Finnish ICT Development from the OECD Perspective

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Helsinki, 1 April, 2005 — Finnish ICT Development from the OECD Perspective

The OECD (Organisation for Economic Co-operation and Development) brings together the 30 industrialized countries for policy analysis and peer review. Some of the most frequently referred to publications are benchmarking statistics and country rankings. Luckily for all parties concerned, those of the OECD generally agree with the key findings of broad competitiveness surveys even though the OECD bases its analysis hard statistical facts mostly on official sources. This article casts a view in Finnish ICT development in the light of two reports published in December 2004.

The OECD Science, Technology, and Industry Outlook 2004 offers a comprehensive picture of micro-economic performance of countries. Finland generally ranks high in areas such as share of R&D spending and employing scientists in enterprises.

The report also identifies a number of challenges for Finnish policy. Service sector productivity and innovation need more focus, although the picture is uneven. Competitive services sectors, such as business and telecom services, are high-performing whereas personal and public services demonstrate room for improvement. Again, there is a need for more detail; Finland was placed at the top in the recent PISA 2003 study that ranked learning skills of 15 year olds across the OECD countries. Other public services, such as health of government, are more difficult to measure but show generally a slow change despite investment in technology.

The IT Outlook 2004 looks closer into the ICT clusters and policies in the OECD countries. Traditionally Finland has ranked high in penetration of new technologies such as mobile phones or the Internet. Broadband penetration in the household sector will remain a challenge in sparsely populated country like Finland if compared to some front-runners, in particular in the Asian countries. But commercial use of ICT in Finland is well advanced as companies seek ways to improve productivity through technology.

Despite this wide across-the-economy investment in ICT, there is still room for development in the services sectors as, like in most countries, the ICT cluster itself has played an important role in eco- Ecnomic development in Finland. It has accelerated R&D investment, growth, and productivity development.

In the OECD peer reviews are used to shed light into how policy leads to performance. A recent series of reports looked into how government policies promote ICT diffusion to business. The report on Finland (OECD/DSTI 2004) highlighted the fact that market forces have been given predominance and that the government limits its interventions. One of the main challenges ahead is how to engage an increasing number of companies as users of ICT into the technology projects, and how to have more visible demonstration of impacts of technology and technology programmes.

Again, like in all countries, applying ICT in all company functions to form one single system has still a long way to go. Companies in Finland acquire production inputs over the value chain in digitally managed systems as a common practice engaging also numerous small and medium sized companies. However, integrating the different systems takes time. The report also notes that even though the telecommunication markets have been deregulated in Finland quite some time ago, the authorities need to keep a keen eye on network access conditions for competing service providers, in particular in broadband markets.

The report concluded that the future success of the Finnish economy and the ICT cluster will depend on the ability to turn new technology innovations into practical applications that companies and people will be willing to invest in. Competition and squeezed margins may make companies to view bold business ventures and provision of new technology applications with a critical eye. But, like in the past, competition and innovation go intimately hand-in-hand. Entrepreneuring innovators will continue to enjoy of the acceptance of a technology privy market such as Finland.

Mr. Pekka Lindroos
Head of Information
Computer & Communications Policy Division
OECD Directorate for Science, Technology and Industry

This article is published in ICT Cluster Finland Review 2005

More information
OECD Directorate for Science, Technology and Industry
ICT Cluster Finland Review 2005