Transforming the Role of Public Policies for Innovation: The Role of Institutional Foundations in Finland as a Nordic State

Abstract

One of the trends in “growth strategies” in advanced countries since the beginning of the twenty-first century has been to emphasize innovations in areas where services and infrastructures are provided largely by the public sector. The Japanese “new growth strategy,” established in 2010, is a typical example, in which both “green innovation” and “life innovation” were at the core of the strategy. In line with this trend, Boyer (2004) argued that economic growth in advanced economies will be generated by human-related services rather than the production of durable goods, as in the postwar period. His argument was based on the consumption expenditure record in the United States, which showed the salient increase in expenditure on interpersonal services, in contrast with the almost unchanged expenditure on durable consumer goods. If his argument is correct, then the main locus of innovation in advanced countries will be human-related services. Because a large part of human-related services are provided by the public sector, innovation policies may require novel approaches, partly because diverse sociopolitical factors such as regulations, institutions, political processes, and even cultural norms affect innovations in human-related services. As we will see in this paper, the European Union, and particularly Northern European countries, has been quite active in implementing novel approaches to innovation policies.