State Secretary Karin Yrvin

Norway’s strategy for growth and innovation

”Innovation Policies and Strategies- European and Norwegian Perspectives”

Seminar held by the Norwegian School of Management and the European Commission Delegation to Norway and Iceland, 23 May 2006

According to former Danish Prime Minister, and now Member of the European Parliament, Poul Nyrup Rasmussen, the Nordic countries are the ”bumblebees of Europe”.

We have a large public sector that demands huge efforts.

We have high wage and tax levels.

In theory, we cannot compete:

We are too heavy to fly.

But like bumblebees, we fly anyway

– and even quite well.

The bumblebee supports the belief that our welfare states are not a burden – but the basis of our prosperity and social cohesion.

It shows that competitiveness and social security are not contradictions -

but pre-conditions for each other.

It rejects the idea that European welfare states are the cause of Europe’s problems.

Some of Europe’s most competitive economies

- Denmark, Norway, Sweden and Finland -

are those that offer some of the best

social protection and workers’ rights.

In short, fair play and growth are mutually supporting.

This is why we have used our first half year in government to strengthen the welfare state.

• We have strengthened employee protection
• We are investing heavily in kindergartens, schools, hospitals and nursing homes in our first budget

These are not only policies for wealth distribution.

They are also policies for wealth creation.

And we see results already:

Employment has reached an all-time high.

Since last October, unemployment has fallen from 83 000 to 72 000.

The fall is expected to continue down to 60 000 this year.

In other words: A total of 23 000 more people boosting Norwegian growth!

This is the Nordic model in practice.

But mind you, our model is not perfect.

We have to improve.

And we share many challenges with other European countries.

That is why we are here.

Also to discuss what we can do better.

Thank you for the opportunity to speak at this seminar.

It is a great pleasure to be able to share some thoughts with Mr. Verheugen, the panel and the participants here today,

on our strategies for innovation and growth.

I will address three simple questions:

• Why is innovation a prime concern for us?
• Where should we be going?
• And how do we get there?

First – the question of why:

In Europe, we are faced with

• increased global competition
• an increasing proportion of elderly people
• and falling birth rates

High cost countries in Europe can no longer compete on prices alone.

We have to compete on quality, based on cutting edge knowledge.

Therefore, it is crucial that we keep on our toes,

improve our ability to change

and make the most of our human capital.

Not surprisingly, innovation seems to be a central part of the answer to these challenges – in the EU and in Norway.

Now, let’s go to the next question – the question of where we should be going:

EU and Norway share many of the same political objectives. We want to:

·

• Create more and better jobs for everyone
• ·
• Strengthen the welfare system
• ·
• Increase social justice and inclusion
• ·
• Ensure economic stability and sustainable growth
• ·
• And maintain a strong competitive industry

In my Government’s program we state that:

Norway is to become among the world’s leading, most innovative, dynamic and knowledge-based economies in areas where we have competitive advantages. Norway shall be a good place for business activity.

In other words,

not too far from the ambition of the EU strategy for growth and jobs.

Now, the question of how do we get there:

Again, innovation seems to be the evident solution.

But how, exactly, do we facilitate innovation?

First of all, our economic policy shall ensure stable conditions for innovation and business activity.

But stability is not enough. We need something more. We need active policies. Similar to the EU, we will

• Facilitate innovation in all areas
• increase investments in R&D
• and develop our human capital

Innovation policy requires coordination.

Innovation is influenced by many policy areas, like:

• education
• competition
• patent policies
• labour market
• infrastructure
• and research policies

Therefore, we have to place innovation at the heart of many policies.

And lead a broad innovation policy.

In Norway, increasing research activity is a top priority.

Our goal is to reach a total investment in R&D of 3 per cent of GDP by 2010.

EU and Norway share this goal.

Norway also takes part in many of EU’s activities in this area. This is extremely important for our institutions and industry.

We participate in the 6 ^th> Framework Program, and we participate actively in the planning of the 7 ^th>.

We also closely follow the Commissions’ proposal for a new Competitiveness and Innovation Framework Programme (CIP).

Our international activities are complemented by national initiatives.

SkatteFUNN is our tax relief scheme for R&D.

Skattefunn is popular, and provides an early access to the world of research.

More Norwegian companies than ever are now doing R&D.

This adds to increased grants for

·

• user driven research projects led by industry
• ·
• industrial and public R&D contracts
• ·
• and commercialisation of research results

My government invests more in business-related R&D than any previous government.

In total, my government has increased the allocation to business research, innovation and business development

by almost 30 percent since the 2005 budget.

This shall result in new and prosperous Norwegian businesses.

For example,

Our growing solar energy industry is a recent success story

of active public support and innovative private actors.

The list of previous examples is long:

The Norwegian petroleum or maritime industry

would not have been the same success story

without political will and public involvement.

Many of our most important companies

like Telenor, Statoil or Hydro

would not have been what they are today

without active industrial policies.

However:

If we want to succeed, we need more than an active government.

We also need to work hand in hand with the business sector

the knowledge institutions

and the social partners.

We have to pull together.

This brings me back to the Nordic model.

It is argued that the Nordic model is built on cooperation, trust and inclusion.

However, the model has room for improvement.

For example, we are not using all our human capital well enough.

In our part of the world, men and women are quite equal.

In fact, women get more university degrees than men. But:

women are still an under-utilised resource.

In Norway, women are under-represented in leading positions and corporate boards.

At the same time,

many citizens withnon-western backgrounds

have problems getting jobs matching their competence.

This is not only unacceptable from an equality perspective.

It is also worrying from an innovation perspective.

Put simply: We cannot afford it.

To become more competitive, we must use everyone’s talents and skills.

The inclusion of women and people with immigrant backgrounds will be our diversity exam.

And it is an important one.

Because if we fail, we will give up a golden opportunity.

My government would like to pass this exam.

Therefore, we have taken steps

• to increase gender balance in company boards
• to increase entrepreneurship among women and immigrants
• to remove bottlenecks for competent candidates with non-western names into the labour market

And we have established a new Directorate of Integration and Diversity.

These are hopefully steps in the right direction.

If time had allowed,

I would have mentioned our mutual competence challenges,

and Norway’s strategy for the strengthening of math, science and technology.

And I should have mentioned how thrilled I am about our decision to join the European Patent Organisation.

But hopefully, I will get the chance during the discussion.

To sum up:

·

• Norway shares many of EUs challenges, objectives – and tremendous possibilities
• ·
• We want to become innovative, dynamic and competitive
• ·
• This requires
• • solid and effective welfare systems
  • o
  • big efforts for social inclusion
  • o
  • and active policies for innovation

And why shall we settle for being the bumblebee?

I look forward to the panel discussion and the other speakers.

Enjoy the seminar.

And thank you for your attention.