CHALLENGES AND IMPLEMENTATION OF KNOWLEDGE BASED ECONOMY IN ESTONIA

NEED FOR CHANGE Successful investment based economy, with stable monetary system and functioning open market economy. Attractive for Foreign Direct Investments, which induce inward knowledge and technology transfer, and support modernisation of the economy. Labour productivity was in 1998 still only 37% of the EU average, continued economic growth is need to catch up the EU member states. Need to build up well functioning knowledge based learning economy, ensuring this way bases for the longer term sustained economic growth.

ESTONIAN R&D STRATEGY 2001-2006 Sees the future Estonia as a knowledge-based society where the development of human capital, research and adaptation of new knowledge and skills is the source of growth in the competitiveness of the economy, labour force and in the quality of life. Specifies the goals, opportunities and principles of R&D and serves as a basis for organising the development of R&D in Estonia. The strategy establishes general framework and foresees volumes of the research and innovation support mechanisms until 2006. Is the basis for developing annual plans and concrete programs to develop R&D and innovation system according to the goals set.

THE ROLE OF THE STATE State is the main investor in creating the knowledge base and assuring the reproduction of knowledge and skills. State is the catalyst of the innovation process. Its role is to quicken the adaptation of new knowledge and to encourage enterprises to introduce new technologies. State as the regulator creates a favourable environment for the development of R&D and ensures safety of consumers in using new technologies.

TODAY’s SITUATION Total expenditure on R&D in 1995-1998 was 0,6% of GDP, while the EU average was 1,8% of GDP (1998) Low enterprise R&D investment. In 1999 public sector investment in R&D was 76% of total expenditure. EU average was 36% (1998). High number of scientific publications. In 1997, Estonia produced 37 scientific articles per GDP, while EU average was 27 articles/GDP, United States produced 22 articles/GDP, and Japan 15 articles/GDP. Limited co-operation between researchers and industry, low patenting activity.

PARTICIPAION IN R&D ACTIVITIES % of GDP Source: OECD 2001, Estonian Statistical Office 2001

CHALLENGES R&D strategic objectives are to renew the knowledge base and to raise the competitiveness of Estonian enterprises. The principles for reaching the objectives are: socially balanced development, environmental-friendly and saving economic progress and science ethics. Strengthening R&D innovation related public policy making, and co-ordination with different long term development plans. Building awareness on the importance of innovation in society in general.

REALISATION OF THE STRATEGY % of GDP

REALISATION OF THE STRATEGY To increase sharply gross R&D expenditure by 2006 to 1,5% of GDP, making it comparable to EU average Using additional public appropriations to foster growth of business R&D investment Improving functioning of the national innovation system, as the whole, while removing obstacles hindering development, and supporting prospectively emerging industrial clusters. Focus on three key thematic areas User friendly information society technologies Biomedicine and gene technologies Material- and nanotechnologies In-depth integration into international research and development and innovation networks.

INTERNATIONAL CO-OPERATION Estonia fully support initiatives for establishment of the European Research Area, which already helps us in adjusting national R&D and innovation policies. Estonian participation in EU RTD Framework Programmes has been successful. Estonia is also full member of EUREKA and COST networks, but so far limited participation to these programmes has been seen. Co-ordination of national R&D programmes is seen, as one of possibly the most valuable instruments, while being extremely challenging and demanding task to realise. Prospective successful participation to the 6th Framework Programme still subject to final definitions of the specific instruments (IP, NoE, art. 169), rules of participation and priorities of specific thematic programmes.

Research and Development Council of Estonia THANK YOU! Further information: Marek Tiits Permanent secretary Research and Development Council of Estonia www.tan.ee