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Swiss look to Finland for economic model

Nokia is Finland's biggest success story Keystone

A new study says Switzerland should offer young companies far more financial support if it wants to boost economic growth.

This content was published on February 12, 2004 - 10:22

The report by the Swiss Academy of Engineering Sciences examined Finland’s success in promoting innovation and asked what Switzerland could learn from the experience.

“Finland has developed a high dynamic in innovation activities,” Beat Hotz-Hart, co-author of the study, told swissinfo.

“Switzerland has an interest to understand how this dynamic is produced and what can be done through economic policy and innovation policy to accelerate innovation activities,” said Hotz-Hart, who is also deputy director of the federal office for professional education and technology.

After a recession at the beginning of the 1990s, the Finnish economy grew by 4.3 per cent a year between 1995 and 2001.

In the same period, Switzerland’s gross domestic product increased by only 1.7 per cent a year.

According to the experts, European Union entry boosted Finland’s economy by 0.8 per cent. But a far more important factor is its strong political commitment to innovation.

Venture capital

One of the study’s recommendations is to set up a new foundation to provide venture capital funding for start-up firms.

Hotz-Hart said the foundation would need at least SFr300 million to be effective.

He said that the equivalent Finnish fund had €650 million (SFr1 billion) at its disposal – money generated by the privatisation of the national electricity companies. Profits from investing the capital are used to promote start-ups.

For new companies trying to turn a science project into a business, the research and development phase is a tricky time with private venture capitalists often reluctant to get involved.

Hotz-Hart said the foundation should work closely with the existing Commission for Technology and Innovation (CTI) – a body which subsidises start-ups that emerge from the public universities but does not support private companies.

Gold reserves

Asked where the SFr300 million might come from, Hotz-Hart suggested that a small part of the Swiss National Bank gold reserves could be earmarked for this purpose.

The Swiss National Bank holds 1,300 tons of excess gold in its reserves, estimated to be worth between SFr18 billion and SFr20 billion.

Plans to use the proceeds from the sale of the surplus reserves have come to nothing since 2002 when voters rejected proposals to use some of the money to fund humanitarian projects and boost the state pension scheme.

Scientists in Germany have also proposed selling up to 600 tons of central bank gold reserves to create a fund that would boost science and innovation.

Lack of cooperation

Besides recommending much greater support for companies conducting research, the study lamented the lack of cooperation between the principal agencies in Switzerland which are involved in promoting innovation.

It proposed the creation of a guiding body for technology policy on the model of Finland’s Science and Technology Policy Council, which is led by the prime minister and represented by leading figures from the world of politics and business.

Such a structure would make it possible to develop a common vision on innovation, said Hotz-Hart.

“They have a national movement that they want to be brilliant in technology and they want to advance with a knowledge-based society.

“This kind of national consciousness and awareness could be better in Switzerland and the pressure in the political field could be greater.”

swissinfo, Vincent Landon

innovation

Finland occupies the highest rankings in numerous international studies comparing both competitiveness and innovation.
The reason for its success lies mainly in the investment made in R&D by Finnish companies, universities and research institutes.
A study of the phenomenon by the Swiss Academy of Engineering Sciences suggests ways in which Switzerland might learn from Finland’s experience.

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