Abstract
In recent decades, economists have been increasingly concerned with the role of the public sector in improving public policy for innovation processes; the link between transition of a small country and other factors have not yet been considered in detail. Therefore, we discuss (a) public innovation conditions prevailing in and policy measures available to a small country such as Estonia and (b) which might be effective there. The instruments to promote innovation of private Estonian firms, such as good conditions for entrepreneurs, taxation conditions, financial aid, and so on, are assigned to strategy (1); additional instruments, such as public demand, public procurement, and so on, are related to strategy (2), whereas sales of public property and participation in ownership to assist innovative firms are due to strategy (3). Private and public innovations concern the innovative activities of public enterprises according to strategy (4) and that of strategy (5), dealing with public research and the supply of infrastructure services. Public sector-oriented innovation refer to strategies (6) concerning education and (7) infrastructure, and strategy (8) referring to legislation and public management. The reform policies in strategy (9) are completely oriented to public sector innovation pointing to functional and territorial reforms, intergovernmental fiscal relations and similar policy measures.
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Notes
- 1.
Cheap, manual-skilled labor in these countries hosts a variety of simple mass production assembly plants.
- 2.
However, these phases now overlap, due partly to the rapid integration of the world market, international business, foreign direct investment as well as technology transfer. The “innovation-imitation lag” (UNCTAD 1995) between advanced countries has been significantly reduced thanks mainly to the flexibility and divisibility in production technology, a rapid accumulation of capital and the learning process.
- 3.
By consulting, PPP intermediary organizations such as spin-offs, encourage innovation in private firms. Partly they work together with 40 private research institutions in Estonia. Colleges (e.g., Pärnu, Narva) also support organizational solutions, management activities, and product development in private firms.
- 4.
State research funds are given to the Eesti Teadusfond(Estonian Science Foundation). The Estonian Science Foundation distributes scientific grants to individuals and research groups through competition. The objective of the Estonian Science Foundation is to support high-quality scientific research, new ideas, and research as well as degree studies (Estonian Science Foundation 2010). However, many financial means are targeted to public research institutions or intermediary institutions that consist of spin offs from university foundations and development centers.
- 5.
Sometimes the privatizer has to buy private entities and to sell them to achieve a farm size that is able to afford innovative investment.
- 6.
Non-used schoolhouses, former manor houses, industrial ruins, rotten houses, etc., can be sold to firms at low market prices considering investment and innovation conditions. With this policy the country size is less limiting. It attracts firms, farmers, or experts for some sectors. New inhabitants that might have highly welcomed results.
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This chapter is written with the support of the Ministry of Education and research foundation project No. SF0180037s08 “The path dependent model of the innovation system: development and implementation in the case of a small country.”
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Friedrich, P., Reiljan, J., Paltser, I. (2012). Policy Suggestions for Integrated Public Innovation Policies in a Small Country. In: Carayannis, E., Varblane, U., Roolaht, T. (eds) Innovation Systems in Small Catching-Up Economies. Innovation, Technology, and Knowledge Management, vol 15. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-1548-0_18
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