DEVELOPMENT

• The high relative importance of foreign capital,
along with a good position in the value chain, and
the appropriation of complex production functions
– Singapore and Ireland. It’s true that, in the case
of Ireland, the state has a sufficiently attractive
environment and resources for business activities
throughout the entire value chain, but these activities
are controlled, to a great extent, by foreign
companies that have not been especially willing to
involve local suppliers in their activities.
• The high relative importance of foreign capital, with
middling success in regard to positioning in the
value chain, and the appropriation of complex production
processes – the Czech Republic and Costa
Rica. In some sense, the Czech Republic can be
compared to Ireland, whereas in the Czech Republic,
the cooperation between the foreign enterprises
and locals seems to be stronger; and the quantity
and quality of the local suppliers is assessed to be
good as a development factor.
• The high relative importance of foreign capital,
with little success related to positioning in the value
chain, and the appropriation of complex production
processes – Hungary, Estonia, and Uruguay.
It is difficult to place Slovakia in this classification, since
its position in the value chain is poor, while it has been
able to appropriate production that is quite complex.
The conclusion is -- even with an economic policy
that is strongly supported by foreign investments, it is possible
to achieve quite a good position in the international
value chains. To achieve this, well-considered and selective
policies are required for attracting foreign investors and
dealing with them. Singapore and Ireland have been able
to follow this path. While Estonia has invested in the general
economic environment, it has not been able to create
the levers for getting foreign-owned companies not only
to utilise the local economic environment, but also to help
the Estonian economy to rise to a higher qualitative level.
4.5.5
The dynamic of recent years
The above has described the current situation of the indicators
for innovation and the closely connected business
sophistication in various groups of countries. Undoubtedly,
the dynamics of these indicators is also of interest.
Unfortunately, it is difficult to find the corresponding
comparative indicators for states outside of Europe for a
longer time period. Based on WEF materials, it is possible
to compare the indicators and positions of the states that
interest us, from 2005 to 2007, and for 2012. This time
period is quite short, but some generalisations can be
made nevertheless.
During the period under observation, as a whole,
the group with developed economies, in Europe, or
with European backgrounds, tended to strengthen its
position in the indicators for both innovation and business
sophistication. The indicators for the Netherlands
underwent a great improvement during this period, and
the positions of Switzerland, Austria and Finland also
increased somewhat, in the corresponding rankings.
The Asian countries had already secured high
places in the rankings prior to 2005. Taiwan, which,
during the last period, dealt mostly with transferring its
high tech production to mainland China, declined in the
rankings. Singapore improved somewhat, and the remainder
maintained their positions.
The group of Latin American countries, with not
very enviable positions in the rankings for innovation and
business sophistication, did not worsen or improve their
rankings, during the period under observation.
Unfortunately, we have to recognise that the relevant
positions of the CEE countries did not improve
between 2005 and 2012, but rather worsened. The
greatest reversal was suffered by Slovakia. Estonia
maintained, approximately, the same position in the
innovation ranking, but the positions of all the other
CEE countries declined. In the business sophistication
ranking, between 2005 and 2012, the positions of all the
CEE countries, including Estonia, declined. The extent
to which the impact of the international economic crisis
was at play here, and to what extent, some other factors
were involved needs to be clarified by a more detailed
analysis. In any case, the worsening of one’s position in
international business networks is a very serious negative
trend, and impairs the movement toward innovation
in the future, especially in regard to high tech innovation
(see Reid, Varblane et al. 2011, p. 96).
4.5.6
New focal points in innovation policy
The innovation policies of the various states have developed
over a long period of time, and are, generally, quite
stable. Currently, the catalogues of policy measures in use
by various states tend to overlap to a great degree. It is
also clear that the focal points based thereon are dependent
on each state’s level of development, its specific status
as well as traditions. The emphasis, in each case, may
depend on whether having the state actively intervene in
the economy and the modernisation of business is acceptable;
on the various efforts that are made to utilise the
potential of universities and research institutions for innovation;
but also on whether the emphasis is on making
the most out of the strengths of the innovation system, or
rather, on trying to reduce its weaknesses. The situation
was changed considerably by the recent international economic
crisis and its aftermath, which, on the one hand,
made it more difficult for states to find resources for R&D
investments, and on the other hand, increased the motivation
to make innovation policies more effective, and to
direct them at the rapid achievement of clear economic
and employment-related results (Funding... 2010–2012;
Innovation policy 2012, p. 1). How this was achieved
depends on the specific state (see the country overviews).
Generalising the developments, the following changes in
course can be highlighted:
• Attempts to improve the R&D planning and financing
in the state, incl. rationalising the provision of
research grants from the public sector to companies
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Estonian Human Development Report 2012/2013