Knowledge-based Estonia. Kristi Hakkaja Secretariat of Estonian R&D Council

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1 Knowledge-based Estonia Kristi Hakkaja Secretariat of Estonian R&D Council 1

2 General data about Estonia Population: less than 1.4 million GDP (2002): 6.5 billion USD GDP per capita (2002): 4785 USD GDP growth (2002): 5.8% National budget (2002): 2.45 billion USD Currency: Estonian kroon 1 EEK=14 USD 2

3 Context for Knowledge-based Estonia 1. Estonian socio-economic situation 2. EU context and accession perspectives 3. Strong and competitive neighbors (Nordic countries) 4. Continuous effort for a coherent R&D policy 3

4 1. Estonian socio-economic situation Rapid transition Average GDP growth 5% No 21 in World Competitiveness Ranking (2002) No 6 in Economic Freedom Ranking (2002) Liberal policies and excessive FDI Social problems Low productivity (37% of EU average) Mostly subcontracting industry 4

5 Productivity per worker on basis of GDP PPP (2001). Source: IMD World Competitiveness Yearbook USA Italy Norway Netherlands Germany Finland Denmark Spain Japan Sweden United Kingdom Greece Singapore Slovenia Portugal Czech Republic Estonia USD

6 2. EU context and accession perspectives Prospective date of accession 1 May 2004 Strong European competition Lisbon strategy for EU: to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion. (R&D investment 3% of GDP) 6

7 3. Strong and very competitive neighbors Closest neighbors: Finland and Sweden Nordic countries very competitive World Competitiveness Ranking Finland and Sweden investing heavily in Estonia 7

8 World Competitiveness Ranking USA 11. Sweden 2. Finland 15. Germany 4. Netherlands 16. United Kingdom 5. Singapore 17. Norway 6. Denmark 21. Estonia 10. Ireland 8

9 Direct investment position in Estonia by countries as of 31 March

10 4. Continuous effort for a coherent R&D policy in Estonia Reorganization of Estonian R&D system Organization of Research and Development Act of 1997 Estonian Research and Development Strategy Knowledge-based Estonia 10

11 II. Estonian Research and Development strategy Knowledge-based Estonia Approved by Estonian parliament in 2001 Aim: from investment based economy to innovation driven economy Role of state: Investor Catalyst Regulator 11

12 1. Objectives and key areas (I) Two objectives 1) updating the pool of knowledge 2) increasing the competitiveness of enterprises Target of gradual increase in R&D investments to achieve 1.5% of GDP by

13 Financial calculations of Knowledge-based Estonia Government financing strategy for R&D MEEK Share private sector in GERD Government budget appropriations for R&D "Public Funding Gap" 13

14 1. Objectives and key areas (II) 3 key areas: 1) user-friendly information technologies and development of information society 2) bio-medicine 3) materials technologies 14

15 2. Management of Estonian R&D system (I) Estonian institutional framework for RTDI Policy Estonian Government & Parliament Executive level Innovation Sub-Committee Government R&D Council Research Sub-Committee Im plem enting bodies Types of support M inistry of Economic Affairs Regional Development Inward Investment Enterprise Estonia Export Promotion Financing RTDI: Funding of applied R&D & product development projects Advance technology programmes (2003-4) Seed capital fund (2004) KREDEX (Guarantee) Technology & Innovation Division Estonian Technology Agency (ESTAG) Planning, managing, evaluating policy Strengthening innovation System RTDI infrastructure; High-tech incubator scheme (2003) Competence Centres (2002-3) SPINNO (2001) Science Competence Council Developing knowledge & skills Innovation Awareness/ Competence (2003) Research-industry mobility (2003-4) Ministry of Education Strengthening knowledge base Targeted funding of research Centres of Excellence (2001-) R&D infrastructure Estonian Science Foundation Grant funding of researchers 15

16 2. Management of Estonian R&D system (II) Ministry of Education and Research research and education policies Ministry of Economic Affairs and Communication industrial research and innovation policies Research and Development Council advises Government on R&D issues 16

17 III Two years after the launch of Knowledge-based Estonia 17

18 1. Strengths Active acquisition of knowledge Clear strategy and management system Identified objectives, priorities and implementation instruments 18

19 2. Weaknesses Strategic level Link to budget Priority areas too broad Structural level Implementation agencies Divide between the 2 major ministries Implementation level Personnel problems Feedback 19

20 3. Recommendations resulting from the experience of Knowledge-based Estonia I: Write down a clear strategy with specific goals and priorities, and with enough power to bring about change II: Build a management system that is effective and flexible III: Pay much attention on getting industry to invest into R&D Include also SME-s!!! 20

21 Contacts Kristi Hakkaja Secretariat of Research and Development Council Estonian State Chancellery The Stenbock House Rahukohtu Tallinn Estonia Phone: (office) Fax: kristi.hakkaja@rk.ee sekretariaat@tan.ee (general) 21