Dr. ERKKI ORMALA

Vice President, Technology Policy, NOKIA (Finland)

I am the Vice President of Nokia Corporation at the moment in charge of global technology policy however it is also worth mentioning in order to put my remarks in the right context I’ve been for 12 years as the secretary general of the Science & Technology Policy Council of Finland chaired by the Prime Minister so I more or less is in charge of building the knowledge society for Finland.

Thank you very much my job is very easy because much of what I thought to say is already been mentioned so my role here is more or less to comment upon the previous speakers. Let me start by explaining how we perceive the current change in the world economy and also in the societies. There are basically 3 elements which are changing the frame of conditions and the environment, one of them is of course globalization and my colleague from the Microsoft developed very nicely how this has changed over the years and now globalization is also addressing the knowledge assets, knowledge is a global asset in the sense which is freely distributed and that is changing the environment to significant extend. The other point which is very much changing the arena which is also being discussed is the we may call it the merchants of knowledge in Western economies or we might call it the increase of the knowledge intensity of the economy so that more and more activities are based on knowledge and therefore knowledge has become an important ingredient in any of our discussions and policies that we try to pursue in building competitive sort of advantage and the third one is of course is the ITT revolution, the ITT is great enabler providing an ability to leap frog and that has already been discussed but let me approach to the issue from a list of elements which seem to be prevailing in all those countries and regions which today can show the most rapid growth and also knowledge absorption. I don’t intend to spend too much time on this because this can be a long debate; I just mention some of the elements, which seem to be common to all those environments. We may call them the favorable innovation environment or the framework conditions and this seems to be explaining not only the success of countries but it seems also to be the list that companies are looking today when they look where to put their future investments and I’ll be very brief. I’ll start from the knowledge part that is an extremely important element sort of element seems to be axis to top-level knowledge. This involves the research knowledge but also the access to high quality experts where there is good mobility of labor where there is a good collaboration between public and private so people can move freely from one constituency to another. Another important element is the sort of appropriate funding arrangements where the government funding and private funding can be matched in a way, which is creating common platforms where new knowledge can be created and also disseminated. Third point is efficient market conditions and this is something we’ve discussed already extensively that market conditions are playing extremely important role to bring the cost down and providing level playing field for the actors and venture capital arrangements and provisions behind venture capitals seems to play an important role in providing the dynamism into the economy and then of course we have the regulatory environment where we need to have favorable regulations harmonized and transparent rules, IPR sort of provisions, companies that use taxation arrangements and so fort which we already discussed that is important part of the environment and finally which is not been addressed so far but which is also extremely important is a rich fabric of private partners enabling vertical and horizontal integration that seems to play an extremely important part when we look at the develop. So now the question, what is the government’s role in this and I fully agree with my UK colleague here that governments are extremely poor in picking winners. That’s not government’s role but there is a clear role for governments and that role is to create this kind of favorable environment for individuals and businesses to operate and there you need explicit policy because you either create these framework conditions through random implicit measures or you have a systemic approach where you are trying to create this kind of favorable environment and there I argue that governments have extremely important role to play. These framework conditions are a preconditioned and essential part of government strategies to attain macro economic stability, economic renewal and full employment. Without these framework conditions this will not succeed and this policy whatever we want to call it, it is a horizontal policy. It addresses number of different traditional policy sectors, you have to address the education, you have to address the regulatory environment, taxation, all the different sectors, which are creating this favorable environments, and thirdly it is important to understand that building this kind of an environment you need to start from basic and it is already said in number of times that education and rule of law are some of the fundamental basics that we can’t avoid if we want to build something else. Finally the problem with these favorable conditions is that the system is as strong as its weakest link so it doesn’t help us at all although we would have the best universities in the world if we don’t have access to the market or if the regulatory red tape is so high that new ventures and new companies cannot enter the market place so therefore all these elements are linked interlinked with one another and therefore you need some kind of coordination mechanism so that whatever actions you are making in one specific sector it is consistent with the actions in some other policy sector.

Going back to the Lisbon strategy my argument is that this is one of the reasons why it has not turned out to be such a success EU policies are not consistent. One arm of the EU tries to create the information society and improve the competitiveness in European industries the other arm of the EU structure is building the red tape, creating new regulations, trying to promote good and all this is legitimate but if these actions are not coordinated so that we understand that if we are putting this or that regulation what is its impact on competitiveness innovation, we are loosing the game and this is the European chance and I also being as humble as all my panel members don’t want to give clear recommendations, I make the disclaimer each country has to find its own way but I still want to raise a few points which I think are based on the extensive experience that we have from different parts of the world which basically have struggled with the same kinds of problems that Turkey is facing today. My first point is, make the basics right. Without them everything else will be useless and I already mentioned 2 of them, the rule of law and education and to certain extend RND as well. Launch a consistent process and also a liberate process to develop a holistic framework conditions so that you know what are the implications of various policy measures that you’re doing in different parts of the government may that be the regional government or the central government. Consistency is extremely important and in order to do that it is not enough to say that you have to do it you also have to create institutional framework to facilitate this and this is may be one of the lessons that I can deliver from the Finnish experience, we had the science and technology policy council chaired by the prime minister which had authority over the various administrations to asses the different policies whether they were contributing to innovation and to competitiveness and this created a coordinating mechanism but again I stress very strongly if this works in Finland doesn’t necessarily imply that it will work in some other context. We all have different arrangements in Japan; we had one in the UK but don’t exist anymore.

My fourth point is that ICT truly can help the leap frog and I just wanted to add 2 points here through an excellent presentation from my colleague in Microsoft, don’t forget that this is a much wider picture, we’ll look at the mobility, we have today about 1.8 billion mobile subscribers throughout the world and we are adding every year 300 million new subscribers so that is providing an access, not only the voice services but also to the internet with the price of approximately 1/3 rd of fixed connectivity and this is something what we are experiencing today, we can provide this kind of opportunities and many of these countries which are currently in the process leap flogging they are building their strategies on the mobile communications.

My final point is really to stress the importance of public-private partnerships. This is not a game that the governments can do alone, this is a game where the public sector is just one player among the others and therefore public private partnerships are extremely important and specifically don’t forget that our global players are all ready to support the process. Thank you very much.