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AIRR regions and Finland: approaches and practices of innovation management

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05 March2024
AIRR regions and Finland: approaches and practices of innovation management

The Association of Innovative Regions of Russia (AIRR), within the framework of the “Hour with the Trade Representative” format, organized an online meeting of representatives of the constituent entities of the Association with the acting trade representative of the Russian Federation in Finland, Evgeny Rubinchik.

Evgeny Rubinchik told the meeting participants about the new realities of business relations between the two countries - the impact of EU restrictive measures, trends in the Finnish economy, the interests of Finnish and Russian exporters, as well as the efforts that the Trade Mission of the Russian Federation in Finland is making to maintain and develop trade relations between our countries.

Despite anti-Russian sanctions, businesses in both countries continue to look for ways to minimize the negative impact of restrictions on bilateral cooperation. The Trade Mission of the Russian Federation in Finland fully contributes to this, supporting existing connections and helping in the search for new points of development and new joint projects.

The Trade Mission of the Russian Federation reflected the current economic situation in Finland with objective indicators, including GDP dynamics (for 2023, a decline of 1%), figures indicating a decline in retail trade, a decline in consumer confidence, a decline in indicators in various industrial sectors, which affects prospects for technological development in general. Finnish innovative technology companies began to receive fewer orders, with the value of new orders falling by 19% in the last quarter of 2023 compared to the same period in 2022.

Evgeniy Rubinchik also noted a decrease in interest from Russian exporters due to the large number of barriers that they have to overcome.

“According to the Finnish Customs Service, trade turnover in the country has fallen - both export and import components. This is mainly due to the reduction in trade with Russia - at the end of 2023, Russian-Finnish trade turnover decreased by 4 times, that is, by 75%,” said Evgeniy Rubinchik.

According to Trade Representation estimates, in 2023 there were still 300-400 active Finnish companies in Russia. The leadership in their placement is in Moscow and St. Petersburg.

“Many Finnish companies continue to work in the Russian Federation, build business, some are switching to Russian raw materials, since supplies from Finland are difficult. These include high-tech companies,” explains Mr. Rubinchik. “At the request of the regions, we can advise on how to optimize trade turnover with Finland, which companies still have export and import potential.”

Using the example of cooperation between the Samara Region and the Perm Territory with Finland, the trade representative demonstrated to the meeting participants the indicators of import and export in various industries.

During the meeting, participants were told about the features of the development of the national innovation system of Finland. In the global innovation ranking for 2023, Finland ranks 6th among 132 countries, and it ranks 4th among 39 European economies. The ranking is based on more than 80 indicators, and for some of them, in particular innovation infrastructure, Finland ranks first in innovation infrastructure, which is undoubtedly a great achievement. There is a lag in certain parameters, for example, the greatest problems are with productivity growth in the innovation sector and with personnel training.

Finland was ranked third in the European Innovation Index 2023. Among the advantages, researchers highlight a well-functioning R&D system, a high level of R&D costs, a strong knowledge base in a number of specializations, and others. Disadvantages include the lack of sustainable financing, a growing shortage of qualified personnel, and others.

The country's innovation policy is formed by the Ministry of Economic Affairs and Employment of Finland, then, within the framework of this innovation policy, the Parliamentary Working Group on R&D forms goals and objectives, and the implementation of the policy is carried out by the Finnish Research and Innovation Council. This is the superstructure over the system that manages the innovation block. Funding for innovative development is provided through four institutions, including the Academy of Finland, which is responsible for distributing the research budget among universities. Business Finland serves as a bridge between innovation and economics, between research, trade and investment. The main funding is directed to the IT, electronics, research in the field of engineering and technology. The Centers for Economic Development, Transport and the Environment (ELY) serve as the government's focal points for regional policy implementation. The Strategic Research Council (STN) deals with specific problems that require an interdisciplinary approach and funds university research.

R&D spending in Finland has fallen over the past decade, but there are plans for a significant increase in government funding. So, by 2030 it should increase by 40%.

An important issue for foreign trade participants is the issue of logistics. Currently, of the three previously available supply routes to Finland - rail, road and water transport - only railway transportation and sea transportation remain. The automobile border has not been operational since the end of last year. However, business is coping with the challenges of the time, and the Trade Mission provides full support in this. The trade mission, together with the Russian Embassy in Finland, provides assistance in obtaining special permits for the import of goods subject to restrictions and the return of the advance payment. In addition, the Trade Mission helps in interaction with customs authorities, as an example, the release of equipment detained at Finnish customs. On an ongoing basis, the Trade Mission provides information and consulting support to Russian companies that own railway cars detained in Finland - it assists in establishing contacts between carriers and regulatory authorities (the legal department of the Ministry of Foreign Affairs, bailiffs, customs).

The trade mission has also taken a number of measures aimed at minimizing the negative impact of an unfavorable business environment on the activities of Russian foreign trade participants in Finland, in particular, creating platforms for discussions and exchange of experience on problematic issues.

“The meeting of representatives of 18 subjects of the AIRR with the Trade Mission of the Russian Federation in Finland became the first event on the international agenda of the Association in 2024. The event allowed the regions to receive up-to-date information about the features of the country’s national innovation system, which is among the top ten leading countries in the Global Innovation Index 2023, as well as to discuss tools for supporting R&D, approaches to educational activities, large-scale infrastructure and high-tech projects. The work of AIRR with foreign trade missions of the Russian Federation in order to exchange best practices in the field of innovation management and promote the economic and investment potential of AIRR participating regions will continue,” - Head of the international direction of AIRR Elena Chernova.

As a result of the meeting, a “Business Guide” was sent to the regions, containing economic indicators, legal features of doing business, features of investment activities in Finland, as well as detailed recommendations for participants in cross-border trade with contact details of Russian institutions and organizations.

Download "Business Guide"

You can follow the economic agenda of the Trade Mission of the Russian Federation in Finland on the telegram channel - https://t.me/rusfintrade