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References 1. Coelli, T. J., Prasada Rao, D. S., O’Donnell, C. J., Battese, G. E. (2005) An Introduction to Efficiency and Productivity Analysis. New York: Springer Science, 349. 2. Dhanani, S., Scholtès, P. (2002) Thailand’s Manufacturing Competitiveness: Promoting Technology, Productivity and Linkages. UNIDO SME Technical Working Paper Series 8, 94. 3. Directorate-General of the Commission, Eurostat. [http://epp. eurostat.ec. europa.eu/portal/page/portal/eurostat/home/]. 28.12.2012. 4. Galarneau, D., Maynard, J.-P. (1995) “Measuring Productivity,” Statistics Canada, Catalogue 75-001E, 26–32. 5. Krugman, P. (1994) “Competitiveness: A Dangerous Obsession,” Foreign Affairs, March/April. 6. Mereste, U. (2003) Majandusleksikon. 2. osa. Tallinn: Estonian Encyclopaedia Publishers Ltd. 7. Mertsina, T., Jänes, T. (2012). “Tööjõu ühikukulu majanduse konkurentsivõime näitajana,” Statistics Estonian Quarterly Newsletter, 4/12, 43–47 8. OECD (2001) “Measuring Productivity,” OECD Manual. Paris: OECD Publishing. 9. OECD (2007) Glossary of Statistical Terms. OECD Publishing. 10. OECD (2013) OECD Factbook 2013: Economic, Environmental and Social Statistics. OECD Publishing. 11. OECD (2006) OECD Compendium of Productivity Indicators. Paris: OECD Publishing 12. Quesnay, F. (1766) “Analyse de la formule arithme´tique du tableau e´conomique de la distribution des de´penses annuelles d’une nation agricole,” Journal de l’Agriculture, du Commerce & des Finances, 11–41. 13. Sinn, H.W.(2002) “The New Systems Competition,” NBER Working Papers 8747, National Bureau of Economic Research, Inc. 14. Syverson, C. (2011) “What Determines Productivity?” Journal of Economic Literature Vol. 49, No.2, 326–365. 15. Tamm, D. (2005). Tööjõu erikulu seos Eesti töötleva tööstuse ekspordivõimega. Eesti ettevõtluse perspektiivid Euroopa Liidus: III teadus- ja koolituskonverents; Pärnu, Eesti; 28-29. January 2005. Tallinn, Pärnu: Mattimar, 2005, 211 - 223. 16. Tangen, P. (2005) International Journal of Productivity and Performance Management, Vol. 54, No. 1, 34–46 180 Estonian Human Development Report 2012/2013
4.5 Innovation Erik Terk, Katrin Männik, Silja Lassur The innovation capability of economies, societies and states, and the realisation of this capability become extremely important, especially at certain stages of development. Literature has traditionally dealt, primarily, with how the enterprises in a par¬ticular country are able to update their products and technologies, to move up in the value chain thereby enabling them to demand higher prices and how countries succeed in establishing new cutting-edge industrial sectors. However, in addition to product and technology innovations, attention has recently increasingly been directed at innovations in marketing, organisation, companies’ foreign contacts and other non-technological innovations. In the broader context, innovations in governance, lifestyles, i.e. social innovation in general, has become a special topic for research. All these aspects of innovation are interconnected, and together they form a complicated innovation pattern in a specific country. In order to support innovation, states develop innovation policies and improve national systems for innovation. The latter is understood to mean the networks of public and private sector organisations that initiate, import, adapt and disseminate new technologies and other innovative solutions. Attention is focused on the knowledge, technology and information flows between companies and other organisations (universities, research institutions, etc.), but also between the companies themselves (Freeman 1995; Rothwell 2002). It is the quality of the functioning of complex cooperation networks that creates the bases for the rising innovativeness of the country. We observe the necessary preconditions for innovation process, how the innovation potential emerging in the country due to the preconditions raises the country’s competitiveness, which in its turn will be realised in economic growth and other development indicators. We shall describe how different countries attempt to make the aforementioned chain function properly by using innovation and economic policy measures. Firstly, we examine the innovation-related rankings of states and ascertain the positions of Estonia and its reference states. We describe the specifics of innovation potential in the states, the situation related to the individual elements, and generalise these results at the level of regional groups of countries. This allows us to better understand the context in which innovation capability develops and is realised. We compare Estonia’s “innovation pattern” with the innovation patterns of the other Central and Eastern European (CEE) countries, as well as states in other regions of the world, and ascertain how innovation capability is linked to a state’s competiveness. Thereafter, we examine the most important changes in the states’ innovation policies during the last few years, as well as describe and generalise them, and try to draw some conclusions for Estonia. 4.5.1 The innovation rankings of states Measuring innovation potential of the country or results of innovation is quite complicated. Different methods have been developed for this, and their results diverge somewhat. In the current case, we rely primarily on two methodologies; the first was developed by the World Economic Forum (WEF), and is used to measure the general competiveness of states. The second, the methodology of the European Innovation Scoreboard, is used by the European Commission. Unfortunately, the latter has been used in non-EU countries only in rare cases. The European Commission’s (EC) use more than 40 parameters to measure the state of innovation. The parameters are not limited to ones related to innovation potential (the scientific potential of the country, investments in research and development [hereinafter R&D], in-house research in companies, access to venture capital, etc.), but also reflect the use of innovation potential and the achieved results. The number of different types of innovations implemented by the companies in the period under observation is measured; the percentage of the population working in knowledge-based fields of activity, etc. Labour’s education-related indicators are also dealt with as a precondition for innovation. The World Economic Forum’s (WEF’s) index of innovation is comprised of seven relevant yardsticks of innovation, which are directed at the measurement of innovation potential. However, the index deals with it in a relatively restricted manner, by focusing primarily on the technological and financing aspects of innovation, and the relations of companies with universities and research organisations. However, since the WEF method examines innovation in the context of competitiveness as a whole (see sub-chapter 4.1), this method enables the innovation index and its components to be compared to other, closely related indicators of competitiveness. Often, the innovation indicators obtained by using the WEF’s method are examined together with the indicators for business sophistication. In the ranking of innovation capacity, based on the WEF’s methodology, Estonia, along with the more capable Central and Eastern European states, is positioned at the beginning of the 40s in the World. According to this assessment, we are ranked somewhat ahead of Slovenia and the Czech Republic. But closer analysis shows that the difference is marginal, and is probably based on the technical nuances of the methodology. The gap between Estonia and the top ten in the World is relatively large. In the following comparison of the innovation- related rankings of the EU Member States, based on the two aforementioned methods, no great differences can be found in regard to Estonia or most of the other states. The exception Estonian Human Development Report 2012/2013 181
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ESTONIAN HUMAN DEVELOPMENT REPORT 2
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Table of Contents 1 Human Capital /
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Dear Reader Since the moment when E
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1Human Capital Estonian Human Devel
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the HDI’s content has also been h
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Figure 1.1.1 The human development
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Figure 1.1.7 The income sub-index:
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The results of the Princeton Projec
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the hypothetical generation. The to
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Figure 1.2.3 Life expectancy. Eston
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Table 1.2.2 also presents the most
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The new trends that are appearing i
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Figure 1.2.8 Components of populati
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New features were introduced into E
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Initiation of Voluntary Birth Contr
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Table 1.3.1 Best-known educational
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(OECD 2012b). Therefore a certain r
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The reciprocal dependence of the pr
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Figure 1.3.8 Percentage of students
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Table 1.3.4 The quality of educatio
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1.4 Health Raul-Allan Kiivet Change
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Table 1.4.1 Usage of prescription m
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allude to the fact that approximate
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promote healthy lifestyles among th
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Figure 1.5.1 The World Values Surve
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Table 1.5.2 Estonia’s participati
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Figure 1.5.3 The percentage of the
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Figure 1.5.5 Percentage of the Esto
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The fact that Estonia’s position
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Summary Mati Heidmets The global vi
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2People and Society Estonian Human
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Table 2.1.1 Structure of the Bertel
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tioning market economies (15 states
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2.2 Freedom and democracy Martin M
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Table 2.2.1 Democracy indicators Po
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Figure 2.2.2 The distribution of th
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would be something that none of the
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political participation are general
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strongest, while a very small perce
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is concerned, Estonia is one of the
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Figure 2.4.2 Average circulation of
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2.5 Corruption Jüri Saar In accord
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Lithuania, 61%; and in Russia, 69%.
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2.6.2 Intentional homicides in Esto
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crime. And thirdly, there was a wis
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References 1. Ahven, A. & Tabur, L.
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states included in the EU Kids Onli
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2.8 Public assessments of the state
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Figure 2.8.4 Changes releated to tr
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of the state’s development are en
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Table 2.9.1 The positions of Estoni
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3. IEP (2011). Structures of Peace.
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3Welfare and the Quality of Life Es
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choices made, not what people say t
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Figure 3.1.5 Public social spending
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tion agreed upon the social contrac
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References 1. Aidukaite, J. (2006).
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hand, to the “inequality of acces
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and explanations of the extent of i
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5- much more than I deserve. Some d
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people in Estonia consider the inco
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Table 3.3.1 Experienced Well-Being
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at about 70%. In Latvia and Lithuan
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sign. It seems that the usual view
Page 131 and 132: 3.4 Quality of life Anu Toots 3.4.1
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Page 135 and 136: 3.4.6 The components of life qualit
Page 137 and 138: Figure 3.4.4c Perceived quality of
Page 139 and 140: Figure 3.4.5 Changes in the depriva
Page 141 and 142: 3.5 Environment dimension of well-b
Page 143 and 144: Figure 3.5.1.b Estonia’s position
Page 145 and 146: 3.5.4 Energy intensity The energy i
Page 147 and 148: productivity, which is defined as t
Page 149 and 150: perceive themselves as worse off th
Page 151 and 152: 4The Economy Estonian Human Develop
Page 153 and 154: vide a valuable connection for maki
Page 155 and 156: Figure 4.1.3 Components of economic
Page 157 and 158: ule of law, the sub-indicators for
Page 159 and 160: References 1. Acemoglu, D.; Robinso
Page 161 and 162: Development Report employs generali
Page 163 and 164: and pasture land, and this was capi
Page 165 and 166: Basing the total and net savings re
Page 167 and 168: 4.3 Labour market Reelika Leetmaa,
Page 169 and 170: The problems include the very limit
Page 171 and 172: • Expenditures for active labour
Page 173 and 174: who lose their jobs. These ensure i
Page 175 and 176: 4.4 Productivity and the economic s
Page 177 and 178: labour costs at the company level r
Page 179 and 180: Table 4.4.4 Comparison of the produ
Page 181: Figure 4.4.1 Annual average increas
Page 185 and 186: Table 4.5.2 Comparison of innovatio
Page 187 and 188: Table 4.5.4 Comparison of the indic
Page 189 and 190: in order to make the R&D potential
Page 191 and 192: It is characteristic of the South K
Page 193 and 194: mechanisms for increasing their sta
Page 195 and 196: Globalisation and Policy Patterns 5
Page 197 and 198: When Estonia regained its independe
Page 199 and 200: 5.2 The impacts of globalisation an
Page 201 and 202: Table 5.2.2 Support of the differen
Page 203 and 204: 5.3 Development policies Erik Terk,
Page 205 and 206: • C -the “Estonia-centred” su
Page 207 and 208: Figure 5.4.1 Support for the possib
Page 209: Summary Erik Terk Estonia is part o
Page 212 and 213: ehavioural patterns. Therefore, it
Page 214 and 215: EDR 2012/2013 authors Clemens Buche
Page 216 and 217: EDR 2012/2013 authors Alari Purju i
Page 218: Editor-in-Chief: Mati Heidmets Prod
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