09/27/15 - 10/4/15
INNOVATION DELEGATION TO
ESTONIA & FINLAND
BALTIC INNOVATION Finland has been a decade long world leader in education and technological advancement, and now after 24 years of being occupied, by the Soviet Union, Estonia has transformed its economy to mirror its neighbor and are leapfrogging themselves to become one of the most innovative governments in the world.
COUNTRIES AT A GLANCE Key Data & Statistics Capitol Population Declared Independence
Finland
Estonia
Helsinki
Tallinn
5.3 million
1.2 million
1917
1991
221 billion
$26 billion
GDP Per Capita
$40,500
$26,600
GDP Growth Rate 12-14
-0.97%
2.5%
National Budget Revenues
146 billion
$10 billion
National Budget Expenses
156 billion
$10 billion
GDP
Public Debt (% of GDP)
60%
10%
-1 billion
$949 million
Imports
$71.2 billion
$20.4 billion
Exports
$75.2 Billion
$17.3 billion
Most Imported Category
Minerals
Machines
Most Exported Category
Machines
Machines
Kaolin Paper
Silk Yarn
Network Readiness Index Rank
2nd
22nd
Economic Freedom Index Rank
19th
8th
FDI Inflow
World Exporter Of
01 - California Innovation Delegation 2015
2
In just decades both Finland and Estonia have transformed their economies.
1995
2013
Estonia's Top Exports to the U.S.
Estonia's Top Exports to the U.S.
Light Woven Cotton
$23 M
Refined Petroleum
$814 M
Heavy Woven Cotton
$9 M
Telephones
$139 M
Unsaturated Acids
$8 M
Tantalum
$25 M
House Linens
$7 M
Fishing & Hunting Equipment
$20 M
Pig Iron
$6 M
Chemical Analysis Instruments
$14 M
Raw Aluminium
$4 M
Insulated Wire
$13 M
Wadding
$3 M
Rare-Earth Metal Compounds
$11 M
Baby Garments
$3 M
Acyclic Hydrocarbons
$9 M
In 1995 Finland's economy was substantially driven by the
After two decades, the mantra of knowledge has changed to in-
wood and paper industry, accounting for more than 35 per-
novation. Now, knowledge is not enough to drive the economy,
cent of the total exports. As compared to Estonia, which had
although it is still recognized as a key ingredient. It is the execu-
a partially more diversified economy with textiles, petroleum
tion of using knowledge to create new ideas that result in game
and wood accounting for over 30 percent of exports. Now both
changing outcomes. Governments, state and local need to be
contries largest exporting industry sector are machines. This
thinking about the long-run future of their constituencies, and
shift of economic specialization is a remarkable change given a
how small policy implementations can have major economic
relatively short period of time.
implications.
An innovation delegation to these Baltic States can provide an-
Economic policies are not California's forte, and government
swers to questions such as: How did both of these Baltic States
innovation sounds similar to an oxymoron. The idea that most
change their economies so rapidly? What economic policies
government services can be accessed and delivered through
were implemented to create such sectors? Did the government
the internet is not a new idea. Although, few countries have a
provide any services to create these sectors? The goal of the
cohesive plan and have implemented a complete e-govern-
delegation is to inspire and promote creativity with solutions
ment system. Estonian's Parliament has created the first ever
to growing problems in California's uneven economy? How can
e-residency program, which allows for people anywhere in the
a state government promote unique economic policies to en-
world to become an "e-citizen" of the country and conduct
courage depressed geographic areas of California. These would
business there without physically being there. It also allows all
be the types of the questions we will seek to answer through
Estonians access to all of their government information, from
their Finnish and Estonian counterparts on this innovation
taxes to building permits, and can be signed using their digital
delegation.
signatures. This type of online citizen infrastructure will be the future of governance. By visiting a more risk tolerant govern-
Nearly two decades ago, the Organization for Economic Coop-
ment, such as Estonia, it will enlighten legislators to what is
eration and Development (OECD) released a report titled, “The
possible.
Knowledge-Based Economy,� which detailed that the growth of the future economy was not simply based on the manufactur-
Finland and Estonia have shown considerable progress to
ing output, but that, knowledge is now recognized as the driver
establishing their economies for a greater economic prosperity
of productivity and economic growth, leading to a new focus
in the 21st century. While one is focused on innovation within
on the role of information, technology and learning in econom-
the economy the other is focused on innovation from within
ic performance. Simply put, measuring tangible outputs is not
the government. Visiting both countries will give an interest-
enough to drive the economy forward. Future economic growth
ing contrast to how they approach the future and how they are
is determined by the knowledge of the workforce.
planning for it. Estonia and Finland - 02
HELSINKI Finland ranks 1st for the most well-functioning and highly transparent public institutions, 2nd in the Networked Readiness Index and 3rd for most competitive country in the world by the World Economic Forum. Finland has a rich history of developing its society to be geared
a highly innovative economy. Improving the country’s
toward a knowledge-based economy. Similar to other
capacity to adopt the latest technologies (ranked 18th)
countries in the region, they boast well-functioning
could lead to important synergies that could, in turn,
and highly transparent public institutions (1st), topping several
further reinforce the country’s competitive position going
indicators included in this category. Its private institutions,
forward. Finland’s macroeconomic environment has
ranked 3rd overall, are also seen to be among the best run and
weakened slightly due inpart to rising inflation (above 3
most ethical in the world. Finland also occupies the top posi-
percent), however it fares comparatively well when contrasted
tion both in the health and primary education sectors, as well
with other euro-zone economies.
as higher education and training sector, which is the the result
Finland’s education system is a fully subsidized program
of a strong focus on education over recent decades. This has
from kindergarten to post-secondary universities, with no
provided the workforce with the skills needed to adapt rapidly
tuition fees for full-time students. Their educational system
to a changing environment and has laid the groundwork
is designed for students to be able to compete on a global
for high levels of innovation, allowing Finland to become
level, and student performance is ranked the highest on all
03 - California Innovation Delegation 2015
FINLAND levels of metrics.
cent of Finland’s budget toward research
Finland started in the early 80’s with the
and development.
establishment of the Finnish Funding Agency for Technology and Innovation (Tekes). The purpose of Tekes is to drive the advancement of technology within Finland and fund research-stage ideas into viable businesses. In 2014 Tekes reported it had received $550 million Euros for 3,670 funding applications. and 2,750 were approved for funding. Of
DECADES OF A STRONG POLICY FOCUS TO EDUCATION HAS PLACED THEM IN THE TOP FOR HEALTH AND PRIMARY EDUCATION IN THE WORLD.
DESIRED TAKEAWAYS The rationale to visiting Finland is to give policymakers a new perspective on government programs that could be established to promote innovation in California. Finland is an exemplary country of how government has been a supporter of innovation by giving them funding and support during critical phases of a company's life cycle.
these 660 were startup companies. This
CALIFORNIA IMPROVEMENT
resulted in 1,500 products, 1,300 patents
With a population roughly the size of
and 1,090 academic theses.
San Diego and Los Angeles combined,
Rovio Entertainment received over 2
their economy is remarkably diverse
million euros from Tekes over several
and innovative. The Finnish have estab-
By opening a dialog with Finnish policy-
years. Ultimately this funding supported
lished themselves as a global economic
makers and representatives, California
their success of developing Angry Birds,
innovators and will continue to lead the
can be more creative with their policies
which is arguably the most popular
world with a clean and sustainable tech-
to promote the economy and innovation,
gaming app brand in the world. Finland
nology. California policymakers should
along with having the experience to see
ranks the highest on the Global Innova-
take note of funding schemes that have
and learn why Finland is ranked for the
tion Index and allocated roughly 3.6 per-
proven successful.
most well-functioning government.
Estonia & Finland - 04
TALLINN Estonia ranks among the most wired and technologically advanced countries in the world. With a high internet penetration rate, widespread e-commerce, and e-government services embedded into the daily lives of individuals. Estonia remains the best performer within Eastern Europe. The
world. Since 2001, Estonia has created a six year strategic plan
country has an excellent educational system and highly ef-
through their Estonian R&D Council to determine the direction
ficient and well-developed goods and financial markets, as well
of R&D and innovation in the country. In their latest strategic
as a strong commitment to advancing technological readiness.
plan, Estonia has set out specific benchmarks that they hope to
In addition, Estonia’s 22nd rank in macroeconomic stability re-
reach at the end of the six years. They include, increasing pro-
flects its relatively well managed public finances. The country’s
ductivity per employed person to 80 percent of the EU average,
leading margin ahead of the rest of the region also reflects its
raising the level of investment in R&D to 3 percent of GDP and
more flexible and efficient labor markets (12th), which continue
increasing the share of Estonian exports in world trade to 0.11
to be rigid in other countries throughout much of Europe.
percent. All of these are objectives for which Estonia is striving
Estonia has taken the most public action of any country in
to accomplish by 2020.
Europe to improve their future economic standing for their citi-
Not only are they driving their economy to be more established
zens. From 2001 to 2011 Estonia has increased its R&D funding
for the 21st Century, they are also innovating within govern-
by 239 percent, the largest increase out of any country in the
ment as well. Estonia has established the first e-residency pro-
05 - California Innovation Delegation 2015
ESTONIA gram for anyone in the world to become
an online identity and special passcode
an “e-citizen” of Estonia. The purpose of
that allows them to vote in elections, file
e-estonia.com is to create a fully func-
income tax returns, sign legally-binding
tioning portal for their citizens
contracts, access medical files and even
ESTONIA HAS BECOME A MODEL FOR FREE INTERNET ACCESS AS A DEVELOPMENT ENGINE FOR SOCIETY. PARLIAMENTARY MEETINGS TOOK ON AVERAGE 4.5 HOURS, NOW THEY HAVE REDUCED THEIR MEETINGS TO JUST 30 MINUTES DUE TO THEIR E-CONSULTATION SYSTEM.
register businesses. In 2000 Estonia’s Parliament created E-Cabinet, which originally removed paper documents and placed stationary computers. They now access all of their documents through their personal computers or phones. They have also created
DESIRED TAKEAWAYS Estonia’s ability to embrace e-governance and implement it across all of its agencies is a practice for which California policymakers should strive to replicate among various levels government. This would also give an opportunity for policymakers to make direct connections with their counterparts that have been able to implement such a program.
government departments to consulate
CALIFORNIA IMPROVEMENT
directly with parliament representatives.
Several ways in which California can
Before the E-Cabinet and E-Consultation,
improve from its visit to Estonia is to start
normal parliamentary meetings took on
thinking about creating digital identi-
average 4.5 hours, now they are reduced
ties for all Californians. This will allow for
to just 30 minutes.
greater efficencies when interactting
Estonia is emerging from a post-Soviet
with government across all departments.
occupation to become a leading tech-
Having a one-stop-shop for all govern-
to interact with the government at every
nologically advanced society and will
ment agencies would improve costly
level. Every resident of Estonia now has
continue to excel for decades to come.
delays for citizens and departments.
E-Consultation System, which enables all
Estonia & Finland - 06
Innovation Delegation Itinerary SEPTEMBER 27TH 2015 - OCTOBER 4TH 2015 Time
Event
Location
9/27 10:30 AM – 12:30
Shuttle To San Francisco Airport
Sacramento -San Francisco
2:30 PM – 1:15
Depart SFO, Arrive in Copenhagen
San Francisco - Copenhagen
9/28 5:15PM - 6:30
Depart Copenhagen to Helsinki
Copenhagen - Helsinki
7:00 PM – 7:45
Check in at Hotel Scandic Paasi
Paasivourenkatu 5 B, Helsinki 00530
8:00PM - 9:30
Dinner Debrief Ravintola Graniittilnna
Saastopankinranta 6, Helsinki 00530
9/29 9:00 AM - 11:00
U.S. Embassy Innovation Center Debrief
Helsinki
11:30 AM – 12:30
Finland Tekes (Innovation Funding Agency)
Helsinki
12:30PM - 2:00
Lunch
Helsinki
2:00 PM - 4:00
Innovative Finnish Company TBD
Helsinki
4:30
Return to Hotel
Helsinki
9/30 9:00 AM - 11:30
Innovative Finnish Company TBD
Helsinki
12:00 PM – 1:35
Lunch
Helsinki
1:45 PM - 2:30
SITRA (finnish futre-oriented org)
Helsinki
3:00
Return to Hotel Free Time
Helsinki
07 - California Innovation Delegation 2015
10/1 6:00 AM - 6:30
Shuttle to Airport to Tallinn, Estonia
Helsinki - Airport
7:30 AM – 8:00
Depart Helsinki to Tallinn
Helsinki - Tallinn
8:30 AM - 9:15
Drop Luggage off Hotell Palace
Vabaduse Valjak 3, Tallinn 10141, Est.
9:30 AM - 10:30
Breakfast
11:00 AM - 2:30
U.S. Embassy Hosted Lunch
2:45 PM - 4:15
E-Estonia Showroom Demo Center
4:30 PM - 7:15
Return to Hotell Palace
Lõõtsa 2a, 11415 Tallinn, Estonia
7:45 PM
Hosted Dinner TBD
Tallinnn
Tallinn Tallinn
10/2 9:00 AM - 11:30
Innovative Estonian Company TBD
Tallinn
12:00 PM – 1:35
Lunch
Tallinn
1:45 PM - 2:30
Innovative Estonian Company TBD
Tallinn
3:00
Return
Tallinn
10/3 All Day
Free Day
Tallinn
10/4 6:00 AM - 6:40
Innovative Estonian Company TBD
Tallinn - Helsinki
10:40 AM – 11:20
Lunch
Helsinki - Copenhagen
11:20 AM - 2:45
Innovative Estonian Company TBD
Copenhagen - San Francisco
3:30 PM - 5:30
Return
San Francisco - Sacramento Estonia & Finland - 08
Innovation State 1201 K Street, Suite 750 Sacramento, CA 95814 Innovationstate.org