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Silicon Valley and Finland 69The state has also encouraged a culture of innovation through its policy of anopen regulatory environment. The Finnish state actively pushed the Finnishmobile telecommunications companies to develop an open transnationalmobile phone network (first NMT, then GSM). From the beginning, the statealso maintained an open market so that, unlike in most other countries, theequipment manufacturers had to compete with each other, which resulted infast, competitive development. The state also liberalized mobile service provisionearlier than other countries and thus also created rapid, competitive developmentin mobile phone services.Although the state has played an active role, it has not led all the developments.Rather, the Science and Technology Policy Council, which consists oftop representatives from government, industry, labor, and the university world,represents a wider Finnish view of technology needs and is thus also the visionof industry. For example, pressure from industry in the Council is also behindthe growth of human talent in Finnish universities, and the close cooperationbetween business and the universities is at a higher level than the average forthe advanced economies. In this way, information about new areas of innovationflows both ways, as well as the work and teaching talent.Business is also the primary financier of innovation. In fact, businessinvestment in R&D has grown even faster than investment by the state basedon its own interests. Thus, the share of national R&D investment by the businesssector is more than 70 percent, which is slightly more than in the “business-driven”United States. After the initial public push, the capital needed tofinance the turning of innovations into products has come almost entirely fromwithin companies and from private venture capitalists, which comprise 85percent of Finnish venture capital investments.Of course, ultimately, innovation turns into business through an entrepreneurialculture, which is the final element to be added to the Finnish field ofinnovation. Entrepreneurialism includes both start-up entrepreneurialism andthe entrepreneurial spirit within a large company, as was witnessed in Nokia’srise from the brink of bankruptcy in the early 1990s. In Finland, the latter formof entrepreneurialism has been especially strong as we shall see.However, the real core of the Finnish model is a virtuous circle between thewelfare state and the information economy. The welfare state produces highlyskilled people to continue to create growth in business and this growth makesit possible to continue to finance the welfare state, as well as the state and businessinvestment in innovation. Another way of putting this is to say that thewelfare state contributes a sustainable basis for growth (as shown in figure2.9), both in an economic and in a social sense: the welfare state makes developmentsocially more inclusive, and, as people feel more protected, they aremore ready for the social restructuring that the information economy requires.Inclusion generates trust, which is ultimately the main requirement for the