Balancing Between Competitiveness and Cohesion in Innovation: The case of the regional innovation policy evolution in Finland

A surge in understanding the importance of innovation as a key competitive asset has in its wake also highlighted the potential to intentionally nurture environments and measures conducive for innovations to emerge and to create economic value, i.e. innovation policy. As innovation activities and needed resources are unevenly distributed to economic space, the possibilities and starting-points for innovation policy also vary between localities. This usually led national and regional policy-making in the beginning to focus on the most obvious and attractive targets of innovation policy: the high technology industries and science and technology-based innovations. During the last decade or so, nevertheless, this narrow focus has made way for a broader focus of policy due to, among other things, increased understanding of innovation and pure necessity of striving to support innovativeness also in environments lacking those highly esteemed industries and prerequisites for them. At the same time, innovation policy has had to take into account the heterogeneous innovation environments and also the social consequences of innovation policy (Lundvall & Borras 1997; Sharp 1998; Howells 2005; Fritsch & Stephan 2005). Finland has built up a reputation for its innovation system and policy. Internationally it is renowned especially for its national achievements. Nevertheless, for almost two decades there have been continuously going on a transformation also in the regional innovation policy that have resulted in a considerable emergence of new structures, institutions and processes aiming at milieus conducive for innovation at the local and regional level. During a relatively short period of time, the Finnish regional innovation policy has gone through numerous changes and its rationale and goals have substantially altered. One of the most fundamental questions relates to the balance between regional competitiveness and cohesion. As stated in this paper, there has been made major efforts to create an innovation system that would enable both these goals to be achieved, but that recent policy-making leaves some doubts whether this sensitive balance would have been put into a secondary position as a goal in favour of national competitiveness. The paper attempts to shed light on the relationship and tension between regional competitiveness and cohesion as undercurrents and continuous cause of controversies in the regional innovation policy. Empirically the paper aims at outlining the main phases of evolution and drivers of develop-ment in the Finnish regional innovation policy. It also discusses the most recent developments from the perspective of regional (and national) competitiveness and cohesion nexus. The paper is organized as follows. In Chapter 2, it is first briefly scrutinized some of those key rea-sons for the importance of the immediate local environment for innovation activities. Next, a defini-tion and role of the regional innovation policy is presented and discussed. Finally, the in-built prob-lems of the regional innovation policy are contemplated that are born out of this policy being essen-tially a synthesis of different policy areas with different rationales. Chapter 3 broadly outlines in the Finnish context the emergence and development of the policies related to the regional innovation policy, and leading to an emergence of it. Chapter 4 concentrates on the developments occurred after the actual formation of the regional innovation policy in the mid-1990s. Both the key institutional changes and the main drivers of these changes are discussed. The last Chapter (5) summarizes the main milestones and outlines the major phases of development, and aim at interpreting and discussing the main findings from the perspective of regional (national) competitiveness and cohesion.