Thank you, Johannes Kaufmann for the kind introduction. Also, allow me to express how pleased I am to attend this conference. I am very much looking forward to taking part, and I am sure we will have interesting discussions during the day.

In Norway, we are currently asking ourselves how we can secure future wealth and welfare. Norway is ranked as one of the richest countries in the world, and also one of the best countries to live in. If we are to maintain that position, we cannot neglect the future of our industries. The Government has therefore made wealth creation a main priority.

If we are to succeed, we need to increase our innovation capacity. The Norwegian Government has, like the EU, made innovation a main concern.

The Vision established by the Government is that Norway shall be one of the most innovative countries in the world. Companies and people with entrepreneurial spirits 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 of knowledge and technology.

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

The EU adopted the Lisbon Strategy in spring 2000, aiming to make the Union the world’s most competitive region within 2010. This has been an inspiration for Norway’s work on our plan for innovation.

Although Norway has special challenges in some areas, most elements of the EU strategy are relevant in a Norwegian context. As an EEA member, Norway shares the challenge of ensuring that the EU’s Internal Market realises its full potential. We also face a number of the same challenges as the EU in adopting to a more knowledge-driven economy. The Norwegian Government is therefore actively pursuing many of the policy areas addressed by the Lisbon Strategy.

Globalisation represents both opportunities and challenges. It 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. Largely due to the government’s effort to improve the general conditions for trade and industry, this development has largely been stopped.

For a high-cost country like Norway it will nevertheless be hard to compete with low-cost countries in areas where technology is easily obtainable. We therefore need to develop an innovative and research-based industry with high quality products that are able to fetch 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. Furthermore, revenues from petroleum activities are expected to drop at the same time as public expenditures on health care and pensions increase. Old age and disability pensions are for instance expected to increase from 9,2 percent of 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.

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 knowledge led growth, not least in the fishing industry. ICT has been adopted eagerly both by trade and industry as well as the population at large.

The Government emphasises the need for an economic policy that produces a stable development in production and employment. This includes a tight and responsible fiscal policy that for one thing provides ground for a competitive exchange rate. It furthermore includes the lowering of taxes on investment, capital gains and labour.

This is a necessary, but not a sufficient, condition for future competitiveness in Norwegian trade and industry. Our companies also need to develop long-term competitive advantages based on knowledge and innovation.

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, such as the Lisbon-strategy in the EU. 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, which needs dedicated efforts and co-operation by both Government, industry and research communities. I would therefore like to stress that the plan is only a first step in a process toward increased innovation levels in Norway. The plan is however a platform from which government, business and researchers together can start on this important mission.

There are five targets in the plan, all of which require 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 legislation. I am told that Thomas Alva Edison had a sign 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 the efficient allocation of resources and innovation.
• Norway is a country of long distances. It is as far to travel from Oslo to Hammerfest in Northern Norway, as it is from Oslo to Rome. In order to secure development and innovation in the regions, the Government emphasises the important role of physical and electronic infrastructure. Roads and ICT provide for interaction and exchange of goods, services and knowledge, which are important building blocks in innovation. This is a challenge we share with the EU, and which is described in the final report from the European initiative for growth to the European Council -“Investing in networks and knowledge for growth and jobs”. The community sees, as Norway does, infrastructure investments as a major source for growth and competitiveness.
• Entry of new firms is essential to employment, innovation and wealth creation. The Government has therefore put a strong focus on entrepreneurship. The level of entrepreneurship is in fact fairly high in Norway, with about twenty to twenty-five thousand new entries each year. But only half a percent of these are high-tech firms with export potential. Increasing this number is an important task.

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

Developing skills and competence through education and science in line with the changing requirements of trade and industry is a major challenge. Education is a springboard for research, and the most important source for innovation is research and development. The Government is committed to reaching the OECD-average of resources spent on research and development by 2005. The OECD-average is currently at 2,2 percent of GDP. For a number of reasons, including our industrial structure, Norway is currently spending only 1,6 percent of GDP on research. The latest estimates, does however, give grounds for optimism in our ability to reach the OECD-target.

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. We are in this respect encouraged by the fact that a tax deduction scheme for research and development expenses has been a huge success. The scheme also stimulates co-operation between Norwegian firms and research institutions both domestic and foreign.

The EU is aiming at increasing investment in R&D to approach 3 % of GDP by 2010, as described in the Communication "Investing in research: an action plan for Europe" adopted by the European Commission on 30 ^th> April 2003. I see no reason why Norway should be less ambitious. 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: The European Research Area. This is an exciting development.

If we are to succeed at improving innovation through research and development, we also need to increase our efforts at commercialising the results stemming from research. The new intellectual property rights act is expected to increase the role of our universities in making business of research. The act strengthens the stake of the institution to property rights of an invention, as well as the revenue it generates. We trust that this will increase support for commercialisation within the universities.

In conclusion, I would like to point out that tight fiscal policies are 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 to increase innovation levels. Implementation requires interaction and contributions by a number of actors both in the private and public sector.

A new Innovation Panel at ministerial level, led by me as Minister of Trade and Industry, is already established and had its first meeting two days ago. The Government is putting innovation firmly on the political agenda in Norway and will pursue it eagerly in the weeks, months and years to come.

Thank you for your attention!