Innovation, innovation, innovation

When recently asked what his top priorities were for his country's European Union presidency, Finnish Prime Minister Matti Vanhanen had just three words to say: "Innovation, innovation, innovation."

Finland's willingness to embrace change, shift priorities and make tough choices has created one of the world's most competitive economies, says Ann Mettler, executive director of the Lisbon Council, a Brussels-based think tank.

Taking Finland as an example, the following key lessons can be drawn:

  • Education, skills and lifelong learning must be at the centre of an innovative economy; far from being a consistent top performer – in the mid-1980s, secondary school students in Finland performed only slightly above the Organisation for Economic Co-operation and Development (OECD) average in science tests – the country pursued comprehensive reforms in spite of a deep recession in the 1990s.

  • Finland's policy makers were determined to rid their schools of the bureaucratic inertia and myriad of responsibilities that hobble other European school systems to this day.

  • Through decentralisation and holding teachers and schools accountable for their students' performance – unthinkable in much of the rest of Europe – the reforms instilled in educators a sense of professional pride and unprecedented empowerment.

  • Today, Finland is the top performer in the OECD's high-school study.

    A second area where Finland is leading by example is in shifting its resources toward future-oriented projects:

  • In 2004, Finland spent 3.41 per cent of its Gross Domestic Product (GDP) on research and development (R&D).

  • Even more important, industry contributed the lion's share, 2.41 per cent.

  • Much of Europe, on the other hand, is trying (unsuccessfully) to reach the 3 per cent target through more public spending.

  • Finland realised that attracting private-sector investment is not only more productive but also more likely to yield commercially viable innovative products.

    Source: Ann Mettler, Innovation, Innovation, Innovation, Wall Street Journal, August 28, 2006.

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    FMF Policy Bulletin/ 05 September 2006
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