RESEARCH DIRECTOR , ADJUNCT PROFESSOR

JARI KAIVO-OJA

F I N L A N D F U T U R E S R E S E A R C H C E N T R E ( F F R C )T U R K U S C H O O L O F E C O N O M I C S , U N I V E R S I T Y O F

T U R K U

CHANGING SOCIAL STRUCTURES IN THE BALTIC SEA REGION: URGENT NEEDS FOR TARGET MINDED BALTIC SEA GREEN GROWTH CO-OPERATION AND

SYSTEMIC SOCIAL INNOVATIONS 

CHANGING ECONOMIC STRUCTURES: KEY THEMES

• Green growth paradigm, global climate change, CO2 emissions• Economic growth, employment, investments• Household incomes, welfare, • Income distribution• Various trend analyses

FROM TRIPLE HELIX TO QUARTET HELIX (KAIVO-OJA 2011)

The AcademiaThe Industries

The Government Consumers and end-users

SIXTH WAVE AND GREEN GROWTH AS AN EUROPEAN CHALLENGE

Key Driverds for the

6th Wave

Key trajectories for social change

Key innovation platformsKey megatrends

Rise of complex docietiesWeb-based empowerment of people

Maturing environmental concerns

Growth of health services

Digitalization and dominance of second economy

Demographic changeImplying ageing andlongevity

Globalization: decentralization of global powers The rise of bioeconomy

The expansion of resource efficient technologies

3-LEVEL MODEL OF SYSTEMIC INNOVATION

Sixth Wave: Megatrends and macrotrends

Socio-technical regime A

Socio-technical regime B

Socio-technical regime C

Socio-technical regime D

Socio-technical regime E

Niche B Niche

CNiche

D

Niche level: New ideas and inventions

Landscape

Socio-technical regimes

FROM INTERNET TO ROBOTICS: A FUTURE SOURCE FOR PRODUCTIVITY AND SMARTNESS

Source: ASIMO 2012

See more European Robotics Week 2013:

http://www.eurobotics-project.eu/eurobotics

SYSTEMIC INNOVATION PERSPECTIVE: ”KILLER INNOVATION MODEL” (KAIVO-OJA 2011)

Business-innovation

Social innovation

Systemic TBI

innovationTechnological innovation

EXAMPLE OF SYSTEMIC INNOVATION THINKING (KOREAN UBIQUITOUS CITY ASSOCIATION 2006)

GREEN GROWTH STRATEGY AS INNOVATION CHALLENGE (GREEN GROWTH KNOWLEDGE PLATFORM 2013)

Green growth requires that public agencies are • (1) able to price externalities and value

environmental assets, • (2) stakeholders are able to find innovations

(technological, business and social innovations) to break unsustainable development paths, • (3) the creation and dissemination of new

environmentally sustainable technologies, goods and services, • (4) sectoral shifts and changes in comparative

advantage that inevitably imply winners and losers.

GREEN GROWTH AND NEEDS OF SOCIO-CULTURAL CHANGES (SOURCE: GREEEN GROWTH KNOWLEDGE PLATFORM 2013)

Future comprehensive wealth

Saving/investment

Outputs (material and non-material savings)

Production Consumption

Inputs

Drawing inputs from wealth

Current comprehensive wealth

Policies

Economic opportunities

STAGES OF PUBLIC POLICY FOR THE BALTIC SEA POLITICS

Typical stages of public policy are: • (1) Agenda setting, • (2) policy formulation, • (3) decision-making, • (4) policy implementation and • (5) monitoring and evaluation.

GDP GROWTH (%) IN THE BALTIC SEA COUNTRIES, YEARS 1961-2012

1960196

2196

4196

6196

8197

0197

2197

4197

6197

8198

0198

2198

4198

6198

8199

0199

2199

4199

6199

8200

0200

2200

4200

6200

8201

0201

2

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

GDP (in dollars) in the Baltic Sea countries, 1961-2012 (World Bank 2013)

BelarusDenmarkEstoniaFinlandGermanyLatviaNorwayLithuaniaPolandRussiaSweden

GD

P (%

)

BALTIC SEA REGION (AVERAGE GROWTH RATE OF 11 BS COUNTRIES, %)

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

-8

-6

-4

-2

0

2

4

6

8

Baltic Sea Countries (average GDP growth of the BS countries, %)

GD

P gr

owth

, %

AVERAGE ECONOMIC GROWTH, BALTIC SEA COUNTRIES (AVERAGE GDP GROWTH OF THE BS COUNTRIES, %)

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

-8

-6

-4

-2

0

2

4

6

8

f(x) = 0.00364023086368676 x² − 0.244085755502614 x + 6.1526740384084R² = 0.139484145052062f(x) = − 0.0438730579998424 x + 4.21971144979072R² = 0.0622924990413213

Baltic Sea countries (average GDP growth of the BS countries, %)

GD

P gr

owth

, %

EMPLOYMENT RATES OF NATIVE- AND FOREIGN-BORN POPULATION BY EDUCATIONAL ATTAINMENT IN SOME BALTIC SEA COUNTRIES, YEAR 2007 (OECD 2012)

2007          

Difference between native-born and foreign-born

Native-born   Foreign-born   2007

Low High Total Low High Total  Denmark 51,98113 82,02673 63,88262 50,87713 73,44987 57,68003 6,2

Estonia 29,51551 82,47014 59,66663 20,08191 69,1683 48,30696 11,4

Finland 29,11994 76,27982 56,96619 39,21423 71,58916 59,89582 -2,9

Germany 29,76301 74,06977 55,8576 -

Norway 51,39146 86,32908 71,08491 52,2312 82,43884 68,05048 3,0

Poland 17,9292 76,31345 48,92329 4,222524 44,9374 14,06986 34,9

Sweden 44,76384 82,49948 68,42363 40,84492 73,36278 57,62029 10,8

Russian Federation 30,1 79,1 57,9 32,4 76,4 60,7 -2,8

EMPLOYMENT RATES OF NATIVE- AND FOREIGN-BORN POPULATION BY EDUCATIONAL ATTAINMENT IN SOME BALTIC SEA COUNTRIES, YEAR 2011 (OECD 2012)

2011          

Difference between native-born and foreign-born

Native-born   Foreign-born   2011

Low High Total Low High Total  

Denmark 58,86311 86,57713 74,71888 48,41797 75,98556 61,6778 13,04

Estonia 30,99904 80,78799 65,32655 29,30565 69,61436 63,89933 1,43

Finland 40,99464 84,81853 69,40752 44,85007 69,20665 61,12176 8,28

Germany 43,21679 89,26231 73,75694 53,40668 77,31918 66,49925 7,26

Norway 58,20015 90,55224 75,97524 55,67231 82,04932 70,20329 5,77

Poland 23,48173 82,43909 59,66775 15,22522 72,22753 55,33718 4,33

Sweden 48,67034 89,71784 76,58259 43,94978 75,16999 62,57937 14,00

Russian Federation

REAL HOUSEHOLD DISPOSABLE INCOME: CHANGES IN SOME BALTIC SEA COUNTRIES (OECD 2012)

Denmark

Estonia

Finland

Germany

Norway

Poland

Sweden

-4.00 -3.00 -2.00 -1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00

Average annual growth in percentage: 3-year average at end of period (2009-11)Average annual growth in percentage: 3-year average at beginning of period (1999-2001)

INVESTMENTS (GROSS FIXED CAPITAL FORMATION, % CHANGES) IN SOME BALTIC SEA COUNTRIES, IN THE EU-27, EA17, RUSSIA: CHANGES IN 1999-2001, 2008-2010 (OECD 2012)

Denmark

Estonia

Finland

Germany

Norway

Poland

Sweden

Russian Federation

EA17

EU27

-20.0 0.0 20.0 40.0 60.0 80.0 100.0

HighLow

ACTIVE POPULATION IN THE BALTIC SEA COUNTRIES (%, 15-64 YEARS OLD)

1960196

2196

4196

6196

8197

0197

2197

4197

6197

8198

0198

2198

4198

6198

8199

0199

2199

4199

6199

8200

0200

2200

4200

6200

8201

0201

254

56

58

60

62

64

66

68

70

72

74

Active population in the Baltic Sea countries (%,15-64 years old)

BelarusDenmarkEstoniaFinlandGermanyLatviaNorwayLithuaniaPolandRussiaSweden

Popu

latio

n 15

-64

year

s ol

d, %

)

ACTIVE POPULATION IN THE BALTIC SEA REGION, YEARS 1960-2012

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

62

63

64

65

66

67

68

69

Average size population of 15-64 years old, % in the Baltic Sea Countries (11 countries)

YOUTH POPULATION UNDER THE AGE OF 15 IN SOME BALTIC SEA COUNTRIES AND IN THE EU-27, 2000-2050 (OECD 2012)

2000 2010 2020 2030 2040 20500.0

5.0

10.0

15.0

20.0

25.0

Youth population under the age of 15 in some Baltic Sea countries and in the EU-27, 2000-2050

EstoniaFinlandDenmarkGermanyNorwayPolandSwedenEU 27

%

ELDERLY POPULATION (65 OR OVER 65 YEARS) IN SOME BALTIC SEA COUNTRIES AND IN THE EU-27, 2000-2050 (OECD 2012)

2000 2010 2020 2030 2040 20500.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Elderly population (65 orover 65 years old) in some Baltic Sea countries and in the EU-27, 2000-2050

EstoniaFinlandDenmarkGermanyNorwayPolandSwedenEU 27

%

POPULATION LESS THAN 15 YEARS OLD AND 65 OR OVER 65 YEARS OLD IN THE BALTIC SEA COUNTRIES (OECD 2012)

1990 2000 2010 2020 2030 2040 2050 20600.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Population less than 15 years old and 65 or over 65 years old in the Baltic Sea countries

EstoniaFinlandDenmarkGermanyNorwayPolandSwedenEU 27

Time

%

VALUE ADDED OF INDUSTRY IN THE BALTIC SEA COUNTRIES (%, VALUE ADDED OF GDP), YEARS 1966-2010

1960196

2196

4196

6196

8197

0197

2197

4197

6197

8198

0198

2198

4198

6198

8199

0199

2199

4199

6199

8200

0200

2200

4200

6200

8201

00

10

20

30

40

50

60

Industry in the Baltic Sea countries (%, value added of GDP), years 1966-2010

BelarusDenmarkEstoniaFinlandGermanyLatviaNorwayLithuaniaPolandRussia

%, v

alue

add

ed o

f G

DP

AVERAGE, VALUE ADDED (% OF GDP) IN BALTIC COUNTRIES, YEARS 1996-2010

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

0

5

10

15

20

25

30

35

40

45

f(x) = − 0.00829087874383778 x² + 0.370776505075859 x + 31.7902979581671R² = 0.608217540433567

Average, BS-countries, industry, value added (% of GDP)

%, i

ndus

try,

val

ue a

dded

of

GD

P

HIGH-TECH EXPORTS IN SOME BALTIC SEA COUNTRIES, YEARS 2007-2012 (EUROSTAT 2013)

2007 2008 2009 2010 2011 20120

2

4

6

8

10

12

14

16

18

20

High-tech exports in some Baltic Sea countries, years 2007-2012

EU (28 countries)EU (27 countries)DenmarkGermanyEstoniaLatviaLithuaniaPolandFinlandSweden%

of

expo

rts

EMPLOYMENT IN HIGH- AND MEDIUM-HIGH-TECHNOLOGY MANUFACTURING SECTORS, SHARE OF TOTAL EMPLOYMENT (%) (EUROSTAT 2013)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

2

4

6

8

10

12

Employment in high- and medium-high-technology manu-facturing sectors, Share of total employment (%)

EU (27 countries)DenmarkGermanyEstoniaLatviaLithuaniaPolandFinlandSwedenNorway

Shar

e of

tot

al e

mpl

oym

ent

EMPLOYMENT IN KNOWLEDGE-INTENSIVE SERVICE SECTORS, SHARE OF TOTAL EMPLOYMENT IN SOME BALTIC SEA COUNTRIES, YEARS 1997-2008 (EUROSTAT 2013)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

10

20

30

40

50

60

Employment in knowledge-intensive service sectors, share of total employment in some Baltic Sea countries, years 1997-

2008

EU (27 countries)DenmarkGermanyEstoniaLatviaLithuaniaPolandFinlandSwedenNorway

Shar

e of

tot

al e

mpl

oym

ent,

%

RESEARCH AND DEVELOPMENT EXPENDITURE, BY SECTORS OF PERFORMANCE, % OF GDP (EUROSTAT 2013)

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Akse

lin o

tsik

ko

Research and development expenditure, by sectors of performance, % of GDP

EU (28 countries)

EU (27 countries)

Euro area (17 countries)

Denmark

Germany

Estonia

Latvia

Lithuania

Poland

Finland

Sweden

Norway

CO2 EMISSIONS IN GERMANY, IN POLAND AND IN THE RUSSIAN FED., YEARS 1992-2009

1992199319941995199619971998199920002001200220032004200520062007200820090

500000

1000000

1500000

2000000

2500000

CO2 emissions in Germany, Poland and Russian Fed., years 1992-2009

GermanyPolandRussia

Axis Title

CO2 EMISSIONS (TONS) IN BALTIC SEA COUNTRIES, YEARS 1992-2009

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

CO2 emissions (tons) in Baltic Sea countries, 1992-2009

BelarusDenmarkEstoniaFinlandLatviaNorwayLithuaniaSweden

CO2

emis

sion

s (t

n)

GROSS DOMESTIC EXPENDITURE ON R&D IN SOME BALTIC SEA COUNTRIES, YEARS 1981-2010

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

Gross Domestic Expenditure on R&D - GERD (mil-lion current PPP $) in some Baltic Sea Countries,

years 1981-2010 (Source: OECD 2013)

DenmarkEstoniaFinlandGermanyNorwayPolandSweden

Mill

ion

curr

ent

PPP

$)

VENTURE CAPITAL INVESTMENTS, % OF GDP IN SOME BALTIC SEA COUNTRIES, YEARS 2007-2012 (EUROSTAT 2013)

2007 2008 2009 2010 2011 20120

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

Venture capital investments, % of GDP in some Baltic Sea countries, years 2007-2012

EU (27 countries)DenmarkGermanyPolandFinlandSwedenNorway%

of

GD

P

GROSS DOMESTIC EXPENDITURE ON R&D - GERD (MILLION CURRENT PPP $) IN EU-28, EU-15, USA, JAPAN, CHINA, RUSSIA AND SOUTH AFRICA

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

Gross Domestic Expenditure on R&D - GERD (million current PPP $) in EU-28, EU-15, USA, Japan, China,

Russia and South Africa

EU-28EU-15USAJapanChinaRussiaSouth Africa

Mill

ion

curr

ent

PPP

$

SOME POLICY RECOMMENDATIONS

• Co-operation in the field of the development of social innovations (education, employment and job creation) is a challenging issue in the Baltic Sea region: more strategic co-operation is needed among BS partners

• More productive use of innovation and R&D allocations are needed in near future

• Baltic Sea countries should position themselves more systematically and aggresively in the global trade arena

• The Baltic Sea countries are key players in the EU´s innovation policy arene: they should get more attention inside in the R&D/innovation field the European Union

• Green Growth challenge is a shared challenge in the Baltic Sea countries: Green Growth Knowledge Platform needs more political attention in the Baltic Sea co-operation

THANK YOU!

Research Director, Adjunct Prof. Jari Kaivo-ojaFinland Futures Research Centre, Turku School of EconomicsEmail: jari.kaivo-oja@utu.fiWeb: http://www.utu.fi/en/units/ffrc/Pages/home.aspxTel. +358-(2) 333 9832, +358-(41) 753 0244