02 | 2006

Clear link between R&D investments and economic development of nations

Yield rate of several tens of per cent

According to VTT Technical Research Centre of Finland’s seminar evaluating the effect of technology investments, R&D investments are clearly linked with the economic development of companies, industries and nations. In order to ensure Finland's competitiveness in the global markets, VTT's CEO & President Erkki KM Leppävuori is now asking for a more determined R&D investment policy.

"Finland cannot reduce the amount of R&D investments if we are to maintain the competitive edge of our companies and that of the country. R&D investments are clearly linked with the economic development of companies, industries and nations. International studies have established that the yield of R&D investments is 25-30% for companies, an average of 15% for the businesses and approximately 10% for the national economy. In Finland, we must purposefully ensure that the level of education is maintained and that top-quality expertise is fostered. We must focus research and development on the areas in which we have the knowledge and the yield is the best," VTT's CEO & President Erkki KM Leppävuori pointed out at the VTT Intelligence Forum seminar held in Espoo on 31 May.

Seduction package to market Finland

According to Leppävuori, the State can improve competitiveness not only by supporting research and development activities and providing top-quality education but also by making the operating environment more innovation-friendly by offering tax benefits, among other things. Leppävuori recommends building a proper "seduction package" to market Finland as a target for business investments.

R&D investments and innovations benefit many

Professor Bronwyn H. Hall from UC Berkeley, USA, emphasised that R&D investments and innovations benefit not only the companies or other parties that finance them but also other companies, consumers and society as a whole.

Open competition forces companies to innovate

According to Leif Fagernäs, Managing Director of the Confederation of Finnish Industries, innovation activities first require an approach of open competition, that forces companies to innovate. The second requirement is a business interest approach that encourages owners and entrepreneurs to take risks. The third requirement is a technological approach, as technology makes it possible to improve processes and to bring new products to the market. The fourth requirement is a strong global approach, as each company is faced with global competition. "Globalisation brings competition to Finland. The growth and the success of companies involved in new technologies require a global approach from the moment the business is started. A presence in the evolving markets is also necessary, as the competitors will utilise them in any case," Fagemäs pointed out. 


Additional information

VTT is an impartial expert organisation. Its objective is to develop new technologies, create new innovations and value added thus increasing customer's competencies. With its know how VTT produces research, development, testing and information services to public sector and companies as well as international organisations.