adding functions such as email, fax, and so forth. Although the natural resource based industries such as timber and mining are still prominent, Finland has achieved rapid growth in high-technology production and exports during the 1990s. Systematic investment in technology, including private and government investment, has played a major role.

At a national level we have done several studies over the years to look at Finnish science and technology policies. These studies allow us to develop a vision of the future, which I believe is very useful. The major players in Finnish science and technology policy include VTT, a national laboratory doing applied technical research, and the Technology Development Center (Tekes), which funds research. The Science and Technology Policy Council has also played an important role in recent years. Council members include the Prime Minister, other elected cabinet officials, the directors general of VTT and Tekes, and representatives from industry, universities and other institutions.

We have set a national goal of spending 2.9 percent of GNP on R&D in 1999. We started setting these kind of goals in the mid 1970s, and this has provided an important national focus. In 1996 Finland spent about $2.7 billion on R&D (at 5.54 FIM per dollar), with industry accounting for about 67 percent and government 33 percent. Our goal is to reach a 60-40 ratio between private and public spending. Other major national priorities are to increase international cooperation and to improve the training of research scientists.

The Role of VTT and Tekes

VTT's budget is about $180 million per year, accounting for 6–7 percent of Finnish R&D. In 1993, an international group was charged with evaluating VTT and recommending directions for the future. One outcome of the evaluation was a restructuring into nine research institutes, as shown in Figure 4-1. The basic idea was to form larger institutes with a consistent structure. As the figure shows, we cover all technical fields. VTT operates in several locations within Finland, with most of the 2,700 staff in Espoo. To take my own institute, VTT Automation, as an example, it is quite typical in terms of funding sources. Figure 4-2 gives a breakdown. About one-third of our funding comes from the budget and about two-thirds comes from individual projects. This financing structure has several important benefits. The budgeted money gives us the flexibility to do longer term, speculative sorts of research. At the same time, the need to get project funding forces us to incorporate a customer orientation into what we do.

Included in the project funding is government support through Tekes and other agencies. The role of Tekes is very important. It stresses very much that participation by industry is crucial in all stages. Tekes does have flexibility to fund projects with a longer time horizon with larger numbers of companies as well as projects with a shorter time horizon. It is even able to give development loans. A recent evaluation of Tekes-funded projects found that the volume of net sales and exports achieved with Tekes funding is 10–20 times the initial investment, that four to five new jobs are created per million marks invested, and that without the

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