I am pleased to be in Groningen and happy for the invitation to speak here at the University of Groningen. In recent years, there has been quite extensive international interest in the Finnish innovation and education system. Many delegations have visited our country to observe what is called the "Finnish model". I am aware that there is an active ongoing exchange of visits between the Netherlands and Finland. Two months ago, in October, representatives of your University visited Finland together with people from other Dutch universities. Also, Professor Bart van Ark from this University visited our country just this week – and gave a lecture on productivity, growth and innovation.
I think that this mutual interest shows that the Netherlands and Finland have a lot in common. We are both North European countries and Member States of the European Union. Both countries are committed to the implementation of the Lisbon strategy, and active in global issues. Of course, there are also differences between the two countries.
I would like to outline some of our experiences in building a knowledge economy based on social justice. Finnish approach highlights the importance of developing a vision, encouraging creativity and working on consensus-building.
We Finns are only five million and Finland is a relatively large country, so we can never compete with quantity, only with quality. For this, we need expertise; and expertise is generated through investments in education, in research and development, and in support for innovation.
* * *
We have often been asked how it was possible for Finland to become a technology-intensive, knowledge-based economy in such a short time in the late 1990s and the early years of this century. Actually, the answer is the opposite; it has taken a rather long time to build up the system.
For decades, the Finns have been fast appliers of new technologies. A small nation struggling with severe climatic conditions has simply had to apply new technologies as fast as possible. For instance, the Finlayson weaving shed was the first place in Northern Europe to install electric light in 1882. Only six years after Bell patented his invention, the major cities in Finland had functioning telephone companies. In the early 1920s, Finland had both a national airline and a broadcasting company in operation. Later, Finland became a forerunner in use of the mobile phone and the Internet.
One of the crucial factors behind the Finnish "success story" is that education, science and research have traditionally been widely appreciated in the society and therefore they have become political priorities. Also, public-private partnerships have been used whenever they have been considered suitable.
Finland’s well-established and well-functioning labour market relations also play an important role and enable the formulation of wide-ranging contracts. Traditionally, the main labour market organisations have negotiated income policy agreements which outline the framework for union-level agreements on issues such as the size of pay rises and social, pension and training benefits. The governments have actively supported this process. Nearly all the legislation related to working life is prepared on a tripartite basis, jointly by the Government and the employers’ and employees’ organisations. This approach is still valid – even if heavily debated. It has promoted a favourable political, social and economic "infrastructure" for development of the economy and Finnish society, and also the emergence of a national innovation system.
As a result of broad consensus on the importance of education and research, the Finnish university system was expanded dramatically in the fifties and sixties. Taken into account the large size of Finland, this has had an important role in Finland’s development.
Our modern research and development policy goes back to the beginning of the eighties, and was greatly inspired by recognition that Finland would not be able to compete successfully through traditional industry only. Knowledge intensity and technology were seen as areas on which to build our future strategies. All the major public and private stakeholders in society participated in the development of the Finnish model. In that same decade, both the National Technology Agency, TEKES, and the Technology Policy Council were founded. All this meant that concepts such as the "information society" and a "knowledge-based economy" were integrated into Finnish policies.
Today – 25 years later, Finland is not only one of the most open economies in the world, but also one of the leading knowledge-based economies. Finland is close to the top in many international rankings – for example for competitiveness, environmental sustainability, technology, industry-science relations and research and development expenditure. Spending on research and development relative to GDP is today one of the highest in the world – at about 3.5%. This figure is also well above the EU target. It is interesting to note that at the time of deep recession in the 1990s, public investments in research and development actually increased.
Success is dependent not only on making decisions and choosing the right development paths at the right time: one also needs to have good luck. Progress in science and technological advancement usually take place quite slowly and step by step. In order to exploit the real benefits of research, we need to be patient and far-sighted, and to invest in a sustained manner equally in education, science and technological development.
* * *
I would like to stress that the key word is education. Education affects both the supply of and demand for innovation. New technologies cannot be adopted in production without a sufficiently educated and trained workforce. The demand side is also important, since innovations cannot take place without educated people, who can be active and demanding customers and consumers.
Lifelong learning has been given special importance in Finland. Without well-trained workers, the Finnish economy cannot be competitive and our public sector cannot provide high-quality services efficiently. Education and training is thus a key tool for society and its various sectors in responding to change.
Education and training boost the capacity for self-determination and for making life choices. Also, they give people opportunities to use their expertise and their talents in the best possible way to benefit themselves, their families and society as a whole. In working life, training has traditionally been a quite solid "insurance policy" against unemployment and a factor in gaining better pay, too.
Our education system is based on the principle of providing learning opportunities for everyone, regardless of where they live or their gender, financial standing, cultural background or native language. Our constitution states that everyone has the right to basic education free of charge. Finland ranks very well in international comparison, both for equality in society and for learning attainments in general education.
The OECD’s PISA surveys in 2000 and 2003 put Finland at the top in terms of learning skills among 15-year-olds for mathematics, science and reading. Other high performers included Asian countries such as Japan and Korea. What is unique in the Finnish case is the low variation among different schools and students.
* * *
For economic success, certain social and institutional innovations are as important as technological ones. For a long time now, academics and researchers have linked good governance and a low level of corruption with the concept of the knowledge economy. There is very little corruption in Finland – and I know that the Netherlands has also done well in these surveys. Good governance and political transparency play an invaluable role in Finnish society.
Welfare and competitiveness are not mutually exclusive. I strongly believe that our success as a knowledge-based economy must also been seen against the background that Finnish system is based on the "Nordic welfare society model". This system is grounded on solid democracy, shared responsibility and social justice. People appreciate our educational, social and healthcare services, and are more willing to pay taxes to maintain them than is the case in many other countries. The public sector is relatively extensive and also reasonably transparent and efficient.
The organisation rate among both employees and employers is high in Finland. Most jobs are permanent, though short-term contracts have become more common in recent years, and this has already created some difficulties. Part-time work is not as common as it is elsewhere in Europe. Thanks to family leave, the day-care system – and free warm school meals, women too can play an active role in working life and usually work full-time. Girls perform well at school, and Finnish women of working age are already more highly educated in general than men. I firmly believe that the full participation of women in society is not only right in terms of equality but also improves competitiveness. In Finland, our challenge is to help boys. Most school drop-outs are boys and they are in risk to become long-term unemployed and socially excluded in the future.
* * *
Knowledge is a key factor for economic growth and social development in every part of the world. Globalisation means that information, new ideas and innovation are spreading faster than ever. With a fairer approach to globalisation, ICTs can provide effective means for developing countries to accelerate their progress and enable their integration into the global economy. For developing countries, the knowledge-based economy – if socially just – allows further specialisation and improvements in productivity. Human and knowledge capital is the only asset that can grow without limit.
In Finland and in Europe, we face similar key challenges. Firstly, we have to respond to harder international competition. Secondly, our population is ageing very rapidly – in Finland even more rapidly than elsewhere in Europe. Thirdly, we have to address the ecological challenges – in particular the state of the environment, climate change and energy resources.
The European Union and its Member States have good potential to succeed in globalisation. At the EU level it is important for us to have shared aims and objectives. And indeed we do have a programme that incorporates a common approach of this kind: the Lisbon Strategy.
The Union has not, however, developed according to the ambitious goals inscribed in the original Lisbon Strategy in 2000. The Strategy itself has not been the problem; it has just not been put into practice effectively enough in the Member States. The Lisbon Strategy has recently been revised, making Member States free to decide on the most urgent measures to boost growth and employment. I hope that implementation of the Strategy will now pick up speed and that we shall not ignore the overall aims of sustainable development, innovation and social cohesion. The Lisbon strategy is also a learning process. Perhaps we should be more willing to accept the naming and shaming approach, as proposed by Mr Wim Kok in his report on the Lisbon strategy.
The Lisbon Strategy corresponds well to Finland’s objectives and we remain highly committed to its implementation. During our EU Presidency, we have focused on the need to boost innovation in Europe and to invest more in human resources and lifelong learning.
Globalisation has changed the world, and not only in economic terms. Europeans move from one country to another, and migration to Europe is increasingly vigorous. We must be open to learn from each other and open to the future in order to find opportunities for global cooperation and partnerships – and to work together for fairer globalisation and sustainable development for the benefit of us all.