Public funding cuts hurt Finnish innovation, says former development chief

The former boss of Tekes, the public funding body for technology and innovation now under the umbrella of Business Finland, says the state is doing innovation wrong.

Veli-Pekka Saarnivaara led Tekes - the state business development body now called Business Finland - for more than a decade. Image: Business Finland

"In Finland the thinking now is that companies alone can increase productivity, which is a misconception,” says Veli-Pekka Saarnivaara, who led the agency from 2000-2012. ”The most important factors underpinning growth are investments in education, research, innovation initiatives and digitalisation.”

Yle's investigative news show MOT found that in 2016 direct public funding to companies was slashed by 129 million euros. At the same time, according to Saarnivaara, most of the incentives that had helped Finland become a forerunner in cooperation between universities, research bodies and businesses were erased.

Saarnivaara: Lawmakers not up-to-speed on innovation

He says the research and innovation funding cuts are based on short-term studies that fail to provide an accurate picture of the effectiveness of funding initiatives. He says it was easier for policymakers to pull back innovation funding from small players than cutting earmarked subsidies for large corporations, who more effectively lobby for state-funded cash injections.

Public research and product development funding plummeted by more than a quarter between 2009 and 2016. Saarnivaara also blames government economists for not being well-versed in issues pertinent to innovation and blames an overly liberal economic mindset among lawmakers.

”They don't think the state should finance scientific research that caters to company needs,” he adds.

At the beginning of this year two major state-funded agencies merged in an effort to better promote Finnish companies abroad. Tekes, the Finnish Funding Agency for Innovation, joined Finpro, the former Finnish Foreign Trade Association. It already includes Export Finland, Visit Finland and Invest in Finland. The new mega-agency is called Business Finland.