In the context of decreasing or stagnating public and pri-vate sector R&D investments and the diminishing number of researchers, we should abandon the presumption that the cur-rent approach to R&D strategies—measurement of the volume of R&D investments and distribution of direct grants (and if these do not work, introduction of more complicated ones)—helps us to increase the impact and social legitimacy of R&D. By now
173 OECD. Main Science and Technology Indicators Database. www.oecd.org/sti/msti.htm (24.10.2018).
174 Statistics Estonia. www.stat.ee (29.10.2018).
175 See: Lember, V., Ukrainski, K., Mäekivi, R., Hirv, T., Lukason, O., Kärg, M. (2018).
Euroopa Liidu tõukefondide perioodi 2007–2013 vahenditest rahastatud valdkondlike teadus- ja arendustegevuse programmide lõpphindamine. Tallinna Tehnikaülikool ja Tartu Ülikool. https://www.etag.ee/wp-content/uploads/2018/04/EL-tõukefondid-2007-13.
pdf (06.12.2018).
Figure 4.13. R&D funding in the state budget by socio-economic objective in 2009–2017 (million euros) (provisional data until 2015 (inclusive))
dox detected by the World Bank in developing countries: even though comparisons with other countries (Table 4.1) show that Estonia could have significant potential for R&D investment and innovation-based economic growth, our innovation system is characterised by companies’ low share of R&D and innovation investments and the public sector’s limited capacity to stimu-late these investments to a greater degree. According to the researchers of the World Bank, one of the main causes of this paradox is the lack of complementarity between physical and human capital—in developed countries, functioning financial markets (incl. regulations) that value the role of R&D, R&D friendly business climate (incl. tax system) and the existence of sufficient human capital ensure that even a small growth in R&D investments has significant impact and the role of the state may be limited to stimulating R&D investments. The challenge of developing countries does not only lie in stimulating R&D investments, but also in ensuring constant investments in the basic capabilities of its innovation system, the most important of which are investments into human capital. However, in the case of Estonia, we should be not talking about simply increas-ing R&D investments and developincreas-ing human capital, but above all nudging supplementary investments towards R&D activities with a more applied focus both in companies and in public sector as a whole.
In the current situation, we need to set at least four cross-sec-toral agreements at the centre of the next Knowledge-Based Estonia strategy.
Firstly, instead of R&D expenditure, we need to start talking about R&D investments and thereby change the focus of R&D and innovation policy debates—R&D and innovation are not goals but means to speed up/direct economic growth and solv-ing social issues—and set a cross-sectoral goal of increassolv-ing the share of R&D investments. This growth should also include a structural change in R&D investments and the increase of investments should bring about a rise in R&D investments and projects with a more applied focus, which presumes changes in R&D strategies both in companies, universities and other R&D facilities. The strategic importance of larger companies in R&D policies must become an important element: even though start-ups and small and medium-sized enterprises are great developers of innovative solutions and pioneers especially in sectors influenced by IT development, a large part of private
sector’s applied research and technological developments are even today carried out in larger companies (and a handful of sec-tors), especially in the era of global value chains and platforms.
Secondly, we must increase the number of both private sector and public sector R&D personnel (incl. those with PhD degrees) in order to boost companies’ basic capabilities for R&D and, above all, conducting applied research. Considering the forth-coming cutbacks in EU structural funds, it would be wise to consider the introduction of a policy instrument that has been missing from current Estonian R&D and innovation policy debates—piloting the idea of a social tax cap and exemptions upon hiring R&D workers in the private sector, especially ones with PhD degrees or various certificates of competence.
Thirdly, R&D and innovation policies should not only and mainly focus on supporting individual companies based on identical intervention logics and measures across sectors (e.g. demand in every sector that universities and companies’ applied research be conducted in universities). As the next step, our developmen-tal challenges call for more attention to facilitating and boosting cooperative R&D initiatives and platforms (R&D consortia, etc.).
At the same time, the public sector and state measures must become more open to R&D-related risk-taking. Even though our previous R&D and innovation policies have always stressed the importance of cooperation and co-creation, on the level of actual policy measures and their implementation, they key focus has been on control and over-regulation born from distrust.
Fourthly, the public sector’s R&D investments and innovation projects must become a policy tool for all policy fields (from education and health to state governance itself) just like reg-ulations, public procurements, etc. As a first step towards a more innovative public sector and smarter procurer, all state institutions should reduce the share of public procurement expenses (public procurements currently make up 35% of the public sector’s expenditure and 15% of GDP) and, on account of this, increase the volume of R&D and innovation activities ordered from or conducted together with universities and com-panies. Raising the public sector’s R&D expenses to 1% of the GDP or higher does not necessarily mean raising taxes or the redistribution of funds between various policy fields: it requires a change in the mentality of the public sector itself.
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Probe used in atomic force microscopy for studying forces between surfaces
Author: Kertu Liis Krigul (Estonian Science Photo Competition 2017).
Layer of polydicyandiamide before electropolymerisation
Author: Tavo Romann (Estonian Science Photo Competition 2017).
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