Investment in research and development has increased strongly in Finland for almost 20 years. Exports of high technology have tripled in five years; in industrial productivity Finland has caught up with the United States, which sets the standard for the rest of the world. More than half the growth in productivity is explained through technology. The widely used network method of operating is raising productivity.

In OECD comparisons Finland's proportion of investment in research and development in relation to the gross domestic product has been rising continually, even during the slump at the beginning of the 1990s. In 2001 the proportion of the GDP in Finland was 3.59 per cent compared with the United States, where it was 2.78.

A big part of the growth in R&D originates from companies. Investment in R&D by companies in Finland is among the highest in the world. During the past three years the growth in R&D has rested entirely on the companies' shoulders, because public R&D financing has almost stagnated.

According to an investment survey by the Confederation of Finnish Industry and Employers (TT), investment by industry in research and development will continue this year the growth that began in the 1990s. The growth rate has quietened down from the peak years, but R&D expenditure and the number of research and development staff are clearly on the increase.

The amount of investment by industry in R&D will climb to 4.7 billion euros this year. That is more than industry spends on fixed investment in Finland.

Last year R&D investment increased by 17 per cent. This year there will be an almost 10 per cent increase. R&D expenditure has increased both in Finland and in Finnish companies' foreign units. The number of R&D staff has increased both in Finland and elsewhere.

R&D expenditure directed abroad has risen more strongly than in Finland, but 66 per cent of all the R&D expenditure will be spent in Finland this year.

Metal and electronics industry biggest spender

The metal and electronics industry is by far and away the biggest investor in R&D. It is responsible for more than 80 per cent of all the research and development investment in Finland. This year it will be spending over 4 billion euros on R&D. Most of this will be accounted for by the electronics and electrical industry. Sprinting into second place is the chemical industry, which this year will be putting altogether about 320 million euros into research and development. This sector will be increasing its R&D investment in Finland by 14 per cent and abroad by almost a quarter. The forest industry will be sticking closely to its previous figure, 163 million euros.

Foreign R&D focuses on EU region

Finnish companies will be spending almost 1.6 billion euros on R&D activities abroad this year. Most of it will be in the EU region, but North America has become important.

In practice, foreign research and development activities are almost entirely the preserve of metal and electronics industry companies.

TT's survey is part of the EU's business trend surveys. The survey is carried out twice a year. In addition to industry, respondents include companies in the building industry and companies that serve industry. Investment by the respondents covers more than 80 per cent of all investment by the Finnish manufacturing industry.

Networked company concentrates on its core know-how

The widely used network method of operating in industry has been raising productivity. Three-quarters of industry operates on the networks. Way out in the lead are the metal and electronics industry: almost 90 per cent of companies in this sector operate on networks. Network cooperation gives a company the opportunity to concentrate on its own core know-how. And it is this that increases productivity.

Networking has also raised the utilization rates. This can be seen in particular in the smallest companies, where the figures have gone up by almost a third. In the big companies the proportion of capacity usage has gone up at the high points of the economic cycles from 77 per cent to 90 per cent. In the smallest companies, those that employ fewer than 50 people, the utilization rate has risen from 54 to 82 per cent. It is assumed that networking will spread in the next few years. It will expand to research and development and marketing. Along with it will come closer cooperation with research institutes and educational establishments. There will be a move increasingly away from the traditional subcontractor cooperation to strategic partners who will have something other than productional cooperation.