved on the back of rapid growth in exports (Pajarinen et al. 1998). Traditional industries such as paper, metals and engineering, and chemicals all increased their exports, but the strongest growth has been in the industrial cluster called information and telecommunication technology (ICT). Today, this industry is by far the largest export industry and accounts for close to 30 per cent of total manufacturing exports. Its share almost tripled during the 1990s. In 1990 the share of the other major export sector, the paper industry, was some 30 per cent. Nowadays it is less than one quarter. In its exports Finland is one of the countries most specialized in telecommunications equipment. Thanks...

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