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Publicly subsidised RDI funding has a positive impact on regional growth

There is a clear positive association between publicly subsidised RDI funding and regional innovation capacity, a recent study funded by Business Finland shows. Carried out by the University of Eastern Finland and VTT Technical Research Centre of Finland, the research project investigated the association of research, development and innovation funding with regional development. The project also examined the scaling of new solutions created through innovative public procurement, as well as their impact on society and businesses.

According to a study conducted by Professor Teemu Makkonen of the University of Eastern Finland, publicly subsidised RDI funding also has a clear positive association with economic growth.

“However, studies show that in Finland, publicly subsidised RDI funding is geographically unevenly distributed. Major university cities and high-tech clusters tend to do better in the competition for public RDI funding,” Makkonen says.

Support offered during the COVID-19 pandemic evened out regional differences in RDI funding

The positive impact of funding on Finland’s regions was also observed when examining the 900 million euros of development funding allocated by Business Finland for business development in disruptive circumstances during the COVID-19 pandemic. This funding had a significant positive impact on the economic recovery of the regions. The funding allocated during the COVID-19 pandemic also evened out differences in public RDI funding between cities and rural areas.

The study also showed that Business Finland’s RDI funding has clear spillover effects between the regions: not only the region receiving funding, also other regions benefit from the funding received by their neighbour.

Efficient sharing of knowledge on new solutions saves resources in the public sector

Since 2008, Business Finland and its predecessor Tekes have supported some 150 innovative public procurement processes and development projects in procurement management. A study conducted by VTT Senior Scientist Maria Merisalo identified a number of factors that promote or slow down the scaling of new solutions created through innovative public procurement. They relate, for example, to the transfer and development of skills, intellectual property rights, organisational culture for solo development, collaboration and networks, and the identification of common needs, as well as to local and organisational specificities.

“In the public sector, for example, organisational culture for solo development was seen to slow down the opportunities for scaling. Similarly, collaboration and networks were seen to facilitate the spread of solutions between organisations,” Merisalo notes.

The transfer of skills and knowledge between projects and organisations is key to the spread of new solutions in the public sector.

“Lessons learnt from previous projects must be made use of as efficiently as possible when another organisation is procuring a similar solution. Efficient knowledge sharing saves public sector resources.”

Positive business impacts arise when solutions spread within the public sector and from there to the private domestic and international markets. In a best-case scenario, growth in the export market brings economic benefits at the level of society. Growth emerging from new solutions created through public procurement domestically, and the spread of these solutions in the public sector are particularly important when new solutions can solve economic, social, and ecological sustainability challenges in society.

The final seminar of the COSPIN project, Subsidised Collaboration and Innovation Capacity, will be organised as an online event on Friday, 23 September. The event will be held in English and registration is open at: https://www.cospin.fi/final-seminar /

For further information, please contact:

Association of RDI funding and regional development: Professor Teemu Makkonen, University of Eastern Finland, teemu.makkonen (at) uef.fi, tel. +358 50 525 8942

Scaling of new solutions created through innovative public procurement: Senior Scientist Maria Merisalo, VTT, maria.merisalo (at) vtt.fi, tel. +358 40 628 8413

Further information is also available at:  https://www.cospin.fi/outcomes/