1. KE FINLAND WB WORKSHOP Helsinki, Finland, 30-31 August 2004 RESEARCH AND INNOVATION IN FINLAND – TRANSFORMATION INTO A KNOWLEDGE-BASED ECONOMY Professor Jorma Routti Helsinki University of Technology & CIM Creative Industries Management Helsinki, Finland www.cimfunds.comwww.cimfunds.com jorma.routti@cimfunds.com

2. CURRENT STATE V I S I O N S W O T ECONOMY SAFETY SUSTAINABILITY SOLIDARITY SKENARIOS FOR OPERATING ENVIRONMENT

3. Fundamental changes taking place Globalization Knowledge-based economies Digital revolution

5. 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

6. 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

7. Competitiveness scoreboard * Based on earlier competitiveness index of micro economy Total ranking WEF Total growth competitiveness IMD Total competitiveness 20002001 WEF Current competitiveness 1999*2000200119992000200220011999 USA FINLAND Luxembourg Netherlands Singapore Denmark Switzerland Canada Hong Kong Ireland Sweden Iceland Germany France Japan 2 1.. 4 9 6 5 11 16 22 7 17 3 15 14 2 1.. 3 10 8 5 11 18 22 6 16 4 12 15 1 2.. 3 12 7 5 8 21 17 4 22 6 9 14 1 6 3 4 2 14 10 7 8 5 13 24 15 22 21 2 1.. 8 4 14 15 3 13 11 9 16 17 20 21 2 11 7 9 1 17 6 5 3 10 19 18 25 23 14 1 4 6 3 2 13 7 8 12 5 14 9 11 22 24 1 2 3 4 5 6 7 8 9 10 11 12 15 22 30 1 3 4 5 2 15 10 9 6 7 8 13 12 25 26 1 5 3 4 2 9 7 10 6 8 14 13 12 23 24 Sources: The World Competitiveness Yearbook (IMD) and The Global Competitiveness Report (WEF) Docs 36107 04-2002

8. Japan Korea Ireland Sweden Switzerland United States Belgium FINLAND OECD Germany Czech Rep. EU Denmark UK Norway Austria Canada Netherlands France Australia Spain Italy Iceland Turkey Hungary Poland N. Zealand Portugal Greece Mexico R&D financing R&D expenditures by source of funds Source: OECD, MSTI database, April 1999 020406080100 % J07/ 00-06 Business enterprises Public sector Other national resources Abroad No breakdown

9. MARKETS  quality competitiveness  price competitiveness  environmental expertise 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 CONSTRUCTION AND WOOD TECHNOLOGY  modification of wood  construction technology and architecture  logistics, assembly MANUFACTURING TECHNOLOGY  forestry machines  process and production machinery  material technology BIOTECHNOLOGY  enzymes  rot prevention  gene technology ENERGY AND ENVIRON- MENTAL TECHNOLOGY  biofuels, combustion technology  ecobalances  closed cycles  energy-saving and emissions CHEMICAL TECHNOLOGY  paper and bleaching chemicals  surface treatment substances  pigments, adhesives INFORMATION TECHNOLOGY  sensors, measuring and control  computational intelligence, simulation and machine vision  multimedia and telecommunication  tomography

10. 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 0204060 % 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 0204060 %

11. Nokia's Change 19881998 Mobile Phones 60% Infrastructure 33% Other 7% Floorings 1% Chemicals 2% Machinery 4% Electrical Wholesale 4% Rubber 6% Information Systems 23% Cables 9% Paper 10% Consumer Electronics 31% Mobile Telephones 5% Telecommunications 5% Mobile Telephones 5% Telecommunications 5% 2000 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

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

13. FOCUS IN THE VALUE CHAIN CONSUMER CONTENT CREATORS CONTENT PRODUCERS CONTENT DISTRIBUTORS CREATES IDEA HOLDS IPRs TECHNOLOGY DRIVEN IDEAS DEVELOPS COPYRIGHTS PACKAGES IPRs PROGRAMMING CONTENT DISTRIBUTES COPYRIGHTS MARKETS / BRANDS IPRs DISTRIBUTION PLATFORMS TICKETS MAGAZINES BOOKS, CD, VIDEO, DVD, RADIO, TV NET, WAP/3G

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

16. SOCIAL & HUMAN CAPITAL TECHNOLOGY & INNOVATION RESEARCH CAPACI TY ABSORTION CAPACITY IRELAND USERS

17. SOCIAL & HUMAN CAPITAL TECHNOLOGY & INNOVATION RESEARCH CAPACI TY ABSORTION CAPACITY FINLAND SUPPLY

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

19. Composition of Regional Economies United States, 2001 Traded Clusters Local Clusters Natural Resource- Driven Industries 31.6%1.7%$44,956133.84.5%144.121.759031.6%1.7%$44,956133.84.5%144.121.759067.6%2.8%$28,28884.23.7%79.31.324167.6%2.8%$28,28884.23.7%79.31.32410.8%-1.0%$33,24599.02.0%140.17.2480.8%-1.0%$33,24599.02.0%140.17.248 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

20. Average Regional Wage, 2001 Share of Traded Employment in Strong Clusters (LQ >.8), 2001 y = 96.736x + 16218 R 2 = 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

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

22. Eenlightenment Wwisdom Uunderstanding Kknowledge Iinformation Ddata  Jorma.Routti@cimfunds.com