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Helsinki-Tallinn (Finland-Estonia)

Estonia and Finland have centuries of collaboration, mainly between the capital areas of Tallinn and Helsinki that currently account for 2 million inhabitants and USD 76 billion in economic output. The entry of Estonia into the European Union and, since the mid-2000s, a two-hour ferry trip, have both facilitated flows ofpeople and merchandise across the Gulf of Finland. The different levels of development between Helsinki and Tallinn result in many asymmetric flows (workers to Helsinki, tourists to Tallinn). Beyond infrastructure and labour market issues, there are interesting opportunities for joint innovation policy efforts given their shared strengths such as in ICT, a dynamic start-up environment and technologically sophisticated public services. Cross-border collaboration can help build an “entrepreneurial knowledge region” brand.

This chapter is an excerpt of Nauwelaers, C., K. Maguire and G. Ajmone Marsan (2013), “The case of Helsinki-Tallinn (Finland-Estonia) - Regions and Innovation: Collaborating Across Borders”, OECD Regional Development Working Papers, No. 2013/19, OECD Publishing, Paris,

http://dx.doi.org/10.1787/10.1787/5k3xv0lrt1r6-en.

Introduction

Finland and Estonia have experienced centuries of economic and cultural exchanges, which have increased in recent decades thanks to the consecutive accession of the two countries to the European Union (Finland in 1995 and Estonia in 2004). Since regaining independence in 1991, Estonia is keen to develop as a dynamic and vibrant nation, building in part on the success of its northern neighbour across the gulf. Economic exchanges (trade, work, tourism, education, etc.) between the two countries have grown as barriers have been steadily lowered. Factors supporting greater exchange include: improved transport connections (notably a high-speed ferry), lowering of border barriers within the EU, and adoption of the euro (in 2002 for Finland and 2011 for Estonia).

Finland and Estonia share common challenges and opportunities within a larger Baltic Sea context. As small economies, the two countries are aware that they have to create international linkages to succeed in global competition. Fostering proximity linkages with close neighbours is one way to tackle this challenge. Attracting investment to this part of the Baltic Sea region is a benefit for both countries. The progress in Baltic Sea integration (notably through the establishment of the Rail Baltic Network and energy grid connections) as well as the closeness to Russian markets are additional shared opportunities. Two “Wise Men” reports on the bilateral collaboration opportunities (2003 and 2008) were commissioned by the respective Prime Ministers, paving the way for new forms collaboration.

The Helsinki-Tallinn Euregio was established in 1999 as a network, and as a non-profit association in 2003, for exchange between the Finnish and Estonian capital regions. Many subjects have been raised in the cross-border partnership, ranging from connections in Europe, identification of joint problems, academic co-operation, improving the business environment, joint social services and cultural activities, transport infrastructure, etc. A decade after formally establishing the Euregio, it is now time to assess further the potential for developing Helsinki-Tallinn as a knowledge-driven cross-border region.

Figure 6.1. The Helsinki-Tallinn cross-border area

Note: This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries.

Sources: OECD (2013), OECD eXplorer, www.oecd.org/gov/regional-policy/oecdexplorer.htm (accessed 15 October 2013).

Table 6.1. Socio-economic overview: Helsinki-Tallinn

Variable

Helsinki (Uusimaa)

Tallinn (Pohja-Eesti)

Surface (km2)

6 371

4 333

Population (2009)

1 405 974

524 938

Population density (inhabitants/kmP)

222

121

Main cities (population)

Helsinki (600 000)

Tallinn (405 500)

Unemployment rate (2009)

6.19

11.85

GDP per capita (USD PPP, constant prices 2005) (2009)

42 396

25 364

Note: Uusimaa and Pohja-Eesti are the corresponding TL3 regions including the two metropolitan areas of Helsinki and Tallinn respectively.

Sources: Helsinki-Tallinn Euregio (2013), “Background report for OECD study on cross-border regional innovation policies: Helsinki-Tallinn”; OECD (2013), OECD Regional Statistics (database), http://dx.doi.org/10.1787/region-data-en.

Table 6.2. Strengths, weaknesses, opportunities and threats for cross-border innovation policy:

Helsinki-Tallinn

Strengths/assets

Weaknesses/barriers

  • - Strong economic, political and cultural ties
  • - I ncreasing degree of cross-border economic integration through mobility and trade
  • - Joint efforts for twin city and broader regional efforts (for example, the current Helsinki-Tallinn Euregio)
  • - Support organisations working on both sides of the border
  • - Proximity in innovation policy frameworks
  • - Entrepreneurial culture and cross-border initiatives in entrepreneurship
  • - Complementary expertise in ICT applications and, particularly in Estonia, strengths in public e-services
  • - I nnovation culture that goes beyond technology (Nordic design, living labs, the Aalto model, etc.)
  • - Improving geographic accessibility
  • - Both countries have the same currency and EU membership
  • - Unbalanced level of economic and innovation performance between the two sides
  • - Unbalanced trade and mobility linkages (workers to Finland, tourists to Estonia)
  • - Insufficient knowledge of actors and assets on the other side of the border
  • - Differences in public administration culture
  • - Low level of legitimacy and political support of Euregio, risk of losing co-operation momentum
  • - Knowledge-based development a core element of the Helsinki-Tallinn Euregio strategy, but less so with respect to the overall co-operation activity
  • - Constellation of cross-border projects but no overall strategy for innovation support

Opportunities

Threats

  • - Proximity to the Russian Federation and increasing integration within the Baltic Sea region (including the Rail Baltic EU project)
  • -Building on Finnish-Estonia national level co-operation efforts
  • - Increased global co-operation through Finnish-Estonian synergies in innovation strengths
  • - Branding and positioning the cross-border area as a start-up/e-service/open data region in a global context (entrepreneurial knowledge region)
  • - Less global visibility relative to other Nordic innovation hubs
  • - Helsinki-Tallinn as a mere corridor in Baltic Space, with few economic spillovers
  • - Brain drain from both capital cities out of the cross-border area to other globally competitive hot spots
 
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