Scottish Government

Denmark

Since it came into office in 2001, the Government has focused on the development of the knowledge society in Denmark. Increased investment in research and innovation has been a key element in the efforts to promote renewal, growth and welfare.

The Government platform has singled out science and innovation as top priorities. Denmark is to become one of the world's most inventive and high-tech societies and to get better at translating new knowledge and new ideas into production and new jobs.

A significant step in this development was taken in 2006 when the Government launched a national Globalisation Strategy with new goals and a total of 350 specific initiatives in the fields of education, research, entrepreneurship and innovation. The strategy is to contribute to Denmark becoming a leading growth, knowledge and entrepreneurial society, and it involves comprehensive reforms in education and research as well as substantial improvements of the framework conditions for growth and renewal throughout the whole of society.

The Government, supported by a large majority in Parliament, has allocated a pool of EUR 2.8 billion to research and development over the next six years for the implementation of the national Globalisation Strategy. The funds are to be used for a broad range of initiatives. The initiatives in the Globalisation Strategy have been discussed in the Globalisation Council, which is composed of members from trade unions, business organisations, private enterprises, study programmes and research. The Prime Minister chaired the Globalisation Council and the Minister for Science, Technology and Innovation and other government ministers participated.

The following general research and development goals have been prioritised:

• Public research allocations are to be increased so as to amount to 1 per cent of GNP from and including 2010, including funds to improve the interaction between businesses and public knowledge institutions.
• Privately financed research is to be increased so that total research amounts to 3 per cent of GNP in 2010.
• The universities are to educate more highly qualified researchers and have greater freedom to attract talented researchers.

1. Public Investment in Research and Development

It is the objective of the Government to increase public allocations to research and development in Denmark so that the allocations comprise 1 per cent of the gross national product ( GNP) from and including 2010.

The Government's goal for the increased allocation is to ensure that Danish research is world class.

• Public research is to be innovative and its quality should measure up against the best research environments in the world.
• Public research is to be relevant and underpin a high level of prosperity and welfare.

In recent years the development in government allocations to public research and development has been increasingly positive and in 2007 is anticipated to comprise a sum corresponding to approx. 0.8 per cent of GNP. Cf. figure 1.1.

Concretely, the Danish Government has entered a long-term political agreement with a broad political majority that ensures an increase in the public research budget from EUR 1.7 in 2006 to EUR 2.4 in 2010. Funds are to be earmarked to maintain the 1 per cent target in 2011 and 2012. Figure 1.2 shows the development in the public allocations for research and development between 2005 and 2010.

In 2010 there will be an increase of almost 50 per cent in the public research budget relative to the 2005 level.

Universities and research institutions

Modern institutions in the field of research delivering research of the highest standard are the precondition for the greatly intensified investments in research producing the desired return. The Government would like to see autonomous universities with an independent responsibility for making their contribution to the development of the knowledge society.

The Danish universities have undergone several reforms since 2001. In 2003 the universities became autonomous institutions through separate legislation. The form of management was altered from being a management elected from among the university staff to being an institution under the leadership of a board as the highest authority. The boards have an external majority and an external chairman. The board appoints the vice-chancellor and the upper levels of the day-to-day management.

Relations between the individual university and the Ministry must be based on mutual dialogue and openness. The board establishes the guidelines for the organisation of the university, long-term planning and development. The board enters a development contract with the Ministry of Science, Technology and Innovation which sets the objectives for the university's strategic development.

The purpose of the Danish universities has been subject of a debate. This led to the Government in 2006 and 2007 implementing a process whereby universities were merged, and where government research institutes were merged with universities. The result was that 25 universities and research institutions joined together to form eight universities and three government research institutes.

It is the assessment that this has created the necessary organisational framework for further dynamics in the development of the individual institutions and the planned expansion of the Danish research sector as a whole.

The binary grant system

The binary Danish research financing system with, respectively, basic funding for research institutions and research funds that are distributed in competition is to be continued with increased funding from the Globalization Pool, as and increased share of the funds are distributed by competitive bidding. In the case of the funds that are competed for, larger sums are set aside for both basic and strategic research.

New pools

One special area of focus is building enhanced research capacity, the need for which is created by the rising level of activity. These efforts mainly consist of increased grants for more PhD scholarships and funds for investment in research infrastructure.

The Government has set up two new pools to which the universities, as an innovation, can apply for funds in competition with one another. The one is the Infrastructure Pool with a total of EUR 80.5 million to finance investments in large-scale, crosscutting research infrastructure in Denmark and abroad. The Infrastructure Pool is intended to improve access by Danish researchers to the most recent and most advanced equipment, instruments, databases etc. within promising fields of research.

The utilisation of these funds is to be coordinated with the EU programme for investments in infrastructure.

University management can apply to a second pool, UNIK(University ResearchInvestment Capital) of an annual EUR 32 million for large, long-term ventures. Funds can be granted to both basic and applied research within all scholarly disciplines and across disciplinary lines. The funds are intended to help the universities to mature and develop new, academically important areas.

International collaboration

Research in Denmark comprises only approx. 1 per cent of total world research.

The Government finds it important that we gain increased access to the new knowledge that is created in the rest of the world. Danish researchers collaborating with top researchers in other countries is the best way to ensure this.

Research collaboration within the EU plays a key role in this context. The Government has worked for the research allocations on the EU's 2007-2013 budget being considerably increased with a view to furthering the European and Danish competitiveness.

National funds have been allocated to strengthen and stimulate Danish researchers to make greater use of the possibilities for research collaboration within Europe. In addition, a better framework must be created for bilateral collaboration between Danish and foreign research environments, not least with countries outside of the EU. In this connection the Government has entered bilateral agreements

with selected countries, and centres of innovation have been established in Silicon Valley and Shanghai. A third centre is to be opened in Munich in January 2008. The centres of innovation are intended to create contacts between Danish researchers and companies and leading international research, innovation and business environments.

Danish National Advanced Technology Foundation

In 2004 the Government established the Danish National Advanced Technology Foundation whose general objective is to enhance growth and strengthen employment by supporting strategic and advanced technological priorities and support Denmark's development as a high-tech society. The Foundation awarded EUR 28 million to projects in 2006 and has EUR 37 million at its disposal in 2007. The annual budget of the Foundation is expected to increase gradually.

Strategic programmes

Funds have been set aside for new/existing strategic programmes within a series of thematically defined research fields. The strategic research is to contribute to Denmark developing new research competences with a significant societal potential. Funds have been set aside for the following programmes for the 2007-2010 period:

• Renewable energy, environment and transport
• Food, health and environment
• The field of education
• Consumer-driven innovation
• Nanotechnology, biotechnology and ICT
• Cultural understanding

Within the prioritised areas, strategic research projects can be both basic and more application oriented research. Some of the funds are to be used to finance PhD programmes implemented in connection with the projects.

Strategic planning

With a view to identifying and prioritising coming focus areas for strategic research, an initiative has been taken to conduct an overall mapping of the research needs prompted by social and business development and which the Danish research institutions have the capacity to fulfil. Every fourth year this mapping is to result in a catalogue of important themes for future strategic research. The catalogue can function as a basis for decision-making regarding political prioritisation of the important focus areas. The mapping will be conducted for the first time in 2008.

Measuring quality

The Government has decided to establish a quality barometer for Danish research, where the quality of Danish research in relation to other countries can be followed and measured. The barometer is to be based on internationally recognised indicators such as citation frequency and publication activity.

Moreover, a bibliometric quality indicator to identify and measure Danish research publication across the institutions is to be established. The objective of the indicator is to strengthen the quality of Danish research and to support behaviour that promotes publishing in the most renowned peer-reviewed channels of publication. One target is to make use of university research publications when distributing basic funds from and including 2010.

2. Private investment in research and development

It is the aim of the Government that Denmark should continue to be one of the countries in the world where private enterprises conduct most R&D.

The private sector is to use a minimum of 2 per cent of GNP on research and development in 2010.

The Danish innovation policy is to support and further research and development in trade and industry, and contribute to a higher degree of utilisation of public research in Denmark by trade and industry and the public sector, for example through increased commercialisation of research results and cooperation on research.

According to OECD reports, the business sector in Denmark invested a sum corresponding to 1.67 per cent of GNP in research and development in 2005, thus placing Denmark quite high in an international context. Cf. figure 2.1.

In 2005 the Danish business sector spent EUR 3.5 billion on own research and development, which is an increase of about 2 per cent in relation to 2004.

The Globalisation Strategy contains a great number of initiatives designed to create a better framework for private sector research, development and innovation.

New instruments

The Government's globalisation efforts have given rise to the establishment of instruments designed to provide research institutions with the possibility of bringing several new inventions to market, stimulating the purchase of knowledge and technological assistance by small and medium-sized enterprises, and creating more interaction between research and business.

With effect from 2008, a scheme is to be established whereby small and medium-sized enterprises receive a price reduction the first time they purchaseknowledge from a knowledge institution, for example a university, a research institution or a technological service institution. The enterprises must themselves finance at least half of the costs to ensure relevance and commitment.

Small and medium-sized enterprises entering an agreement about a co-financed research project with one or several universities or research institutions can have their contribution doubled up. The state grant goes to the research institution and a ceiling of EUR 0.2 million per project is to be set. For a grant to be obtained, there must be a cooperation agreement between the enterprise and the knowledge institution that includes an agreement about publication of results and about ownership of any immaterial rights.

The task of the Danish Advanced Technology Group ( GTS) is to promote the development and utilisation of the newest technological, management and market knowledge in Danish enterprises. GTS thus plays an important role in the dissemination of knowledge from public research and education institutions to the business sector. The GTS system has been made more flexible and open to competition by new actors having gained a better possibility of participating in the bidding to perform technological service.

A matchmaking scheme is to be established. The matchmakers who are appointed are to find and unify the best researchers and business people and initiate cooperation projects between enterprises and research institutions.

It is only in recent years that Danish universities have built up professional units for technology transfer to assist researchers in their work with patents and licenses. The university mergers in 2006 and 2007 have led to the creation of a number of units with the volume and capacity to enter into professional interaction on research and development with the business community. Strong environments are a necessary precondition for cooperation at the highest international level.

In order to encourage further positive development in the area, a pool has been earmarked for the maturing and documentation of promising inventions (proof of concept) at public research institutions.

3. HUMAN RESOURCES

The Globalisation Strategy states that the Danish universities should be able to measure up against the best in the world. This is to be ensured inter alia by the universities developing and refining attractive academic environments to continue to make it possible to attract and retain highly qualified manpower.

The total research staff of the universities has expanded considerably in recent years, with an increase of 31 per cent between 1996 and 2006. This rise has taken place in particular among assistant professors, postdocs and professors.

During the past decade, the universities have typically appointed 500-600 researchers a year, and in the last three years universities have employed a total of 1,803 researchers. Women researchers were appointed to 30 per cent of the positions advertised during the period, thus increasing the total share of women researchers from 24 per cent in 2003 to 26 per cent in 2006.

The quality of the education programmes

The goal of the above-mentioned university mergers has been to create better conditions for the Danish universities to offer high quality research training.

In April 2007 an independent accreditation institution for higher education was established. The accreditation institution is to evaluate the quality of Danish higher education programmes in accordance with international standards. The objective is to strengthen Danish universities in the competition to attract talented students and in cooperation with universities abroad.

PhD programmes

The significant increase in public research funds creates the need to train more researchers. PhDs also constitute an important resource for trade and industry. The objective is, therefore, to double the number of PhD programmes commenced

in 2010 in relation to 2003.

In 2006 an international panel concluded that in general Danish PhD training is top quality, and that the potential and capacity exist for a radical increase in PhD intake. In consequence, PhD training programmes are now to take place at graduate schools with academic environments of an appropriate size.

The development of recent years has already shown an increased intake of PhD students. Between 2002 and 2006 there was a 37 per cent rise in annual PhD intake from 1100 to 1507.

Funds are earmarked for the universities to gradually increase their intake by means of growth in the universities' basic funding. Simultaneously, further funds have been set aside for the Business PhD Scheme. In all, the number of PhD scholarships and Business PhDs is to be increased so that approx. 2400 PhD students are to be admitted in 2010. This increase will take place in particular in the areas of natural science, technical science, IT and health science. This will represent an increase of more than 60 per cent in relation to the 2006 level.

The Elite-Forsk initiative

Since 2005 the Government has focused on cultivating talents and the élite of Danish research. The initiative is to draw the attention to the results of excellent researchers as well as to single out researchers as role models with a view to recruiting more young students for a research carrier. In 2007 prizes for more than EUR 10 million was allocated.

Recruitment of researchers

It is the aim of the Danish Government that the universities of the country should have greater freedom to attract talented researchers and that they should train more, highly qualified researchers.

In the coming years, the universities will be faced with a considerable generational change. In order to safeguard long-term build up of capacity, as well as the funding for more PhD scholarships, funds have also been earmarked that are to be directed into postdoc jobs.

In terms of the most recent job structure, which lays down the academic level and basic content of academic positions at the universities, appointment at assistant professor level can be time-fixed up to four years or can be without a fixed term.

Time-fixed lecturers can be transferred to security of tenure as agreed with the university, i.e. without the position being advertised if the lecturer has been assessed as being academically qualified during the period. This creates a greater possibility for the university to offer tenure to the lecturers they wish to retain. This can function as an instrument to remove uncertainty in the terms of employment and thus contribute positively to the recruitment possibilities of the universities.

An open salary system ("New Salary"), where the salary is based on qualifications and functions, provides the possibility of allocating bonuses over and above the centrally laid down basic salary. The possibilities have been gradually developed so that today the university sets bonuses for the individual employee, and it is therefore the university that establishes the total individual salary. The "New Salary" provides the possibility of utilising the pay as a strategic management tool and for recruiting and retaining talented researchers and teachers.

There is work in progress to formulate an agreement on a super professor scheme. The aim is to provide the universities with the possibility of attracting the best national and international capacities with their own budget and managerial responsibility.

The 2003 reform of university management paved the way for university managements to make a greater contribution to creating a well functioning research and work environment.

Efforts are also being made to attract foreign researchers by means of a tax scheme for researchers. The scheme gives foreign researchers (and other key workers) the possibility of choosing 25 per cent gross taxation for up to 3 years. Danish researchers who have not been taxed in Denmark for a three-year period can also use the scheme.

The Ministry of Science, Technology and Innovation is financing the website www.workindenmark.dk in order to make it easier for foreign knowledge workers to obtain information about moving to, working and living in Denmark.

IRELAND

The renewed focus on the Lisbon agenda and the emphasis placed on strengthening the European Research Area coincides with the implementation of the most comprehensive plan for investment in science, technology and innovation that has ever taken place in Ireland. A key element of our Strategy for Science, Technology and Innovation ( SSTI) 2006-2013 relates to Ireland's interaction with the rest of Europe and the rest of the world.

Our Strategy provides us with a distinct opportunity to achieve convergence, coherence and complementarity in our national innovation system and to ensure maximum economic and social benefits are derived from the Government's commitment of i8.2 billion to this area under our National Development Plan. The Strategy gives breadth and depth to a vision for a knowledge economy and society in Ireland backed by real investments by departments and agencies, with clear targets and clear outcomes to be achieved.

As the challenge of cost competitiveness must be met by higher value added output across the economy we will continue to invest in Ireland's science base as one important cornerstone underpinning our future place in the world. A strong science base matched by a paradigm shift in the capacity of our enterprise sector to create knowledge, to innovate, and to exploit new knowledge across global markets marks out Ireland's future strategic direction.

There is a high degree of complementarity between Ireland's objectives in science, technology and innovation and wider European objectives in this area. We fully subscribe to the development of a European Research Area and to the objective of raising EU research efforts to 3% of EUGDP, two thirds to come from industry.

Success in meeting the challenge of global competition will depend on our ability to cooperate and share experiences and knowledge for our mutual benefit.

This and well-being is the very basis upon which the concept of the European Research Area is built. However positive development, there remains a need to tackle the fragmentation of research policies and activities across Europe and to avoid the unnecessary duplication of our research efforts. The world of knowledge does not respect national borders. Today's Activities at a European level, including trans-national collaborative research, funding of frontier research and support for researcher mobility, will contribute directly to the achievement of national targets as set out in our strategy. Similarly, the activity stimulated in Ireland through investment in science, technology and innovation and the initiatives being designed can contribute to the wider goal of strengthening the European research system.

The challenges now lie very much in the implementation of our Strategy and are being achieved through the policy initiatives and implementation structure outlined below.

The following Sections provide a summary of Ireland's current performance and future policy plans and highlights developments in the three key areas of Human Resources for S&T, Private Investment in R&D and Public Funding of S&T. The arrangements in place to ensure implementation of the SSTI objectives and effective policy oversight are outlined in Section 4.

1. CURRENT PERFORMANCE AND FUTURE POLICY PLANS TO MEET THE LISBON AGENDA

Latest data shows that good progress continues to be made in improving Ireland's knowledge economy performance in the context of the Lisbon Agenda. Total R&D spending across all performing sectors ( GERD) increased by 14.3% to i2.33 billion in 2006.

With robust R&D spending gains now outpacing economic growth, the overall R&D intensity ratio climbed to 1.56% of Gross National Product in 2006, ahead of the 1.32% GERD intensity ratio recorded at the start of the Lisbon process in 2000.

The strong progress in R&D spending has also allowed for a narrowing of the spending intensity gap between the EU and OECD averages. R&D performed in the business sector ( BERD) rose to an estimated i1.56 billion in 2006, almost double the level recorded in 2000. The latest 17.3% annual increase between 2005 and 2006 facilitated a rise in the BERD intensity ratio to 1.05% of GNP.

Higher Education sector performed R&D ( HERD) climbed to just over i600 million in 2006, over 2.5 times the i238 million HERD recorded in 2000.

The HERD intensity ratio at 0.40% of GNP is now in line with the EU and OECD averages. Finally government sector performed R&D (Goverd) rose to i170 million in 2006 (0.11% of GNP).

Funding for R&D activities was sourced mainly from businesses, which contributed 65.5% of funds for R&D in 2006. This was in line with the target for two-thirds of total R&D investment to come from businesses. The next largest source of funding for R&D came from the public sector which funded 32.8% of R&D investments. A further 1.7% of R&D activity was financed from other sources.

On the human resources side, the number of employed researchers has risen significantly since 2000, in parallel with the strong increases in R&D investment. The ratio of full-time adjusted equivalent researchers per thousand in employment has risen from 5.0 in 2000 to 6.0 in 2006, and is now in line with the EU average and only slightly below the OECD average.

While the increases noted above provide Ireland with a strengthening research base on which to build, the Government recognised that it is vital for Ireland's long-term national economic success to continue to promote greater investment in R&D. The key challenges will be to:

• accelerate the positive trend in business R&D performance and
• to continue consistent investment in publicly-funded R&D.

In line with this the Irish Government completed the preparation of and published its Strategy for Science, Technology and Innovation 2006-2013 ( SSTI) in June 2006.

The SSTI represents a further step-change in national support for R&D and innovation with i8.2 bn in investment over the period (increased from i2.5bn in the current funding period of 2000-2006 and i0.5bn in the period 1994-1999). It is a whole of Government strategy and Government backing was demonstrated in the co-operation across eight Government Departments (Ministries) in the formulation and now in the implementation of the SSTI.

The SSTI sets out initiatives for Ireland in the context of the Lisbon and Barcelona objectives in the following areas:

• Strengthening the higher education research base
• Capturing, protecting and commercialising ideas and know-how
• R&D in enterprise
• Science, education and society
• Sectoral research
• All-island and international R&D
• Policy oversight and review

Ireland's research efforts have benefited greatly from transnational collaboration through the promotion of scientific excellence, access to state-of-the-art facilities and enhanced researcher mobility and networking. Continued involvement in international activities will be pursued in a co-ordinated and strategic fashion over the next period with a view to HERD funded from foreign sources to increase to 20% by 2013 (from 10% in 2004). The Advisory Science Council is currently undertaking work to develop an internationalisation strategy for Ireland in respect of science, technology and innovation. It is expected that this work will help public funding bodies and the private sector to adopt a more strategic approach to international linkages in terms of priority countries and technologies that should become the focus of activity going forward. The Advisory Science Council will provide its recommendations by early 2008.

Particular attention is being given to our participation in the EU's Seventh Framework Programme and new support structures have been put in place to ensure maximum return from our participation in the programme. The new post of National Director for FP7 was created in late 2006. The National Director leads the overall national engagement in the programme and ensures that a coordinated approach is adopted across all government departments and agencies. As well as engagement in other European activities such as the European Space Agency and various intergovernmental research organisations, we will examine the potential for co-operation with economies in Asia and continue to develop our links with the US.

All-island collaboration is a horizontal objective of the Strategy and, where appropriate, related initiatives will be undertaken, as is happening in a number of instances across the sectoral areas.

2. HUMAN RESOURCES FOR S&T

Ireland will make a number of important changes to science education at primary and secondary level in order to increase and improve their outputs and throughput to higher levels.

Science has recently been re-introduced into the primary curriculum and corresponding training for teachers is undergoing enhancement, both in the Colleges of Education and via in-service training. At secondary level, a revised syllabus was introduced to the Junior Certificate in 2003 with a greater emphasis on investigative

work.

While approximately 90% of students take science in this cycle, this falls to 60% in the Leaving Certificate (senior cycle, second level) and work is required to address this falloff. This will be tackled by:

• Reform of the Leaving Certificate science curricula to ensure a continuum from
• the Junior Certificate and to increase the emphasis on project/ hands-on activity,
• Increased investment in teacher professional development and consideration
• of technical assistance,
• Improved information and awareness activities.

The latter is supported by the Government's integrated awareness programme Discover Science and Engineering ( DSE) whose budget has tripled from 2004, its first full year of operation, to i5M in 2007. DSE continues to support curriculum change at primary level and is now also supporting the changes outlined above at Junior Certificate level. It is implementing further support initiatives, including one for Transition Year (the year between the junior and senior cycles) while continuing to develop support material in the area of career choice. Continuing the pipeline, more students who study science at secondary level will be encouraged to continue their science focus in third level and beyond.

Emphasis is also being placed on promoting Women in Science. Science Foundation Ireland, operates a number of schemes designed to increase participation of women including a career advancement scheme and a scholarship scheme in cooperation with Industry which aims to attract more women into 3rd level education in designated 4 year engineering degree programmes.

Continued increased investment in higher education R&D has resulted in significant strides being made in the development of Ireland's third level academic base under the current National Development Plan 2007-2013. The Programme for Research in Third Level Institutions and the initiatives of Science Foundation Ireland, in particular, have changed the scale and quality of research undertaken in Ireland and the infrastructure supporting it.

This work will continue and intensify over the coming years because investment in human capital development is viewed as pivotal to the success and sustainability of Ireland's national innovation system. This next phase is addressing a number of priorities, including:

• Research capacity, quality and output
• Investment in fourth level and the public research system
• Reform in the universities
• Better management of the research and innovation environments to ensure effective transfer of knowledge and technology.
• Two overarching goals are being pursued:
• To build up a sustainable system of world class research teams across all disciplines, but particularly in biotechnology and information and communication technology, in terms of people and supporting infrastructures,
• To double the annual output of PhDs in Science, Engineering and Technology by 2013.
• These goals are interlinked since the quality of both research and postgraduate formation is dependent on access to world-class principal investigators to lead teams of postdoctoral and postgraduate researchers.

To achieve these, further investments in research infrastructure will be made across the country to build on progress under the current NDP. The PRTLI continues to make significant investment in infrastructure. A further i230 million research investment was announced in 2007 under the fourth cycle of the PRTLI. The SSTI will address the remaining shortfall and provide for new infrastructure. The activity under the SSTI is complemented by the announcement in the 2006 Budget of i900m for a 5-year capital programme and a further i300m Strategic Innovation Fund ( SIF). The Strategic Innovation Fund was introduced in 2006 and i130 million is to be allocated under the second call. Through an internationally peer-reviewed competitive tender, the SIF will support universities in increasing their capacity to produce high quality 3rd and 4th level outputs. It will be based on national priorities and individual institutional strengths as well as inter-institutional collaborations will be encouraged.

Research activity by more world-class well-structured research teams will be supported by the establishment of graduate schools which will ensure the more effective development of our researchers ( e.g. with greater transferable professional skills training), shorter PhD duration and improved completion rates.

Sustainable career development for researchers is being tackled under the auspices of a special task force of the national Advisory Science Council which is due to report in 2007.

In addition to domestic activity, obstacles to the attraction of international of researchers are being addressed, e.g. through the Irish Researcher Mobility Centre, fast-track work permit arrangements for research and implementation of the Third Country Researchers Directive.

The governing bodies of several institutions have been undergoing several modifications, including the appointment of external chairpersons and greater representation of non-academic stakeholders. In addition, enhanced policies for both external and internal quality assurance procedures are being implemented across the universities.

SSTI Indicators

Number of new doctorates in science, engineering and technology earned annually to nearly double from 543 in 2005 to 997 in 2013.

Number of new doctorates in humanities and social sciences to increase from 187 in 2005 to 315 annually by 2013.

Ireland will significantly increase its performance in the publications league table (currently ranked 12th).

Ireland will aim to significantly enhance its performance on the citations index.

2. PRIVATE INVESTMENT IN R&D AND COMMERIALISATION

Manufacturing and international services will continue to be fundamental to Irish economic growth. Future opportunities primarily lie in the development of knowledge intensive industry, both in terms of indigenous activity and in those element(s) of foreign direct investment that Ireland seeks to attract and embed. It also means greater use of technology in all sectors to improve productivity and competitiveness.

Business expenditure on R&D is increasing in absolute terms but relative to economic growth levels and international comparators remains weaker than desirable. There is therefore a strong push in the SSTI to engage a larger number of companies 'more' in R&D activity in Ireland. The key elements of this new approach are:

• Raising awareness and increasing the number of companies carrying out R&D,
• Improving soft support systems to secure the development of appropriate technology
• strategies by companies,
• Achieving step changes in quality and quantity of R&D activity in existing R&D
• performers,
• Building in-company technology capability,
• Increasing inter-company and industry- HEI collaboration,
• Simplifying the administrative and operational procedures of R&D programmes.

Consideration is currently being given to the improvement of the financial supports available for in-company R&D in order to deliver a more holistic and systematic offering to client companies. The tax credit for R&D introduced in 2004 is another important element of the portfolio of public support for enterprise R&D. The scheme (which is incremental and operates on a rolling baseline starting from 2003) was enhanced in the Finance Act 2007 and will be monitored to ensure that it is supporting the SSTI targets as effectively as possible.

This work is complemented by activity within the enterprise development agencies to enhance the 'soft supports' available to firms. For example, Enterprise Ireland recently rolled out its R&D Advocates: people with appropriate expertise and experience to contact and engage with firms who have not previously undertaken R&D. The IDA is running a new international promotional and marketing programme aimed at MNCs with operations in Ireland and those in target markets overseas.

Also on the international front, technology transfer from foreign sources will be enhanced through the TechSearch initiative and linkages between MNCs and SMEs in Ireland.

Industry-academia linkages are another critical part of the SSTI agenda. Initiatives such as Innovation Partnerships run by Enterprise Ireland over the course of the current NDP are being added to with fresh efforts to increase the levels of collaborative activity in Ireland (between firms and third level institutions and also between firms themselves). These include industry-led networks in which companies engage with each other to agree a shared strategic research agenda and then to select a research group(s) with whom to collaborate. The most recent examples of these are in the areas of functional foods and e-learning.

Further structured engagement between industry and academia will be supported through the establishment of competence centres similar to the existing Tyndall Institute in Cork and the newer National Institute for Bioprocessing Research and Training based in University College Dublin. Establishment of such centres will be based on the identification of strategically important technologies for Ireland.

The Institutes of Technology are a key resource for applied research and human capital development in the regions. The Applied Research Enhancement Initiative has recently been rolled out nationally to strengthen the research capability of the Institutes in areas relevant to regional enterprise needs. For example, an Applied Marine Biotechnology centre has been established at the Institute of Technology in Letterkenny, Co. Donegal.

SSTI Indicators

Business investment in R&D to increase to i2.5bn by 2013.

No. of indigenous companies with meaningful R&D (> i100,000) to increase to 1,050.

No. of indigenous companies with significant R&D (> i2m) to increase to 100.

No. of foreign affiliate companies with minimum scale R&D up to 520.

No. of foreign affiliate companies with significant R&D to grow to 150

Transfer of knowledge into market opportunities is a critical link in the innovation system and one to which Ireland is increasingly turning its attention. Returns on our growing research investments will be optimised through informed researchers, well-resourced and connected technology transfer offices and up-to-date expertise on the protection, management and commercialisation of emerging intellectual property.

A two-pronged approach will be employed to this end:

1. Third level institutions are being assisted to strengthen their IP/ commercialisation function by way of a i30m competitive Technology Transfer Office Fund. The Fund supports, inter alia:

• Training for researchers on the importance and potential of technology transfer,
• Recruitment of expert staff to engage in IP scouting, selection and protection.

An essential criterion for institutions' success in securing funding under this mechanism is the importance that they attach to IP and commercialisation within their overall strategic mission.

2. A central unit has been set up in Enterprise Ireland to provide access for technology transfer offices to particular expertise and support, e.g. on legal matters, IP marketing.

A National Code of Practice for managing intellectual property from publicly funded research was launched in April 2004. This was followed in November 2005 with a Code of Practice for Managing and Commercialising IP from Public-Private Collaborative Research. Together these Codes provide a comprehensive set of guidelines for IP management and commercialisation and a framework for IP negotiations to facilitate the development of enterprise-academic relations.

SSTI Indicators

Within the context of the funding being provided to the third-level sector to strengthen research commercialisation, each research performing institution is being asked to set targets in the following areas:

• Financial and human resources devoted to technology transfer, IP management and other commercialisation activities,
• Number of invention disclosures reported,
• Number of patents applied for and granted,
• Number of patents generating revenue,
• Number of licence agreements with companies,
• Total revenues from licensing and fees from royalties,
• Number of actively trading spin-off firms established and their survival rates,
• Private sector investments in public research spin-offs,
• Number and size of industry-commissioned projects.

3. PUBLIC FUNDING OF S&T

As indicated above the Government has committed i8.2 bn over the period of the current National Development Plan 2007-2013 to achieve the SSTI. Over the lifetime of the NDP, the State will invest i6.1 billion in STI as detailed in the Programme areas below:

• World Class Research STI i3.46 billion
• Enterprise STI i1.29 billion
• Agri-Food Research i641 million
• Energy Research i149 million
• Marine Research i141 million
• Geo-science i33 million
• Health research i301 million
• Environment Research i93 million

The investment in human capital, physical infrastructure and commercialisation of research outlined above is complemented by investment in initiatives set out in the NDP allocations for Higher Education and the Industrial Development Agency. Taking account of these amounts, the global NDP investment in STI amounts to i8.2 billion. Within the framework of World Class Research, Science Foundation Ireland ( SFI) will commit i1.46 bn in strategic areas relevant to economic development, particularly the areas of Biotechnology and Information Communications Technologies. The new Programme for Government includes a commitment to include a third research pillar In the area of sustainable energy and energy efficiency technologies within the remit of Science Foundation Ireland.

One of SFI's most significant programmes is the Centres for Science, Engineering and Technology ( CSETs) which links researchers in academia and industry. CSET grants can be up to i25m over five years. The objective of this programme is to have centres that can dramatically advance knowledge, exploit opportunities for discovery and innovation as no smaller research project can, link academic and industry researchers in promising ways, generate products of considerable value in the marketplace, and contribute to the public's understanding of and interest in science and technology. SFI currently supports seven CSETs - four in the ICT sector and three in the Biotechnology sector involving research partnerships between Irish Universities and multi-national companies.

Significant areas of sectoral research right across the various realms of Government activity hold strong potential to deliver socio-economic progress for Ireland. These include:

Agriculture and food:RTDI has a key role to play in the sustainable development of the sector and research funding provided is being focused even more on identified sectoral needs and its future competitiveness. Stronger links with other relevant research activity will be promoted, e.g. on agri-environment issues.

Health: Strong research competence is essential to the future delivery in Ireland of world-class healthcare and the recruitment of top professionals. In 2006, the Advisory Science Council published a review of key policy requirements in the sector ( Towards Better Health: Achieving a Step Change in Health Research in Ireland) and recommended, inter alia, the establishment of a number of translational research centres, with a view to strengthening health research and policy research capacity and addressing strategic national priorities. A Health Research Group has now been established to advise on the formulation and implementation of a comprehensive health research strategy.

Environment: Future research in Ireland will focus on addressing changing circumstances and generating new knowledge of the environment and environmental technologies. These will be assisted by the development of an environmental research centre.

Marine: the Marine Institute's strategy for the period to 2013 aims to deliver an integrated research and innovation programme that prioritises (i) activity within existing industry, (ii) the development of new research capability and (iii) policy support research.

Energy: the energy sector is characterised by high dependency on imported fuels and international environmental obligations. Work on the articulation of national energy policy is underway and thematic areas will include Smart Grids, the rational use of energy, wind energy, marine energy and biomass for heat and fuel. The dependence of enterprise and the economy on cost-effective energy supply is increasingly being viewed as a national priority.

4. POLICY OVERSIGHT AND REVIEW

In order to ensure implementation of the SSTI objectives effective policy oversight and review is essential. The Inter-Departmental Committee ( IDC) for STI, reporting to the Cabinet Sub-Committee, has overall responsibility for the implementation of the SSTI for which there is a total budget of i8.2 bn over the period to 2013. Its key role is in assessing progress against indicators as set out above.

In addition to the inputs of the Advisory Science Council and the Chief Scientific Advisor, the IDC is supported by implementation groups composed of representatives from the relevant Departments and related agencies. The Higher Education Research Group has responsibility for ensuring coherence among key funding initiatives such as PRTLI and the funding awards schemes of the relevant agencies and councils. Technology Ireland is responsible for enterprise R&D activity. The IDC and

implementation groups are backed up by a Joint Secretariat comprised of representatives from the Department of Enterprise, Trade and Employment, the Department of Education and Science, Forfas and the Higher Education Authority.

ICELAND

HUMAN RESOURCES FOR S&T, PRIVATE INVESTMENT ON R&D AND PUBLIC FUNDING OF S&T

In order to be able to reap the benefits of the progress and opportunities brought about by science, development and innovation, including the globalisation and ever more intensive international cooperation in these fields, all nations are in need of a sufficiently sensitive instruments to read and interpret the changes of times and mechanisms to implement policies.

In recent years the Icelandic government has undertaken profound improvements and changes of our science, technology and innovation policy machinery. The guiding principle has been to call stakeholders, including academia, the partners of the labour market and Government to the table for deliberations on science, technology and innovation developments. It should not come as a surprise that most of the issues raised below are either a part of or highly compatible with the Lisbon objectives.

A SCIENCE AND TECHNOLOGY POLICY COUNCIL

The Science and Technology Policy Council of Iceland established in 2003, operates under the chairmanship of the Prime Minister. It is now composed of eight Government Ministers, and 16 members of industry and the science community.

It has proven to be an effective platform for dialogue between science, industry and Government to set policy and follow implementation of policies. The Council meets twice a year and sets the policy agenda and follows up on its policy declarations through budgetary and legislative proposals from the Government on one hand and through operational guidelines and strategic directions provided by its two working committees, the Science Committee and the Technology Committee.

ADAPTING INSTITUTIONS TO CHANGES

The increasing importance of research and innovation calls for new measures and modernization of public research institutes, including a revised division of labour between the private and the public, facilitating public-private-partnerships. During the last few years a number of our public research institutes and universities have been merged, reorganized and a new legal framework adopted. These changes include public-public mergers providing for increased involvement of companies, and a merger of two universities one private and another public in to a private sector university. In addition two public universities will be merged in early 2008. These changes all encompass increased independence of universities and RTD institutions in combination with increased accountability demands and quality assurance measures. Institutions in the food technology sector, agriculture and the energy sectors have all been reorganised to become more competitively oriented in a global context. Support to innovation has been reorganised to create the Icelandic Centre for Innovation.

ICELANDIC PARTICIPATION IN THE FRAMEWORK PROGRAMME FOR RTD

Iceland has actively participated in the Framework Programme ( FP) since 1994. This has been both rewarding and a successful cooperation. During this period the emphasis in our participation has changed.

In FP4 enterprises, mostly SMEs, made up 30% of the Icelandic participants, receiving approximately same percentage of all grants to projects with Icelandic participation.

In FP6 enterprises made up 25% of the our participants, of which large enterprises, accounted for over 42% of funding received. The number of participations in information technologies has however dropped considerably. One reason for this being the short lead time from knowledge generation to implementation in IT. On the other hand participation in health related topics including genomic, biotechnology and bionic technology has increased, accounting for around 35% of received funding from the FP. This is also strongly reflected in our national expenditure on research, and technological development ( RTD). According to the preliminary results of FP7 calls in 2007 this trend appears to continue.

THE GREEN PAPER ON THE ERA: NEW PERSPECTIVES

The Green Paper on the future development of the European Research Area ( ERA) is a timely and welcomed Commission initiative to launch debate on necessary change. It motivates national debates on the role of the European research cooperation and the interplay between national and common policies.

MOBILITY OF RESEARCHERS

Attracting foreign scientists is vital for any country in order to meet its objectives. Iceland has participated in the Steering Group on Human Resources and taken part in its initiatives. In 2005 Iceland set up a Researcher's Mobility Portal which continues operation now when the Commission contribution has ceased.

The European Charter for Research and the Code of Conduct for the Recruitment of Researchers was endorsed by all the Icelandic universities in May 2007. We have carefully considered the Commission proposal for a directive on improving the portability of supplementary pension rights and Council Directive 2005/71/EC on Mobility of Third Countries Researchers.

RESEARCH INFRASTRUCTURE

Competitive research requires joint ventures for providing high quality infrastructures which should be operated and shared at a European level. Iceland supports the work initiated by the Commission in this area. We are participating in ESFRI work and are currently mapping all major public research infrastructures in Iceland and an Icelandic Roadmap is expected by mid-2008.

We note that FP7 does provide incentives for companies to share their infrastructure at an European level through the Research Infrastructure Programme as well as the PEOPLE Programme. We think there are many more opportunities where Iceland with its natural setting and microcosm of socio-economic needs, short lines of communications and a technologically positive population provides an ideal "natural laboratory" or "test bed" for carrying our user-oriented research and stimulating the uptake of technological innovations coming from research and new knowledge.

COORDINATED RESEARCH PROGRAMMES

For many years Iceland has participated in regional coordination of programmes together with the Nordic countries. We are currently participating in 10 ERA-Net schemes and are preparing an assessment of our participation. We welcome the Commissions efforts to facilitate voluntary coordination of national and regional research programmes and further development of tools and methods for collaboration where FP7 plays an important role.

OPENING OF ERA

We fully support the Green Papers vision of opening the ERA to the rest of the world.

Internationalization of research poses both challenges and opportunities for Europe. The Commission can provide a platform for the states to agree on a specific agenda with priorities for coordinated actions towards third countries. This applies especially to the challenges faced by Europe and the World through global warming.

We have argued for a close cooperation among Circumpolar Arctic States on education and research to promote stronger focus on the changing environment and to facilitate adaptation. Education and research are the most powerful/reliable instruments available to guide government policy and underpinning social and economic adaptation.

FORESIGHT - CREATING SHARED VISION FOR THE FUTURE

The STP Council recently organized a foresight exercise, involving participants from science, Government, industry and civil society, to create visions of the future and provide directions for focussing the national efforts in science and technology. Many of the issues put forward in the Green Paper have figured prominently in this work. The themes are broad, multidisciplinary and crosscutting with the view of stimulating maximum interaction among researchers and between academia and society. They are as follows:

• Natural resources, the environment and sustainable development (facing and adapting to climatic change).
• Health, wellbeing and healthy lifestyles (in times of life-style changes and shifting demographic development).
• The strength of a small nation (in the era of multiculturalism and globalisation).
• Industries, trade and the funding of knowledge production and innovation (facing the competition in a globalised knowledge- based economy).

The Science and Technology Policy Council will have a discussion of the visions drawn up for these themes at its meeting next month. The Council expects these to be subsequently translated into recommendations for Government to take action through programming of research and investment in infrastructure facilities for research.

PARTICULAR INTERESTS

Climatic change and sustainable energy

In light of recent scientific reports and impact assessments it is clear that scientific knowledge of climate change requires research cooperation at global and regional levels. The FP7 is a pivotal instrument for a strong systems approach needed in dealing with these challenges. As indicated in my earlier comments during the preparation of FP7 we think this area will become even more important in the future as we have already become aware of signs of climate change and the accompanying effects. It is clear that adaptation to climatic changes will become an extremely important socio-economic and political issue in the years to come, - no less than the mitigating measures so often discussed at the political level. I do note with interest your intention to support research on carbon capture and storage ( CCS) and it is my pleasure to inform you that back home we are already out on a similar mission investigating the feasibility to harness the high CO2 take-up capacity of basalt which makes up most of the country.

Developing sustainable energy systems with reduction in greenhouse gas emissions is part of these challenges, both as a mitigating measure and an opportunity for technological innovations. Iceland is already well on its way with 72% of its total energy supply coming from sustainable/ renewable resources. Geothermal energy, covering 98% of space heating in Iceland is increasingly being used for other purposes as well. Geothermal energy is a large renewable energy potential in many of the new EU Member States, as well as elsewhere in the world. We therefore suggest that FP7 should always explicitly include geothermal energy along with other types of renewable energy and take note of the global perspective.

New developments in harnessing geothermal energy through deep drilling at 5 km depth near volcanologically active areas could create an exponential increase in the energy output and may enlarge the regions of the world, including large areas in Europe, where geothermal energy is a feasible option.

Marine Research and Maritime Policy

The Blue book of the EU on Marine Research and Integrated Maritime Policy recognizes the importance to focus more strongly on research on the Seas. Research priorities and acknowledge that measures need to be taken to strengthen the links between science and policy marking.

However, we would like to see more emphasis on marine research, especially in the support of improved sustainable fisheries were the precausary management principle is acknowledged: Biodiversity, stock structure, new fishing and processing technologies, long-term monitoring databases, coordination of surveillance activities and forecast modelling that will help to forecast future trends and changes in the marine environment.

There is also a common need for an European centre for modelling. We need a common platform in Europe or a European Marine Agency that will bring together all the different networks, institutions, agencies, industry, national and international associations and conventions and ensure the sustainability of networks by long-term funding schemes. It is also important to offer stronger educational programs to inform the public, industry and policy makers on the importance and outcomes of marine research.

CONCLUDING REMARK

Science policy will to a greater extent concern itself with the working conditions for research and technological development and the societal impact: How to reap the benefits, how to disseminate knowledge effectively, how to resolve ownership issues, how to translate knowledge into innovation and improved services. Among the most important objectives of all Governments will be to ensure the best available conditions for RTD and innovation that met international criteria. This field is an important instrument for society and a way to understand the processes that do have an enormous impact on our lives.

NORWAY

The Government's programme declaration from 2005 and the White Paper "Commitment to Research" (Report no. 20 to the Storting (2004-2005) constitute the basis for the Norwegian Government's research policy. The Government aims to increase total investments in research. Contributions from researchers, society and industry are called for and actively stimulated. Norway is not a part of the Lisbonstrategy, but shares a target of 3 percent of GDP to research investments with the European Union. Norway also takes part in European Community programs that underpin the strategy, such as the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013). Norway is an Associated State to the EU Framework Programme.

1. NATIONAL PRIORITIES IN RESEARCH

As stated in the White Paper "Commitment to research", three structural areas are given priority in Norwegian research policy. Firstly, internationalisation constitutes an overall perspective. International participation is emphasised when resources are channelled into research. Secondly, basic research is a priority. Special attention is given to research in the field of mathematics, science and technology. Thirdly, priority is given to investments in research-based innovation and business development, to provide support for the reorganisation and renewal of Norwegian business and industry and the public sector.

In addition priority is given to four thematic and three technological areas. The four thematic priority areas - energy and the environment (including petroleum research), food, oceans and health have been defined on the basis of national strengths and needs.

The three technological areas have wide areas of application and are undergoing substantial development. They are information and communication technology ( ICT), biotechnology, and materials and nanotechnology.

2. IS NORWAY APPROACHING THE 3 PERCENT FUNDING TARGET?

Total public appropriations for R&D in Norway have increased substantially in the latest years. The Government proposes to spend NOK 17,8 billion (2,3 billion Euro, 1 Euro=7,7 NOK) in the state budget for 2008. Despite the substantial increase in public spending, total R&D-expenditure as a percentage of GDP has decreased from 1,7 percent in 2003 to 1,5 percent in 2005, which is the latest figure from the official R&D statistics. The decrease is mainly due to the large growth in nominal GDP, with 11 per cent in 2005 and 9 per cent in 2004 - considerably above the OECD - and EU-average. The relationship between a strong macroeconomic performance and the apparently weak performance on research indicators is discussed in chapter 7.

Total R&D expenditure for all sectors, including government and higher education, amounted to NOK 29.6 billion in 2005 (3,9 billion Euro). Of this total, public sources funded NOK 12.9 billion, or 44 per cent. Public funding amounted to 0.67 per cent of GDP in 2005.

Private investments in R&D amounted to NOK 13.6 billion in 2005 which constituted 0.7 per cent of GDP in 2005 (compared with 0.9 in 2004 and 1.0 in 2003). These figures include research institutes serving business and industry. Rising public investments and decreasing investments in industrial R&D, made public and private R&D expenditure almost par in 2005 - as demonstrated by the figure below.

3. PUBLICLY FUNDED RESEARCH

The Research Council of Norway

About 30 percent of all public R&D funding in Norway is channelled through the Research Council of Norway ( RCN). The Ministry of Education and Research has the administrative responsibility for the RCN, but, practically all ministries with a sector responsibility for research, contribute to R&D programs and institutions funded by the RCN. The RCN identifies strategic areas of special effort, allocates research funds and evaluates the resulting research. The Council is the principal research policy adviser to ministries, and acts as a meeting-place and network-builder for Norwegian research.

Higher education institutions

About 30 per cen t of all R&D in Norway takes place within the system of higher education. R&D is mainly funded over the ordinary budgets of the institutions, but supplementary financing is obtained for programmes and equipment, mainly from the Research Council of Norway. There has been a substantial increase in research expenditure in the higher education sector from 2001 to 2005.

Norway has been an active participant in the Bologna-process. Substantial changes have taken place within tertiary education in Norway during the last ten years, mainly aimed at encouraging institutions to be more responsive to the needs of society and the economy. As a result of the Quality Reform introduced in 2001, all higher education institutions were given significantly greater autonomy in managing and organising their activities.

The Norwegian higher education system consists of both public and private institutions. Government funds are the main source of income for both public and private institutions. Government funds are distributed to all institutions based on a funding system, which is partly performance based. The funding system consists of three components. The basic component represents on average about 60 per cent of the total allocation to the institutions. The education component implies that an average of about 25 per cent of the total allocation is distributed on the basis of the number of study points ( ECTS-credits) achieved. Third, about 15 per cent of the allocation is distributed through a research component. The research component has a strategic part and a performance-based part.

In addition to government grants, the institutions are encouraged to get external funding. The most important sources of external funding are research grants from the Research Council of Norway and the EU.

Research institutes

Some 23 per cent of total Norwegian R&D takes place in the institute sector. The sector is diverse in terms of R&D activity, research topics and size of institutes. Norwegian research institutes serve a wide range of clients, including the civil service and the industrial sector. The variety of customers also reflects the range of subject areas in the sector. Technology is the dominant area with more than one third of total R&D in 2005.

The second largest subject area is the natural sciences with 20 per cent in the same year. In 2005 public funding in this sector amounted to NOK 4.4 billion, while funding from industry amounted to NOK 1.5 billion and funding from abroad amounted to NOK 0.8 billion. Funding from abroad has increased substantially during the last decade. A major part of this funding comes from the EU.

In the budget proposal for 2008 the Government has introduced principles for a new system for basic funding for the research institutes. The new system is performance based and gives incentives to increase both quality and relevance.

4. PRIVATE INVESTMENT IN RESEARCH AND DEVELOPMENT

The majority of the Norway's workforce is employed in the service sector. Norway's great access to energy resources has been instrumental in the development of energy-based business sectors, wealth and growth. Norway also has a technological industry that produces inter alia electronics, industrial machinery, ships and equipment. A large share of exports relies on energy resources, but exports of consumer products and goods, most notably fish, are also significant.

The manufacturing industry has traditionally been the main R&D contributor in the industrial sector. In 2005, the sector proportion of total R&D costs was slightly less than 50 per cent. The service industry's proportion was 41 per cent. Small and medium sized enterprises, with less than 100 employees, reduced their spending on R&D by 2 per cent in 2005 compared to 2003. Enterprises with more than 100 employees on the other hand increased their spending by 10 per cent, led by enterprises with more than 500 employees. They increased their R&D spending by 500 million NOK (65 mill. Euro) compared to 2003.

Internal funding of R&D is the most common source of funding in Norwegian enterprises and constitutes slightly less than 80 per cent of total funding. Funding from abroad, including from the EU, increased from 2003 to 2005, and represents 10 per cent of total funding from abroad. In addition, the business enterprise sector also has several sources of public financing of R&D.

As a whole, the Norwegian business sector is less research intensive than in many other countries. This reflects the fact that the Norwegian economy is characterised by a large share of GDP originating from low-tech or medium low-tech manufacturing, oil and gas, services and fisheries. However, value creation in Norway is high, and a comparison of research investments in each sector with investments in similar sectors in other OECD countries reveals that Norwegian branches of industry are performing well.

Meeting the 3 percent is clearly a particular challenge given the composition and the structure of Norwegian trade and industry. By continuing to support industrial R&D, we aim at contributing to international competitiveness and secure adaptation and development of new business areas in the Norwegian economy.

5. MAIN NORWEGIAN INITIATIVES IN R&D

Internationalisation of Norwegian research

International research cooperation is of vital importance if the quality of Norwegian research is to be enhanced and its renewal ensured. International cooperation also allows Norwegian scientists, research institutions and industry to take advantage of knowledge and technology developed abroad. In addition, international cooperation is necessary to share the risk and costs of large research investments.

The Government places particular emphasis on active participation in European research cooperation. Norway's participation in the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) is a significant public investment. The strengthening of participation of Norwegian R&D actors in the programme is emphasised in national support actions for international research cooperation, and synergies with national R&D priorities is actively pursued. Norway's total contribution to the Seventh Framework Programme will be approximately 9 bill. NOK (1,2 bill. Euro). In the proposed state budget for 2008, the Norwegian contribution to the Framework Programme constitutes just below 6 per cent of total public appropriations to R&D.

Other priorities include a strengthening of bilateral research cooperation - particularly in relation to North-America and countries in Asia, and better utilisation of national assets to attract researchers and research funding from abroad. Norway also has a global responsibility for contributing to the global development of knowledge, particularly in areas that benefit the least developed countries.

The number of Norwegian scientific articles with international co-authorship is increasing. This development can serve as one measure of the internationalisation of Norwegian research ref. Figure 3 below.

Enhancing quality in research

In recent years there has been a strong focus on quality in Norwegian research. Increased attention has been given to carrying out and following up evaluations of disciplines and thematic areas within Norwegian research. As a result increased attention has been given to academic leadership and concentration of resources. As mentioned above, a new and more competitive funding mechanism for universities and university colleges has been introduced.

To promote excellence in Norwegian research, schemes like Centres of Excellence (CoE) and Outstanding Young Investigators have been introduced . The CoE-scheme is a committed focus on Norway's best researchers, enabling them to gain recognition within the international researcher community. The scheme is intended to encourage research communities to establish centres dedicated to long-term, high-level basic research. Only research groups carrying out scientific work at the highest international level are awarded status as CoEs. The CoE-scheme now comprises 21 centres. The centres receive funding of 6 to 20 mill. NOK per year. Initiatives to promote excellence will be continued, but also supplemented and balanced by measures introduced to enhance quality in Norwegian research more broadly.

A number of international scientific prizes are awarded in Norway. The Abel Prize was awarded for the first time in 2003, followed by the Holberg Prize in 2004. In addition three Kavli Prizes for astrophysics, nanoscience and neuroscience will be awarded in 2008.

Strategic programmes to meet national R&D priorities

As part of the effort to meet national research-policy priorities, the Research Council of Norway has established several Large-scale Programmes. These programmes have been developed in a dialogue with research actors, industry and public administration, and extend across various sectors and value chains. The current Large-scale Programmes represent a key component of the Research Council's efforts to follow up the priority areas in the White Paper on research from 2005, and include programs in areas like functional genomics, nanomaterials, ICT, climate change etc.

Research-based innovation and business development

Promoting research in Norwegian industry is pivotal to reaching targets relating to innovation, restructuring and wealth creation. Measures have been taken in Norway to promote research in Norwegian companies and better cooperation between industry and the university sector. A scheme based on user-driven research and innovation including all types of R&D actors has been a main activity in this area for several years.

Main new initiatives are:

• A scheme called Centres for Research based Innovation was launched in 2006. The main objective is to enhance the innovative capability of the business sector by forging close alliances between research-intensive enterprises and prominent research groups in conducting long-term research projects. The host institution for a centre can be a university, a university college or a research institute, or an enterprise with a strong research activity. Participation from foreign companies and research institutions is encouraged. The scheme emphasises the generation of research findings, increased cooperation between various research centres and technology dissemination, but also education and further qualification of researchers. A centre is financed for a period of five years, with the possibility of a three-year extension. Each centre receives an allocation from the RCN of roughly NOK 10 million per year. The host institution and partners must contribute with at least the same amount.

• Norwegian Centres of Expertise ( NCE) is a targeted effort aimed at specialised business clusters with profitability potential, for the purpose of promoting the development of internationally competitive businesses and industrial centres. The programme was launched in 2006. Regional partnerships and the industrial centres shall ensure that this program develops into a long-term effort, strengthening both the regional and national innovation system.
• The Norwegian tax credit scheme, called Skattefunn, was introduced in 2002 and was originally restricted to small and medium sized enterprises ( SMEs). As of 2003, all enterprises operating in Norway are eligible for a deduction in tax payable for expenses in approved R&D projects. About 50 per cent of the users are companies with less than 10 employees, and the scheme is used in all parts of the country and across many sectors. The objective of the scheme is to stimulate R&D activity in the business enterprise sector. In 2005, the total tax expenditure was NOK 1195 million. 74 per cent was refunded in excess of assessed taxes. The reduction of total tax revenues (tax expenditure) turns the scheme into the largest R&D programme in operation directed at the business enterprise sector.

The Skattefunn scheme is currently subject to a comprehensive evaluation by Statistics Norway that will be finalised in 2007. This evaluation will study the scheme's effects in terms of creating more R&D in the private sector, change in R&D behaviour in enterprises, returns of increased R&D, and will also look at whether the scheme stimulates real R&D or reclassification of costs. On the basis of the conclusions in the evaluation report, the Government will decide on the scheme's future scope and configuration.

Commercialisation of research based business ideas may increase national welfare and wealth creation. In 2002, the University and University College Act, as well as the Employee Invention Act, were amended, implying that universities and university colleges were given an expanded responsibility for the application of their own research and the commercialisation of patentable inventions made by their employees. After the amendments the universities and university colleges have been linking up with industry through the establishment of Technology Transfer Offices ( TTOs) and also through existing incubators and science parks.

As a follow-up of the White Paper on Research from 2005 and political aims to boost commercialisation efforts, the existing programme for commercialisation of projects by employees at tertiary institutions in the RCN ( FORNY) has been reinforced.

The Fund for Research and Innovation

The Fund for Research and Innovation was established in 1999. The main purpose of setting up the fund was to provide a basis for long-term stable funding of research activities. In practice, the Fund is a budget mechanism that secures a fixed allocation outside the yearly budgets of ministries. Since its establishment, the fund has been increased considerably and its returns constitute a significant part of all government appropriations to research (16 per cent in 2007, or NOK 2.6 billion). From 1 January 2008 the total capital in the Fund will be NOK 66 billion.

The yield from the Fund finances research that cut across sectors. Investment in functional genomic research and long-term petroleum research are examples on research financed by the Fund. Important new policy instruments financed by the Fund are the Centres of Excellence and the Centres for Research-based Innovation. Resources have also been earmarked to finance Norwegian participation in the International Polar Year ( IPY) and in the EU Framework Programmes.

Incentives for private donations to basic research

Norway has initiated a scheme where private donations for research of at least NOK 5 million are matched with a state contribution corresponding to 25 per cent of the amount of the donation. The donation must come from private individuals, companies or non-profit organizations, and must be given to one of the universities, the state colleges with the right to grant PhDs, the Norwegian Academy of Science and Letters, or the Research Council of Norway.

6. HUMAN RESOURCES

Great importance is attached to the issue of Human Resources in research and technology and the need for more and better scientists. A new White Paper on recruitment will be presented to Parliament in 2008. It will analyse future needs and lay out a plan for increased efforts in doctoral education. In 2005, almost 55 000 persons participated in R&D in Norway. Some 68 per cent of these were researchers and university graduates. The number of researchers per thousand total employment was 12,9 in 2005, which is above the EU-average.

Norway is committed to increasing the number of researchers. The number of posts for doctoral students was increased by more than 30 per cent from 2000-2006. In 2006, 905 doctoral degrees were earned in Norway, of which 347 (38 per cent) by women. In the state budget for 2008, the Government proposes to increase the number of PhD positions by 350.

Women in research is a subject that Norway is particularly occupied with. The Government has appointed a Committee for Women in Research. The Committee works in close dialogue with universities, colleges and research institutes. It acts as an advisory body for both institutions and authorities, and proposes concrete measures to achieve a better balance between the number of men and women in academic positions. The Committee has succeeded in engaging academic institutions and relevant authorities in discussions on gender equality.

The challenges Norway faces regarding supply of and skills in Mathematics, Science and Technology ( MST) are the same as in many other European countries. The Government has a holistic approach to the MST challenges, starting with developing competence in kindergartens and following up throughout the entire educational system, including also teachers' education. A Strategy for a Joint Promotion of Mathematics, Science and Technology to meet the challenges has been established. There has also been an increase in public awareness of the society's needs for MST-competence and a rapid growth in related jobs, especially in knowledge-intensive services. A shift is now emerging, with an increase in the recruitment to MST, and also in the number of girls choosing these subjects.

7. A NORWEGIAN PUZZLE - ARE OUR MEASUREMENTS RIGHT?

The macroeconomic performance of Norway is outstanding with Mainland- GDP growth averaging 4_ per cent for the past three years. GDP per capita and productivity is high and inflation and unemployment rates are low. The labour market has tightened significantly over the last couple of years and the unemployment rate is now the lowest in nearly 20 years.

In contrast to the strong macroeconomic performance stands the weak Norwegian performance on a large number of research and innovation indicators. The 2006 European Innovation Scoreboard ( EIS), ranks Norway 16 out of 34 countries ( SII). In a recent economic survey the OECD called this a paradox, the Norwegian puzzle. The OECD survey spurred a debate in Norway about innovation performance. The discussion is important, because our understanding of what takes place in the innovation system may have serious repercussions for Norwegian innovation policies.

Many scholars claim that EIS indicators do not provide an adequate depiction of strengths and weaknesses of Norwegian research and innovation performance. This is due to biases in the set of indicators chosen. If it turns out that the puzzle is caused by fundamental misconceptions as regards measurements or the role of innovation in the economy, it may even have consequences for innovation policy development in other countries. Norway therefore welcome further discussions on what indicators best reflect the innovation capacity of various countries.

8. THE WAY AHEAD

As shown above, the total R&D-expenditure as a percentage of GDP was 1,5 percent in 2005. It is evident that Norway will not reach the 3 percent target by 2010. The large growth in GDP is the main reason for this. However, the Norwegian government still believes that higher general R&D intensity is important for several reasons, such as to solve challenges related to climate change and the environment and to strengthen the international competitiveness of Norwegian companies. In the state budget for 2008, the Government proposes to strengthen public R&D allocations by NOK. 1.3 bill.

Our ambition is to strengthen our efforts even further in the years to come.

Private investments also need to increase. According to the OECD, Norway has a solid institutional framework and relatively generous public measures for supporting private R&D.

Still, there is a potential for increasing research efforts in the various s trade and industry sectors and for stimulating adaptation and the development of new business areas, and we are addressing this. New measures have been introduced, and we will continue to improve public R&D measures supporting innovation in Norwegian companies. The Government will also present a White Paper on innovation next year, addressing challenges in innovation also in a broader sense.

FINLAND

1. INTRODUCTION

The goal of the Government of Finland is to promote economic growth and social well-being by improving productivity and employment. This will require a better availability of labour, increasing competence and innovativeness, and the reformation of the economic and administrative structures. The national strategy of Finland is strongly based on scientific research, technological development and innovation, and on the successful actions, instruments and implementation processes in the key policy areas. These policy domains include education, S&T and innovation policies. During the past decade, public and private stakeholders of the national innovation system have increased in partnership their investments in creating and exploiting new knowledge, technology and skills. At the same time, there is a growing need for more advanced policy instruments with more extended impacts on the economy and society.

To meet these challenges, the Government will carry out efforts that aim at renewing the structures and procedures of the national innovation system and increasing resources in R&D and innovation. The ultimate objective is to offer innovators the best operating environment in the World. Improvements in economic productivity and competitiveness will require more effective broad-based policy actions. In this context, special attention will be focused on policies in relation to education, R&D and innovation. Apart from technological innovations, the Government will underscore the importance of social innovations, such as those of marketing and organisational innovations. That's why the Government is currently drafting a national innovation strategy. This article will take a closer look at the recent developments in the crucial elements of this strategy - R&D financing and human resources - and describe some of the essential features of the forthcoming new policy domain, i.e. broad-based innovation policy.

2. VOLUME AND FINANCING OF RESEARCH AND DEVELOPMENT ACTIVITIES

The share of R&D funding of gross domestic product

In light of international comparisons, the financing of research and development (R&D) in Finland has developed very favourably. Investment in R&D by both the private and public sectors is among the highest in both the EU and OECD areas. National investment has increased continuously for the past three decades, both in terms of quantity and as a share of gross domestic product ( GDP). The GDP share of R&D funding ( i.e. R&D intensity) in accordance with the Lisbon Strategy did already reach 3% in Finland in 1999.

In 2005, the volume of R&D expenditure in Finland was almost 5.5 billion, i.e. approximately 3.5 per cent of GDP. Preliminary information concerning 2006 indicates that growth of the volume of R&D funding is continuing. However, GDP seems to have grown faster than R&D funding at such a rate that, in 2006, the R&D intensity will probably decrease to 3.4 per cent. The government goal is to raise the R&D intensity to four per cent by 2011. In order to attain this goal, public research and innovation funding will be increased by 5 per cent a year between 2008 and 2011. The goal is included in the decision on state spending limits for 2008-2011 made by the government in May 2007.

R&D expenditure and funding

Overview

Currently, companies account for 71 per cent of R&D expenditure in Finland. The higher education sector accounts for approximately 19 per cent of expenditure and the public sector ( i.e. government R&D institutes) for 10 per cent. As the companies' share of the total R&D expenditure has increased, the share of the public sector, in particular, has diminished over the past 15 years.

Private sector perspectives

In international comparisons, the Finnish business sector appears to be very R&D-intensive. Over the last 15 years, the R&D activity of the business sector has been growing strongly and steadily. From 1991 to 2006, the share of R&D expenditure by companies of the total R&D expenditure increased by approximately 14 percentage points. During the same period, in terms of GDP, the companies' share increased from approximately 1.2 to approximately 2.4 per cent.

Within the private sector, the share of funding by manufacturing industry decreased from 82 per cent in 1998 to less than 80 per cent in 2004. This derives from the strong growth of R&D in the knowledge-intensive services and the moderate growth of R&D in sectors other than the electronics industry. The share of the electronics industry of the total volume of R&D expenditure in the industrial sector increased by 10 percentage points between 1998 and 2004, reaching 71 per cent in 2004. In addition, one company, Nokia Group, accounts for a lion's share of the R&D within the sector. The shares of the two traditional pillars of Finnish industry - the wood processing industry and the metal industry - decreased, amounting in total to no more than 16 per cent of the entire industrial volume of research expenditure in 2004.

R&D is very much concentrated in large companies. The R&D operations of small companies with less than 10 employees are very limited and their growth modest (in 1998-2004, even nominal growth remained under seven per cent).

Slow growth is not so much a sign of access to R&D funding being difficult, but rather reveals that the number of R&D-oriented start-up companies remains low. The actual problems in the capital management of these companies lie in the fact that risk capital investors avoid investing in start-up companies.

Public investors have to provide 90 per cent of financing in this particular area of innovation funding.

According to the Statistics Finland estimate published in January 2007, private sector R&D expenditure in 2006 increased by approximately 4.9 per cent on the previous year. According to a Confederation of Finnish Industries survey, the R&D expenditure of Finnish companies abroad increased, but somewhat slower than domestic R&D expenditure. According to the estimates of Finnish business life, companies' R&D expenditure will continue to grow in 2007. Positive developments can be observed, particularly in the chemical industry and the technology industry,

whereas in the forest industry no signs of revival of R&D activity can be detected as yet. The Statistics Finland estimate, on the other hand, seems to indicate that R&D activity has also increased favourably in the service sector.

It is also worth noting that the Confederation of Finnish Industries estimated that companies would spend over 66 per cent of their R&D expenditure in Finland. This is about the same amount as in 2005-2006, and as much as 6 percentage points more than at the beginning of the 21st century. As far as the R&D activity of Finnish companies is concerned, it would seem that Finland has maintained its position as a competitive and favourable environment for innovation. The growth of R&D expenditure has also increased the number of R&D staff in companies while, in 2003-2005, it remained almost unchanged.

Public sector perspectives

In spite of the fact that the relative share of public sector investment in the volume and funding of research has decreased, when calculated in euros, public sector investment in R&D has increased significantly. State R&D funding almost doubled in 1996-2006. During this period, in real terms, public funding for R&D grew every year except for three. We should note in particular that, at the end of the 1990s, when the state was otherwise cutting expenditure, it still increased R&D funding. Taken alone, the general increase of 1997-1999 meant a real increase in state investment in R&D of more than one fifth. The proportion of R&D funding of state expenditure increased over ten years by 1.2 percentage points. Since 2002, the share of state expenditure has been 4.5 per cent.

In 2007, in the state budget, EUR 1.73 billion will be allocated for appropriations and allocation authorisations for R&D activities, representing an increase of EUR 50 million and nominal growth of three per cent from the previous year. As in previous years, the share of R&D of state expenditure, excluding state debt servicing costs, is 4.5 per cent. In Finland, at 1.03 per cent, the proportion of public R&D funding of gross domestic product in 2005 was the highest among the EU Member States. However, mostly due to remarkable rates of growth of GDP, it is more than likely that the figure will decrease below the level of one per cent in 2007.

Since the latter half of the 1990s, the most characteristic feature of public sector research funding has been a strong focus on competitive funding, its share of state research funding growing within ten years from 25 per cent to 42 per cent in 2005. The financing volume of financing organisations has grown significantly during the same period, as can be seen from the following:

The Academy of Finland is an organisation which provides funding for basic scientific research and Tekes (Finnish Funding Agency for Technology and Innovation) is an organisation which provides funding for applied technical research and innovation activities. In the state budget of 2007, their share of public R&D funding is 45.1 per cent. As the share of financing organisations has grown, the share of government R&D institutes in particular has decreased.

In Finland, the development of the basic funding of universities rests on the Higher Education Development Act, which guarantees a certain real increase in basic funding for universities in 2005-2007. The problem is that the operative basic funding of universities has hardly increased at all, since they are being forced to use most of the statutory increase on rents and other real estate expenses. The modest increase in the basic funding of research institutes operating under various ministries, on the other hand, is largely explained by the endeavour to make research institutes increase the quantity and share of external R&D funding. Within ten years, the share of external R&D funding has indeed grown at an average annual rate of eight per cent, reaching 44 per cent of total funding in 2006. Still, only two of the twenty research institutes - the Technical Research Centre of Finland ( VTT) and the Finnish Environment Institute ( SYKE) - have reached above average levels. In order to develop outside funding, it has been deemed necessary, for instance, to develop the calculation of costs at research institutes and to raise the tax exemption limit of corporate donations for institutes of higher education.

3. DEVELOPMENT OF HUMAN RESOURCES

The rapid growth in the volume of research in Finland has also set challenges for researcher training in order to guarantee that the education level of research staff remains high as operations expand. So far, we have succeeded well. Key measures for achieving this have included the development of graduate schools, the emphasis given to new doctoral theses in the basic funding of universities, and the linking of PhD training to Academy of Finland research funding that has continued for long. At the same time, insufficient attention has been paid to investment in post-doctoral research careers. This development has not matched the requirements of increased R&D activity and presents a major challenge for the research system as a whole, as well as for the financing organisations.

The table below, demonstrating the development in the number of university degrees, shows steady and strong growth in the number of university degrees, postgraduate students and doctoral degrees between 1991 and 2006. The annual number of doctoral degrees more than doubled in Finland in the 1990s, and this growth has continued in the early 21st century. In 2006, the number of doctoral degrees totalled 1,409. Women accounted for 47 per cent of these degrees in 2006, as compared to 33 per cent in the early 1990s.

The Finnish graduate school system, established in 1995 with the financing of the Ministry of Education, universities and the Academy of Finland, has gradually expanded and the number of schools has doubled from the original. At the beginning of 2006, the system comprised 124 graduate schools, where slightly over 4,000 postgraduate students are working on their doctoral dissertations full-time. Most of the graduate schools are networked projects jointly run by several universities. The graduate schools are tasked with providing systematic education and guidance for the postgraduate students enrolled in them. In graduate schools, students study full-time and receive salary.

The graduate schools have made postgraduate education more systematic and efficient. The key objectives are to assure the quality of graduate education and shorten the time it takes doctoral students to write their dissertations, thus lowering the age at which doctoral candidates defend their theses, in order to educate high-level professional researchers and experts. With a view to more international doctoral education, the aim is to increase the share of foreign doctoral students in the graduate schools to 20 per cent on average by 2012.

In 2004, almost 13,000 PhDs were involved in working life in Finland, representing approximately 0.5 per cent of the workforce. Employment prospects are bright for those with a doctoral degree, and in international comparisons, the Finnish unemployment rate for PhDs is among the lowest (2.2% in 2004; unemployment rate of the entire work force in Finland was 7.7% in Dec 2004). Most doctors (85%) work in the public sector.

The general unemployment rate in Finland in December 2006 was 6.4 per cent.In 2005, a total of over 77,000 personnel worked in R&D positions, representing an increase of only one per cent on the previous year. On a longer-term perspective, however, we can see that the number of R&D personnel has grown very favourably in Finland for quite some time. From the point of view of both R&D investments and the number of R&D personnel, the late 1990s was a period of rapid growth. At the beginning of the current decade, growth was slower, but over the past two years the resources allocated to R&D have again begun to grow favourably. After a couple of years of decline, the number of R&D personnel in corporations is also growing again. More than half of research personnel work in companies and about a third - over 26,000 in all - are women. In the public sector and the higher education sector, women account for almost half of research staff, but in companies their share is only slightly over a fifth.

Mobility of the highly educated

In recent years, a third theme has arisen alongside questions on the need for highly educated employees and the placement of graduates, namely, their mobility on the labour market. From the point of view of the national innovation system, the mobility of the highly educated is a key channel for the dissemination of knowledge and expertise. The transfer of employees from one workplace to another is the most efficient way of spreading the knowledge possessed by a person - so-called tacit knowledge and expertise - from one place to another.

The mobility of the highly educated increased favourably in Finland after the economic depression of the 1990s, but has begun to decline again since the turn of the 21st century. In 2004, slightly over 20 per cent of the highly educated changed jobs, almost three per cent less than in 2000. The drop in the mobility rate was highest among the most highly educated, i.e. those with doctoral degrees (from 28% to 23%). In the Finnish labour market, the higher the educational level, the greater the mobility rate, generally. The mobility rate differs greatly from one field of science to another.

In the EU Member States, R&D co-operation and researcher visits to foreign universities increased significantly in the 1990s. Efforts have been made to enhance international mobility further through measures implemented simultaneously in the EU and its member states concerning, for instance, the labour markets, taxation, immigration regulations, work permit questions, and the establishment of internationally acknowledged research environments.

Finland has also taken separate steps in order to become a more attractive place for highly educated foreigners and to attract as many as possible who have moved away to return. The goal is to strengthen the foundations of expertise and reform modes of operation in Finland.

In Finland, the share of foreigners in professions requiring high-level expertise is one of the lowest in the EU15 area. The share of foreign R&D staff is also among the lowest of all EU15 states. In addition, at the beginning of the 21st century, the share of foreign students in researcher education programmes in Finland was among the lowest of the EU15 states (approx. 6%). Growth in the number of foreign students in Finland would be a positive factor, but it would be equally important to have more of them stay and work in Finland after graduation.

A key goal is to enhance the international mobility of researchers. The means of doing so have been examined from the point of view of the advancement of researcher careers and the development of graduate education. According to studies, it would seem important to support researchers during the phase in which they are becoming independent, and to develop the career ladder at universities in a way that promotes research careers. Accordingly, an action plan for the promotion of graduate education and research careers has been drawn up for 2007-2011. In addition, a taskforce has been set up to prepare a four-step research career model.

In accordance with the government programme, a national strategy will be created for the internationalisation of higher education in order to increase the international mobility of students, teachers and researchers. Commissioned education directed at foreign students will be facilitated, and a trial will be launched allowing universities and polytechnics to apply for the right to charge fees for participation in specified MSc programmes from students coming from outside the EU/ ETA area. This trial will also include a scholarship system for foreign students of limited means.

A public financing programme, the Finland Distinguished Professor Programme (FiDiPro), has been established in order to recruit foreign researchers to Finland, offering distinguished professor-level positions for a fixed term. The programme aims to strengthen Finland's scientific and technological expertise and to internationalise the Finnish research system, bring added value to the national innovation system, and support the profiling of research in universities and government R&D institutes.

4. SCIENCE AND TECHNOLOGY ALONE ARE NOT ENOUGH: TOWARDS BROAD-BASED INNOVATION POLICY

The government aims to increase public R&D funding sufficiently to raise the GDP share of private and public research funding to four per cent by the end of this decade. Of course, increasing research funding is not an end in itself. With a view to the realisation of the science, technology and innovation policy objectives, it is essential that research funding be provided on a long-term basis and its development is predictable. The purpose of public funding is to increase the benefits deriving from investment. Public funding also encourages companies to increase their research investments and

strengthen their innovation activities. In Finland, the concern remains that large investments in R&D do not materialise sufficiently in the form of new innovations, businesses, jobs, or increased exports. It would be especially necessary to develop R&D and innovation activities in the service sector, which has a weak productivity rate.

Thus, when targeting financing, in addition to implementing content-related goals, it would also be important to reduce the fragmentation of R&D activities and other weaknesses. Accordingly, the measures in accordance with the government decision in principle concerning the structural development of the public research system - particularly the centres of expertise, structural reform of sectoral research, and more efficient strategic guidance - were emphasised in the implementation of the science, technology and innovation policy. The internationalisation of science and technology is the over-arching feature of all development measures.

The structural development of institutes of higher education aims at strengthening their quality, effectiveness and internationalisation. Universities and polytechnics are being encouraged to develop their own focus areas. Some polytechnics have become united, and the preparation of a few university consortiums is underway. In accordance with the government programme, a new innovation university of research and education will be established as a joint venture by three institutes of higher education. Project funding has been provided for universities and polytechnics, for instance, for the purpose of strengthening business expertise, entrepreneurship and internationalisation in their teaching. Universities will be given more financial power in connection with the reform of the Universities Act. They can become collective or juridical persons under public law or foundations under civil law. In addition, their management and decision-making systems will undergo a reform by the spring of 2009. The legislation concerning inventions made in institutes of higher education was reformed in the spring of 2006. A new law will make the recognition and exploitation of inventions developed in institutes of higher education more efficient by clarifying the related rights and compensation procedures. Furthermore, the legislation was changed to enable universities to establish limited companies which can apply research results for commercial purposes.

Special attention is being paid to the fact that the financing structure of research organisations (direct budget funding and competitive funding) is in balance and rests on a sustainable foundation with a view to the stable management of the basic tasks and long-term development of the knowledge base. These principles apply to the use of both existing and new funding, the need for which is already a widely accepted fact in Finland.

Strategic Centres of Excellence in Science, Technology and Innovation will be established for areas of expertise which are crucial to the future of the national economy and society. Such areas include energy, the environment, metal products and mechanical engineering, the forest cluster, health and welfare, and the information and communications industry and services. The operation of these centres will be based on the strong commitment of companies, universities, research institutes and financing organisations. Moreover, the national strategy includes proposals for the development of comprehensive national infrastructures and their enhanced use. The first centre of expertise, the Forest Cluster Ltd., was established in the summer of 2007. Preparations for the establishment of strategic centres of expertise have taken place in close co-operation with the Centre of Expertise Programme (CoE). During the new programme period 2007-2013, the CoE programme focus will be on the development of nationally significant centres of expertise and internationally competitive centres of expertise. In addition, a regional centre of expertise programme will strengthen the innovation environments of small and medium sized rural areas in particular and support their networking with stronger rural areas within the innovation system. The innovation strategies of large rural areas, on the other hand, promote the development of rural innovation environments and support the establishment of centres of expertise. Financing from EU structural funds will be guided towards the development of regional conditions for innovation activity.

The government has decided to reform the governance system of research performed in sectoral research institutes ( i.e. government R&D institutes), operating under various ministries. An advisory committee has been established for the ministries' new, joint operating model, to guide and develop sectoral research and its exploitation. The field of sectoral research has been divided into four areas: regional and social structures and infrastructures; competencies, work and welfare; sustainable development; and security. Furthermore, the advisory committee has been tasked with the development, for instance, of evaluation and anticipatory methods for policy measures, and the

promotion of researcher careers and internationalisation.

The various phases in the development of enterprises and the varying needs related to each of them have not been taken into account in the financing as comprehensively as they should be. However, the public sector has begun to eliminate the discontinuity emerging at the interface of research and innovation funding by means of risk funding, operating between R&D funding and the actions of private capital investors. This phase of the innovation process also entails other areas of development requiring investments, particularly in areas related to business skills and, more generally, willingness to become an entrepreneur.

Alongside increased R&D funding, efforts are being made to improve the efficiency of the way in which the funding is used. In order to make the evaluation of the impact of aid measures easier, a database of public research funding and economic subsidies has been set up. This database, covering all business subsidies since 2000, provides a foundation for evaluating the impact of subsidies independent of the provider of the subsidy and with the required research reliability.

In addition to the above, there are many other factors related to the operation of the innovation system, for the development of which the public sector is expected to bear responsibility in Finland. Such measures include closer co-operation and interaction between public innovation organisations, including the development of joint service models, more efficient productisation and commercialisation measures, and the promotion of innovation readiness and creativity - for instance, by supporting the innovativeness of work organisations, promoting entrepreneurship, improving

the clarity and predictability of the regulatory environment, the operation of markets, and the development of public sector acquisitions.

It is important that the development of the science and technology policy be closely linked with the innovation policy, since in this way it can be guaranteed that the results of scientific and technological development will benefit society as extensively as possible. Furthermore, it is important that the concept of innovation be not confined only to, say, technological innovations. Accordingly, the Finnish Government has decided to draw up a national innovation strategy, whose preparation has been launched from the viewpoint of broad-based innovation policy. The basic principle lies in there being a specific, recognisable role for most areas of political life within the innovation activities and policy, and that the governance measures of public authorities are linked more comprehensively as part of the innovation policy.