Historical archive

From Idea to Value - Norwegian Innovation Policy

Historical archive

Published under: Bondevik's 2nd Government

Publisher: Ministry of Trade and Industry

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State Secretary Mrs Helle Hammer

From Idea to Value – Norwegian Innovation Policy

Science and Technology Forum Norway-Canada
Ottawa, 7 November 2003

Ambassadors, Ladies and Gentlemen,

Thank you, Ambassador Havnen for the kind introduction. Also, allow me to express my appreciation to the Science and Technology Forum for the invitation to attend this seminar on Research, Technology and Innovation. I am very much looking forward to taking part in this seminar, and also hope to learn more about the potential for increased co-operation between Norway and Canada and the United States during my stay.

In Norway, we are now asking ourselves how we can secure future value creation and continued welfare for the coming generations? Currently, Norway is ranked as one of the richest countries in the world, and also one of the best countries to live in. In order to secure continued prosperity and welfare, the Government has stated that increasing value creation is the main priority.

If we are to succeed at increasing value creation, we need to increase our innovation capacity. The Norwegian Government has therefore, like the Canadian Government, made innovation a main concern.

(Sheet: Vision)

The Vision established by the Government is that Norway shall be one of the most innovative countries in the world. Companies and people with go-ahead spirit shall have a good chance of success in their efforts at developing profitable enterprises. Also, Norway shall be in the lead internationally within important areas as regards knowledge, technology and value creation.

Innovation takes place on the basis of actions by individuals, firms and institutions. The role of the Government is primarily to pave the way for innovation to happen, and to remove obstacles. A major challenge is to create a culture that inspires us to do new things and be excellent in certain areas. Trade and industry, individuals, institutions and the Government need to embark on this exciting task together.

(Sheet: Why a comprehensive innovation policy?)

Globalisation implies both opportunities and challenges. Globalisation does for instance lead to geographical shifts in activities and division of labour between countries. In Norway, we experienced a drain of labour-intensive production last year. Due to an improvement in the general framework conditions for trade and industry, this development is however on the rebound.

For a high-cost country like Norway it will be hard to compete with low-cost countries in areas where technology is easily accessible. We therefore need to develop an innovative and research-based trade and industry with high quality products that obtain good prices in international markets, in line with our high costs of production.

This becomes even more important when we consider the expected decrease in growth impulses from our large petroleum sector in the years to come. Even more alarming: The revenues from petroleum activities are expected to drop at the same time as public expenditure on health care and pensions are expected to increase. Old age and disability pensions are for instance expected to increase from 9,2 percent of our GDP in 2002 to close to 20 percent in 2050.

Clearly, this increases the importance of adaptation and innovation in our economy.

We are therefore somewhat troubled by the fact that Norwegian companies at present display lower levels of innovation than firms in many other countries in Europe.

(Sheet: The foundation for future growth)

Our human capital is estimated to constitute about eighty percent of the National wealth. Developing this capital and putting it to good use is crucial to our ability to innovate and create value. Internationally speaking, levels of education are very high in Norway. We do nevertheless see a lack of qualified manpower in certain areas. Increasing the number and quality of students in science subjects is a particular concern. We know that there is a positive correlation between knowledge in these disciplines and economic growth.

(Sheet: A policy for increased value creation)

I believe Norway has a good chance at succeeding in a global knowledge economy. We have a solid and stable economy. We have made significant investments in research, education and physical infrastructure. We have natural resources with a potential for growth, not least in the fishing industry. ICT has been adopted eagerly both by trade and industry and the population at large. Much like Canada I believe, we are also a high-trust society.

The Government emphasises the need for an economic policy that produces stable development in production and employment. This includes a tight and responsible fiscal policy that for one thing provides the ground for a competitive exchange rate. This is, however, a necessary, but not sufficient, condition for competitive strength in Norwegian trade and industry. Our companies also need to develop long-term competitive advantages based on innovation.

(Sheet: Innovation)

Innovation is about new products, new services, new methods of production, new organisational structures and even creating new markets. In order to display some of the broadness in present innovation activities in Norwegian trade and industry, I would like to briefly present three examples of Norwegian innovation activities:

  • Figgjo started out making traditional china for private homes, but is now specialised in deliveries to the professional market based on professional industrial design. Innovation is in this case about design, strategic choice and marketing.
  • Afinion provides analyses of blood tests in two to five minutes. This used to take extensive laboratory work. Co-operation with companies in Great Britain, Sweden, Canada and Germany, as well as in Norway has been central to the project.
  • Kongsberg is one of the most important high-tech environments in Norway, and operates in maritime and defence. They excel at blending new and already established knowledge into an internationally competitive environment.

These are examples of a development the Government wants to encourage further.

(Sheet: The Government’s plan for a comprehensive innovation policy)

Internationally, innovation policy is subject to a great deal of attention these days. Several countries are in the process of establishing broad strategies for innovation and growth. The EU has for one thing launched its’ ambitious Lisbon-strategy, and Canada has established a forward-looking innovation strategy. We are grateful for the opportunity to learn amongst others from the work being done in this country. Good co-ordination across policy areas is a clear recommendation in many of these processes.

The Norwegian Government recently presented its’ own plan for a more comprehensive innovation policy. Clearly, increasing innovation is a demanding task, and needs dedicated efforts and team play both by the Government and trade and industry. I would therefore like to underline that the plan is only a first step in a process aiming at increasing innovation levels in Norway. The plan is however a clear signal from the Government both to private and public actors of the need to get started with this important mission.


(Sheet: The Government’s innovation targets)

There are five targets in the plan, all of which requires good co-ordination across policy areas:

  • Good and predictable framework conditions for trade and industry includes the cost-side of production and exports, such as wages and exchange rates, but also taxes and the body of laws. I am told Thomas Alva Edison, a great inventor, had a sign hanging on the wall in his workshop that read: “There are no rules here, we are trying to achieve something!” Clearly, rules should be judged also with regard to how they affect efficiency in the allocation of resources and innovation.
  • Norway is a country marked by long distances. It is as far to travel from Oslo to Hammerfest in Northern Norway, as it is to travel to Rome. In order to secure development and innovation in the regions of Norway, the Government emphasises the important role of the physical and electronic infrastructure. Roads and ICT provide for interaction and exchange of goods, services and knowledge, which are important building blocks in innovation.
  • Entry of new firms is essential to employment, innovation and value creation. The Government has therefore put a strong focus on entrepreneurship. Actually, the level of entrepreneurship is fairly high in Norway, with about twenty to twenty-five thousand new entries each year. Only 0,5 percent of these are however high-tech firms with export potential. Increasing this number is a major challenge.

This brings me to the important areas of education and research.

(Sheet: Research and Commercialisation)

I have already touched upon education and science, which is an overriding concern. Developing skills and competence in line with the changing requirements in trade and industry is of course a major challenge. I am in this respect pleased that a quality reform in our education system has been approved by Parliament.

Education is a springboard for research, and research and development is perhaps the most important source for innovation. The Government is committed to a goal of reaching the OECD-average of resources spent on research and development by 2005. The average is currently at 2,2 percent of GDP. Norway is currently spending 1,6 percent of her GDP on research, but if we look at public spending isolated we have reached the OECD-average.

It is a major challenge to increase private sector spending on research and development. Currently, the firms’ share of total spending is at 50 percent, partly due to the industrial structure in Norway with a large percentage of companies involved in raw-material based production. We are, however, encouraged by the fact that a tax deduction scheme for research expenses has been a huge success. The scheme also opens up to co-operation with foreign research institutions.

The EU has established that it is a goal to increase spending on research and development to 3,0 percent of GDP. This adds to our challenge, but also implies new possibilities through our participation in the EU Framework Programme. The programme is geared towards the realisation of an internal market for research and innovation in Europe called the European Research Area. This is an exciting development.

I would however like to add that Norway also welcomes co-operation outside of Europe, not least with the US and Canada.

If we are to succeed at improving innovation through research and development, we also need to increase our efforts at commercialisation of the results stemming from research. A new law on intellectual property rights is anticipated to increase the role of our universities with respect to commercialisation of research. The law strengthens the stake of the institution in regard to the property right of an invention, as well as the revenue it generates. We trust the law will lead to increased support for commercialisation by the universities.

(Sheet: Innovation in trade and industry – a success story)

I would now briefly like to provide you with an example I find is a success story in research and innovation. The product SAP developed by Biotec pharmacon in Tromsø in Northern Norway is used in gene analysis, and is actually made from process water stemming from thawing of shrimps. The price per bottle is about 70 000 Canadian dollars.

What is so fascinating about this is that the product has come about as a result of many factors: efforts in research and development, interplay with research institutions, access to competent labour, good use of the tax deduction scheme and important contributions by the Norwegian Research Council as well as other instruments of policy.

(Sheet: Other innovation measures)

The Government wants to see more new entries like this, and is prepared to move on with other measures.

In line with this, a new organisation will be established 1 January 2004. This will be a merger of public schemes and programmes from the Norwegian Trade Council, the Norwegian Tourist Board, the Industrial and Regional Development Fund and the State Counselling Office for Inventors. The entity will have innovation and internationalisation as its main priorities. I will talk about this in more detail at the annual meeting in the North American Chamber of Commerce later today.

The Government will also shortly present a strategy for the development of entrepreneurial skills in our education system. Furthermore, we will evaluate the effect of red tape on innovation and value creation and establish a common electronic informative function for trade and industry.

(Sheet: A policy for the future)

In summing up, I would like to point out that a tight fiscal policy is necessary, but not sufficient if we are to increase innovation levels and develop new strengths in Norwegian trade and industry. We also need an active policy aiming at increasing innovation levels. Implementation requires good interplay and contributions by a number of actors both in the private and public sector.

To conclude, innovation has been put firmly on the political agenda in Norway and will be pursued eagerly by the Government. A new Innovation Panel led by the Minister of Trade and Industry will be established. I work with the Minister every day, and know that he will not rest until results are demonstrated.

Thank you for your attention!