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The profile and relevance of the Bothnian Arc cross-border area for innovation

The Bothnian Arc gathers the most relevant areas in Northern Finland and Sweden for innovation potential, anchored by the two cities of Oulu and Lulea, respectively. The region is seeking to diversify from the traditional mining, forestry and metal sectors, and reduce dependence on the large companies. The “Oulu exception” - a high-tech hub - provides credibility to the possibility of “success in the north”, contributing to the stronger innovation performance on the Finnish side that has nevertheless been challenged by Nokia’s downsizing. The arrival of Facebook in Lulea may signal new opportunities on the Swedish side. The knowledge potential linked to universities, applied research institutes and governmental research centres, as well as the presence of R&D- intensive companies in new sectors, provides a great opportunity to deepen this diversification process and maintain attractiveness and a skilled labour force.

Table 4.1. Socio-economic overview: Bothnian Arc cross-border area

Variable

Bothnian Arc

Finland area

Sweden area

Population (2011)

710 000

460 000

250 000

Surface (km2)

55 000

29 000

26 000

Population density (inhabitants/kmP)

12.9

15.8

9.6

Main cities

137 000 (Oulu)

74 426 (Lulea)

Unemployment rate (2011)

7.0

8.3

4.0

GDP per capita (2009)

(USD PPP constant prices 2005)

--

Pohjois-Suomi 25 264 Finland 30 574

Ovre Norrland 28 474 Sweden 32 322

Sources: OECD (2013), OECD Regional Statistics (database), http://dx.doi.org/10.1787/region-data-en; Launonen, M., K. Launonen, H. Sundvall and M. Lindqvist (2013), “Background report for OECD study on cross-border regional innovation policies: Bothnian Arc”, Bothnian Arc, January.

Table 4.2. Strengths, weaknesses, opportunities and threats for cross-border innovation policy: Bothnian Arc

Strengths and assets

Weaknesses and barriers

  • - Strong innovation assets and performance
  • - “Oulu miracle” supporting the attractiveness of the area
  • - Existing experimentations on joint projects to feed the cross-border innovation agenda
  • - Important mobilisation of main higher education institutions around cross-border research and innovation
  • - Climate of trust favourable for co-operation
  • - Common areas of specialisation and opportunities for complementary expertise (example of ICT and big data, reinforced by the new Facebook data centre in Lulea and the ICT cluster in Oulu)
  • - Geographical scale and accessibility issues within the area
  • - Distance from large urban centres
  • - Lack of information for actors on innovation potential over the border
  • - Mainly driven by local authorities with limited innovation policy instruments
  • - Insufficient involvement of firms in developing the cross-border vision and financing its actions
  • - Lack of data to understand the potential and barriers for cross-border co-operation

Opportunities

Threats

  • - I ncreasing geostrategic importance of the location given global warming
  • - Developing an internationally recognised brand as the technology hub of the north
  • - Raising awareness and funding from regional and national sources not currently involved in the cross-border efforts
  • - Greater attractiveness of other national and international locations for high-skilled talent
  • - Mature industries unable to upgrade quickly enough
  • - Declining relative competitiveness of high-tech sectors

The area cannot yet be considered functional with respect to innovation policy, but has clear potential. There is a lack of evidence on cross-border flows beyond border crossings at Haparanda-Tornio. Anecdotal evidence points towards some cross-border linkages in the higher education and business worlds, but there is no measure of the density and relative strengths of these links. While geographical, regulatory and cultural barriers do exist within the area, they do not seem to constitute insurmountable obstacles. Internal accessibility remains a challenge for reaping the benefits of proximity.

Table 4.3. Innovation overview: Bothnian Arc

Variable

Finland

Pohjois- Suomi (FIN)

Ovre

Norrland

(SWE)

Sweden

OECD peer average: Knowledge and tech hubs

OECD peer average: Service and natural resource in knowledgeintensive countries

Tertiary educational attainment (2008) (as a % of labour force)

40.0

32.2

28.5

34.2

30.8

29.8

R&D personnel (2009)

(as a % of total employment)

3.3

3.7

2.7

2.6

2.7

2.0

Share of employment in high-tech manufacturing (2008) (%)

39.9

26.2

37.6

42.9

49.2

32.4

Share of employment in knowledgeintensive services (2008) (%)

58.5

60.0

64.6

62.8

56.7

57.6

Total R&D expenditure as a % of GDP (2009)

3.78

6.58

2.82

3.37

3.91

1.79

Business R&D expenditure as a % of GDP (2009)

2.81

5.31

0.67

2.53

--

--

Share of R&D by private sector (%)

74

80

23

75

--

--

PCT patents per million inhabitants (2008-10 average)

281

251

159

310

260

103

Note: Peer regions’ average: average of the clusters “Knowledge and technology hubs” and “Service and natural resources in knowledge-intensive countries”. For further information see Ajmone Marsan and Maguire (2011). Data are missing for Canada and Korea for tertiary education attainment; some data are missing for Korean and some US regions for HTM/KIS. Data are missing for France for R&D personnel.

Source: Eurostat; OECD (2013), OECD Regional Statistics (database), http://dx.doi.org/10.1787/region-data-en.

Table 4.4. Snapshot of the functional region for innovation: Bothnian Arc

(Bothnian Arc in bold)

Characteristic

Specification

Comments

Region settlement patterns

Metropolitan area Network of small and medium-sized cities Sparsely populated with small cites/towns

The Bothnian Arc is composed of predominantly rural areas, with two main medium/small cities: Oulu (Finland) and Lulea (Sweden).

Internal accessibility and flows

Strong

Moderate

Weak

The Bothnian Arc region spans over a large territorial scale with limited infrastructure connections (the main cities are more than 3 hours away by motorway, 800 kilometres from tip to tip).

Industrial and knowledge specialisations

Similar with complementarities Same Different

Both sides of the border are specialised in the following sectors: forestry/wood and pulp, mining and ICT. There are opportunities to seek complementarities in these fields.

Socio-cultural context

Very similar

Somewhat similar

Different

Cultural and language barriers seem limited on both sides, but increase with distance from the border. Swedish is an official language in Finland, even if it is not spoken by everyone.

Innovation system interactions

Pervasive

Hub-to-hub

On the border

Some business-related interactions occur at the border (Haparanda-Tornio). The main potential for innovation linkages is between the two main cities of Lulea and Oulu.

Level of innovation development across border

Balanced, strong Balanced, weak Unbalanced

Both sides of the Bothnian Arc are relatively advanced regions in terms of innovation performance. The Finnish side appears to be slightly more advanced thanks mainly to assets around Oulu.

 
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