Funding of Finnish R&D&I-policies
3.7.2008
Juha Majanen, Ministerial Adviser, Budget department
R&D&I-expenditure, overview
 Total R&D&I-expenditure 2008 is
estimated to amount about 6,3 billion
euros of which:
 Private enterprises 4,26 billoin euros (71%)
 Public funding 1,80 billion euros (29%)
 Public R&D&I –expenditure is about 4,4 % of
government spending in 2008 (exclusive
interest payments on debt)
Budget Department
Budget
Department
03/07/2008
03/07/2008
2
Central government budget expenditure by
administrative branches in 2008, billion euros
President, Parliament, Council of State
0.2
Foreign Affairs
1.1
0.7
Justice
1.1
Interior
Defence
2.4
6.7
Finance
6.9
Education
2.8
Agriculture and Forestry
2.1
Transport and Communication
2.4
Labour and Industry
13.9
Social Affairs and Health
Environment
0.3
Interest payments on debt
0,0
Source: MoF
Budget Department
Budget
Department
2.4
5,0
10,0
15,0
May 14, 2008/VM/TaE
03/07/2008
03/07/2008
3
R&D&I-expenditure, overview
 Both private and public R&D&Iexpenditure have remained at relatively
high level for years
 Growth of the R&D&I-funding has been
about 4 to 5% each year
 However, due to very rapidly grown
GDP, the GDP-ratio has decreased
since 2005
Budget Department
Budget
Department
03/07/2008
03/07/2008
4
Private and Public R&D&I-expenditure, Finland 2000 - 2008
(2007 and 2008 are estimates, Billion euros)
5,00
3,70 %
3,48 % 3,45 %
3,43 % 3,45 %
Billion euros
4,00 3,34 %
3,35 %
3,30 %
3,50
3,36 %
3,50 %
3,30 %
3,30 %
3,00
2,50
3,10 %
2,00
% of GDP
4,50
2,90 %
1,50
1,00
2,70 %
0,50
0,00
2,50 %
2000
2001
2002
Private sector
Budget Department
Budget
Department
2003
2004
2005
2006
Public sector
Source: Statistics Finland
2007
2008
Total, % of GDP
03/07/2008
03/07/2008
5
Public R&D&I -expenditure, Finland 2000 - 2008
(2007 and 2008 are estimates)
2,00
0,98 % 0,97 %
0,96 %
1,00 % 1,01 %
1,03 %
1,00 % 0,99 %
0,95 %
1,80
1,798
0,90 %
1,730
1,694
0,80 %
1,614
1,60
1,535
% of GDP
Billion euros
1,00 %
0,70 %
1,453
1,40
1,389
1,352
0,60 %
1,296
1,20
0,50 %
2000
2001
2002
Budget Department
Budget
Department
2003
2004
2005
Source: Statistics Finland
2006
2007
2008
03/07/2008
03/07/2008
6
Main actors in R&D&I-funding
 Several actors are funding and executing R&D&I-programmes
and -projects
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Tekes – Finnish Funding agency for Technology and Innovation
Academy of Finland
Sitra - the Finnish Innovation Fund
Science and Technology Policy Council
Ministry of Employment and the Economy
Ministry of Education
Universities
Employment and Economic Development Centres (Regional TEcentres)
Government research institutes
Finnvera Oyj
Industry Investment
Other institutions
Private enterprises
Budget Department
Budget
Department
03/07/2008
03/07/2008
7
Main actors in public sector
Parliament
Science and
Technolygy
Policy
Council
Government
Ministry of
Education
Ministry of
Emloyment
and
the Economy
Academy
of Finland
Tekes
VTT
Universities
Technical
Research Centre
of Finland
Other ministries
and
Research
institutes
Sitra
Finnvera Oyj
Finpro
Industry
Investment
TE-centres
Budget Department
Budget
Department
DM 25736
01-2008 Copyright © Tekes
03/07/2008
03/07/2008
8
Overview of innovation environment
Private
R&D&I activities
of Private enterprises
4 109
BusinessAngels
noin 380**
Private funding
from abroad
409
VTT
217
(*) year 2005
(**) old estimate
2002
Public
Year 2006,
Million euros
Academy
of
Finland
239
Universities
1 079*
82
Tekes
465
Sitra
29
Finnvera
406*
Finpro
31
Foundation
Ministries,
for
TE-centres Finnish Inventions
6
Research institutes
357
Basic research Applied research
Budget Department
Budget
Department
Investors:
Private301
Industry Invesment:
Development of companie
Marketin
Development Internationalization
03/07/2008
03/07/2008
9
DM 25736
02-2008 Copyright © Tekes
Public R&D&I-funding, main actors
(Budget 2008, MEUR)
Other R&D&I Funding
241 Meur
13 %
Tekes – Finnish Funding
agency for Technology
and Innovation
526 Meur
30 %
Governm ent research
institutes
Basic R&D&I funding allocated
in central government budget
282 Meur
16 %
Tekes and Academy of Finland
(Total 823 MEUR)
offer funding on a competetive
basis
Academ y of Finland
Universities
452 Meur
25 %
Budget Department
Budget
Department
297 Meur
16 %
Source: Statistics Finland
03/07/2008
03/07/2008
10
R&D&I expenditure, main actors
(2006, MEUR)
Universities
1 079 MEUR
Public sector
574 MEUR
Private enterprises
4 108 MEUR
Budget Department
Budget
Department
Source: Statistics Finland
03/07/2008
03/07/2008
11
R&D&I-expenditure and funding, main actors
(2006, MEUR)
Expenditure Funding
Domestic
Private
Foreign
Public
Public
Total
enterprises
Foundations funging
Funding
Funding
Meur
Meur
Meur
Meur
Meur
%
5 761
3 756
55
409
1 541
27
Year 2006
Total
Private enterprises
- Industry
- Other branches
Public sector
- Central Government institutions
- Other Public institutions
- Non-profit organisations
Higher education
- Universities
- University hospitals
- Higschools
Budget Department
Budget
Department
4 108
3 279
828
3 616
3 052
564
2
0
2
259
88
170
232
139
93
6
4
11
574
522
16
36
70
68
28
9
1
19
54
52
0
2
423
393
16
14
74
75
99
38
1 079
891
81
107
71
56
7
8
26
21
3
2
96
62
6
28
887
753
65
69
82
84
80
64
Source: Statistics Finland
03/07/2008
03/07/2008
12
Public R&D&I-allocation
Disciplines (2006, MEUR)
300
277
261
250
231
228
205
200
Public sect.
150
Higher educ.
101
100
87
50
83
74
71
26
9
0
Natural
science
Technical
science
Budget Department
Budget
Department
Medicine
Agriculture
and forestry
Social
science
Source: Statistics Finland
Humanities
03/07/2008
03/07/2008
13
Public R&D&I-allocation, Socio-political targets
(2008, MEUR; %)
Other sociopolitical targets
(less than 50
MEUR)
Defence
51; 3 % 175; 10 %
Energy
88; 5 %
Agriculture,
fishery, forestry
94; 5 %
Ehancing
sciences
760; 43 %
Health care
111; 6 %
Enhancing
industry
490; 28 %
Budget Department
Budget
Department
Source: Statistics Finland
03/07/2008
03/07/2008
14
Socio-political targets 2000 – 2008
(MEUR)
800
700
600
500
400
300
200
100
0
2000
Ehancing sciences
2001
2002
Enhancing industry
Budget Department
Budget
Department
2003
2004
Health care
2005
2006
Agriculture, fishery, forestry
Source: Statistics Finland
2007
Energy
2008
Defence
03/07/2008
03/07/2008
15
Top ten R&D&I-lines of industry (2006, MEUR)
Man. of pulp, paper
and paper products
86
Technical services
94
Wholesale and
retail trade
84
R&D-services
186
Man. of basic
metals and metal
products
74
Man. of
foodproducts and
beverages
65
Man. of chemicals
and chemical
products
238
Manufacture of
electrical
equipments
2 320
Man. of machinery
and equipments
317
ITC-services
365
Budget Department
Budget
Department
Source: Statistics Finland
03/07/2008
03/07/2008
16
R&D&I-expenditure in private enterprises
2006, MEUR
Total
Expenditure
Total
Agriculture, fishing, hunting and Forestry
Mining and quarrying
Manufacturing
Food products beverages and tobacco
Textiles and textile products
Wood and w ood products
Pulp, paper and paper products
Publishing and printing
Oil, plastic and rubber
Chemicals and chemical products
Glass and Stone products
Basic metals and metal Products
Machinery and equipment
Electrical equipments*
Transport equipment
Recycling
Services
Electricity, gas and w ater supply
Construction
Wholesale and retail trade
Transport and storage
Mail and communication
ITC
R&D-services
Technical services
Other services
Other lines of industy
Budget Department
Budget
Department
4 108
0
4
3 279
65
12
6
86
7
59
238
26
74
317
2 320
59
11
811
22
26
84
5
77
288
186
94
29
18
Salaries
Services
2 054
0
1
1 589
35
6
3
44
4
29
120
12
26
143
1 121
26
5
455
4
16
29
2
38
199
93
56
17
8
Source: Statistics Finland
862
0
0
699
6
2
2
17
2
4
53
6
10
75
486
24
3
160
15
5
34
2
8
38
38
15
6
3
Machines,
Other
equipments Operational costs
premises
249
944
0
0
2
0
200
791
8
15
2
3
0
1
5
19
0
2
19
8
17
48
1
7
2
7
16
83
127
585
1
8
1
2
47
150
0
3
2
3
1
20
0
1
8
23
14
38
17
38
5
18
1
5
0
2
03/07/2008
03/07/2008
17
Competitive funding programs
 Tekes and Academy of Finland
Programmes, public funding about 550
Meur, 2008
 Sitra programmes
 Researcher groups from both public
sector (incl. universities) and private
enterprises can compete and participate
Budget Department
Budget
Department
03/07/2008
03/07/2008
18
Tekes’ programmes
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Ongoing Tekes programmes
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BioRefine 2007-2012 - New Biomass Products
ClimBus - Business Opportunities in the Mitigation of Climate Change 2004-2008
Concepts of Operations 2007-2011
Digital Product Process 2008-2012
FinNano - Nanotechnology Programme 2005-2010
FinnWell - Future Healthcare 2004-2009
Fuel Cell 2007-2013
Functional Materials 2007-2013
GIGA - Converging Networks 2005-2010
Liito - Innovative Business Competence and Management 2006-2010
MASI - Modeling and Simulation 2005-2009
NORDITE 2005-2010
NewPro - Advanced Metals Technology - New Products 2004-2009
Pharma - Building Competitive Edge 2008-2011
Safety and security 2007-2013
Serve - Innovative Services 2006-2010
SISU 2010 - Innovative Manufacture 2005-2009
Sustainable community 2007-2012
SymBio - Industrial Biotechnology 2006-2011
Tourism and Leisure Services 2006-2009
Ubicom - Embedded ICT 2007-2013
VAMOS - Value Added Mobile Solutions 2005-2010
Verso - Vertical Software Solutions 2006-2010
Workplace Development Programme Tykes
Budget Department
Budget
Department
03/07/2008
03/07/2008
19
Tekes’ evaluation criteria for applications
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High-quality, advanced technology and effective networking
Project’s long-term effects, such as employment and potential
turnover and exports
The enterprise projects to be funded are selected by evaluating
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the business to be generated
the technology, innovation and competence to be developed
the resources available
the cooperation to be developed and used
the social and environmental well-being factors to be promoted
the impact of Tekes funding and expert services
The public research projects to be funded are selected by
evaluating
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the technology and competence to be developed
the cooperation to be developed and used
the utilisation of results
the resources available
the social and environmental well-being factors to be promoted
the impact of Tekes funding and expert services
Budget Department
Budget
Department
03/07/2008
03/07/2008
20
Academy of Finland programmes
 Ongoing Finnish Academy programmes
 Environment and Law, ENVLAW (2005-2008)
 Information Technology in Mechanical and Automation Engineering,
KITARA (2005-2009)
 Business Know-how, LIIKE2 (2006-2009)
 Neuroscience, NEURO (2006-2009)
 Nanoscience, FinNano (2006-2010)
 Sustainable Production and Products, KETJU (2006-2010)
 Nutrition, Food and Health, ELVIRA (2006-2010)
 Power in Finland, VALTA (2007-2010)
 Substance Abuse and Addictions, ADDIKTIO (2007-2010)
 The Future of Work and Well-being, WORK (2008-2011)
 Sustainable Energ, SusEn (2008-2011)
 Open for application
 Responding to Public Health Challenges (SALVE)
 Ubiquitous computing and diversity of communication (MOTIVE)
Budget Department
Budget
Department
03/07/2008
03/07/2008
21
Academy of Finland’s evaluation criteria for
applications
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Scientific quality and innovativeness of the research plan
Competence of the applicant/research team
Feasibility of the research plan
Cooperation contacts for the research
Significance of the research project for the promotion of
professional careers in research and for researcher training
 Depending on the research project, the significance of the research
project is also assessed in terms of society and business and industry.
A starting point is that the project to be funded will benefit Finnish
research, society or international cooperation.
 The Academy also pays attention to that research projects aiming
at a high target level and new breakthroughs involve a risk of
failure. The aim is to be fully aware of the risks involved and,
nevertheless, to provide an opportunity for scientific
breakthroughs as well as to increase the renewal of science and
research.
Budget Department
Budget
Department
03/07/2008
03/07/2008
22
Sitra’s Programmes
 Sitra currently focuses actively on five
programmes:
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Health Care Programme
Food and Nutrition Programme ERA
Energy Programme
Growth Programme for the Mechanical
Industry
Budget Department
Budget
Department
03/07/2008
03/07/2008
23
Strategic centres for science, technology
and innovation I
 Strategic centres for science, technology and innovation are new
instruments
 Coordinating research resources in Fields that are important to
the future of Finnish society and business and industry.
 The aim is to create a new, more efficient framework for
collaboration between companies, universities, research
organisations and sources of funding.
 Companies, universities and research institutes will agree on a
joint research plan. The plan will aim to meet the application
needs for practical application by companies within a 5 to 10 year
period.
 In addition to shareholders, public funding organisations will
commit themselves to providing funding for the centres in the long
term. Strategic centres for science, technology and innovation
Budget Department
Budget
Department
03/07/2008
03/07/2008
24
Strategic centres for science, technology
and innovation II
 Five strategic centres
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energy and the environment
metal products and mechanical engineering
the forest cluster
health and well-being
information and communication industry and services.
 Tekes did bear the main responsibility for
organising the establishment of the centres.
 However, the actual establishment of the
strategic centres has been the responsibility of
the partners of the centre, i.e. companies,
universities and research institutes.
Budget Department
Budget
Department
03/07/2008
03/07/2008
25
Incentives for partnership
 Finnish innovation framework:
 A strong emphasis on long term cooperation
and partnership between companies,
researchers and funding organisations
 Transition towards demand- and end-userdriven innovation
 Renewal of innovation concepts
 Evaluation criteria of Tekes and
Academy of Finland for applications
Budget Department
Budget
Department
03/07/2008
03/07/2008
26
Example: Regional networking with partners from
Oulu in electronics and telecommunications
programmes Lappeenranta University of Technology (Lappeenranta)
Salcomp Oy (Kemijärvi)
CCC (Oulu)
Sonera (Helsinki)
Efore Oy (Helsinki)
Nokia Mobile Phones (Oulu)
National Semiconductor Finland Oy,
former Fincitec Oy (Kemi)
Cybelius Software Oy (Oulu)
University of Oulu (Oulu)
Tampere University of Technology (Tampere)
Elektrobit Oy (Oulu)
Projekti-Insinöörit Oy (Helsinki)
Nokia Networks (Oulu)
NetHawk Oy (Oulu)
Teleste (Turku)
ABB (Helsinki)
ADC Telecommunications Oy (Oulu)
JOT Automation Oy (Oulu)
VTT, Technical Research
Centre of Finland (Helsinki)
VTT, Technical Research
Centre of Finland (Oulu)Helsinki University of Technology (Espoo)
Polar Electro Oy (Oulu)
Nokia Research Center (Helsinki)
Filtronic LK Oy (Oulu)
Extrabit Oy (Oulu)
Aspocomp Oy (Helsinki)
Vaisala Oyj (Helsinki)
Includes partners who participated in at
least three projects in Tekes Electronics
and Telecommunications technology programmes.
Elcoteq Network Oyj (Lohja)
Picopak (Lohja)
Nokia Mobile Phones (Salo)
Suunto Oy (Helsinki)
Budget Department
Budget
Department
Ultraprint Oy (Oulu)
Planar Systems Oy (Helsinki)
03/07/2008
03/07/2008
27
DM 58620
03-2004 Copyright © Tekes
Example: Regional networking with partners from Turku
in electronics and telecommunications programmes
Miratel Oy (Turku)
Nokia Multimedia Terminals (Turku)
Finnish Broadcasting Company (Helsinki)
Elisa Communications (Helsinki)
Sonera (Helsinki)
University of Oulu (Oulu)
Nokia Research Center (Helsinki)
Helsinki University of Technology (Espoo)
Tampere University of Technology (Tampere)
VTT (Helsinki)
Teleste (Turku)
Satel Oy (Salo)
Nokia Networks (Tampere)
Nokia Mobile Phones (Tampere)
ADC Telecommunications Oy (Oulu)
Filtronic LK Oy (Oulu)
Mariachi Oy (Turku)
Includes partners who participated in at
least three projects in Tekes Electronics
and Telecommunications technology
programmes.
Budget Department
Budget
Department
ABB (Helsinki)
VTT (Oulu)
Wallac Oy (Turku)
03/07/2008
03/07/2008
28
DM 58620
03-2004 Copyright © Tekes
Regional Criteria and R&D&I
 Not used for funding offered on an competitive basis
 However R&D&I-activity seems to be important from
the standpoint of regional development
 SMEs are encouraged to develop their capability to apply
and utilize R&D&I funding (special funding for pre-R&D&I
projects)
 decisions on allocation of funding are taken at the regional
level
 Significant part of EU structural funds funding is used to
R&D&I-purposes
 decisions at the regional level
 Universities have certain tasks in enhancing for example
regional development
 Regional universities of applied sciences/Polytechnics
 decisions at the regional level
 Locating goverment research institutes or their functions
Budget Department
Budget
Department
03/07/2008
03/07/2008
29
Network of universities, polytechnics, public
research institutes and technology centres
in Finland
University
Regional university unit
Polytechnic
Polytechnic regional unit
VTT, Technical Research
Centre of Finland or other
public research institute
Regional unit of public
sector research institute
Technology centre
Budget Department
Budget
Department
03/07/2008
03/07/2008
30
DM 58620
03-2004 Copyright © Tekes
Main financial incentives for the private sector
 Directly through:
 Grants
 Loans
 Investment/Venture capital (directly or through
Venture Capital companies)
 No indirect tax incentives or
expenditures
Budget Department
Budget
Department
03/07/2008
03/07/2008
31
Example on incentives: Tekes’ funding
Budget Department
Budget
Department
03/07/2008
03/07/2008
32
R&D&I-funding and fiscal ceilings
 Government spending limits are the ceiling
 Spending limits are ceiling for the Budget expenditures
over the entire electoral period
 Includes about ¾ of budget expenditure, also R&D&Iexpenditure
 According to the current Spending limits the basic
public R&D&I funding increases 80 MEUR during
current electoral period (2007 – 2011)
 The 4 % GDP-ratio is expressed aim
 but no direct mechanical link to scaling of budget
appropriations
Budget Department
Budget
Department
03/07/2008
03/07/2008
33
Spending limits
Budget Department
Budget
Department
03/07/2008
03/07/2008
34
Evaluation and budget process
 Strong emphasis on evaluating programmes
and pojects, however:
 In the budget process evaluation results are usually
referred only at the general level (and sometimes to
legitimate proposals for additional funding)
 Examples of epressis verbis referred
evaluations:
 Evaluation results of Centre of Expertise programme
 Evaluation of Finnish Innovation system
 relates to the ongoing preparation of Finnish
Innovation Strategy
Budget Department
Budget
Department
03/07/2008
03/07/2008
35
How R&D&I-policy targets are set
 As a part of performance budgeting
 As a part of performance management
 Performance management is an agreement-based
interactive control model.
 Its operational core is in the ability of the agreement parties
(ministry and agency) to find the appropriate balance
between the available resources and the results to be
attained with them.
 The basic idea of performance management is to balance
resources and targets on the one hand and efficiency and
quality on the other as well as possible and to ensure that
the desired effects are cost-efficiently achieved.
 Achievement of targets are controlled and reported as
a part of Accountability
Budget Department
Budget
Department
03/07/2008
03/07/2008
36
Basic performance criteria
(true and fair information)
Outcome targets
Policy effectiveness: outcomes
Policy
effectiveness
How operations and finances
have affected policy
effectiveness
Operational
performance
targets
Operational
efficiency
Outputs and quality
management
-economy
-goods and services
- productivity
- service capacity and
quality
- profitability
Operational results:
outputs (which can be
influenced through
management)
- cost-equivalence
Human resource management
Budget Department
Budget
Department
03/07/2008
03/07/2008
37
Impacts of evaluation results
 Evaluation activities are an integral part of
funding R&D&I-operation, however:
 evaluation results seem to be under-utilized
 evaluation results seldom result to reassesment of
allocation of R&D&I-funding, specially at the level of
ministries
 evaluation results are sometimes even unuseful due to
the lack of quality of evaluation or for example due to
unclear or incomplete performance targets
 Performance audit report 157/2008 of National
Audit Office
Budget Department
Budget
Department
03/07/2008
03/07/2008
38
Use of performance information in budgeting
 Different level of targets are set and examined:
 social policy targets: changes in the state of society and the
conditions of its members and the extent to which the set
targets have been achieved (social effectiveness);
 costs of achieving the social policy targets (cost
effectiveness);
 operating performance
 outputs, service capacity and the quality of outputs and
processes (outputs and quality management)
 economy, productivity and the cost effectiveness and
profitability of charged and jointly financed operations
(operational efficiency)
 personnel and job satisfaction, and information, expertise
and renewal.
Mainly
at the level of
Government
and ministries
Mainly
at the level of
agencies, e.g.
Universities
or institutes
 Above targets are set also for the R&D&I funding,
however, there is no direct mechanical link between
results achieved and allocation of funds
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The effect chain of government agencies
Policy
effectiveness
OUTCOMES
OUTPUTS
Goods an services, service
capacity of the agency
Operational PROCESSES and their quality
RESOURCES
Appropriations, staff, intangible assets
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Preliminary conclusions, how to perform better
 Inputs are already at a relatively high level
 More emphasis on outcomes
 Significant amount of actors doesn’t necessarily mean
significant results
 New challenges (e.g. ageing or energy and climate
issues) demand adaptability from the management of
R&D&I-funding
 Systemic approach
 More weight on utilizing evaluation information in
decision making, specially at central government level
 Widening the innovation concept, more emphasis e.g.
on services and social innovations
 Adjusting the innovation process to be more demandand customer-driven (“innovating together”)
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