State Secretary Frode Berge

EEA and Innovation - Joint efforts and Norwegian policies

Speech at EFTA headquarters, Brussel, November the 14 ^th> 2006

Innovation is not an individual effort.

It is a team sport.

No country alone, be it big economies in the EU or small ones like Iceland or Norway,

can rely on its own assets to achieve real progress.

We have to cooperate.

In another fascinating team sport, football,

the principles are fairly simple:

if the ball moves, kick it.

If it doesn't, kick it until it does.

The game of innovation is a bit more complex.

However, the idea of being in motion is the same.

In today’s global economy, standing still means going backward.

Therefore, it is crucial that we keep on our toes,

improve our ability to change

and make the most of our resources.

The idea of team efforts is also the same – in football as in innovation.

In order to achieve our goals of growth and prosperity,

we have to make a team effort.

We have a lot to discuss and a lot to learn from each other.

That is why we are here today.

Thank you for the opportunity to speak at this conference.

It is a great pleasure to be able to share some thoughts with fellow EFTA members, the European Commission and the other participants here today,

on our mutual challenges

and strategies for innovation.

In Europe, we are faced with

• increased global competition
• an increasing proportion of elderly people
• and falling birth rates

High cost countries in Europe should not try to compete on low wages.

We must work smarter, more efficiently -

and compete on quality, based on cutting edge knowledge.

This way, we can sustain our welfare and prosperity.

In Europe, we share many of the same political objectives. We want to:

• Create more and better jobs for everyone
• Strengthen the welfare system
• Increase social justice and inclusion
• Ensure economic stability and sustainable growth
• And maintain a strong competitive industry

The revised Lisbon strategy is a good basis for further progress -

both within the EU – and in Europe as a whole.

For the past four years,

we have made a report comparing Norway

and the EU countries’ progress according to the Lisbon strategy.

We do this even though we are not a member of the EU.

We do it because it is a useful learning process.

I am looking forward to learning more about the national reform programmes in the workshop section later today.

The Nordic countries are often described as the ” bumblebees of Europe”.

We have large public sectors that demand huge efforts.

We have high wage and tax levels.

In theory, we cannot compete:

We are too heavy to fly.

But like bumblebees, we fly anyway

– and even quite well.

We are quite pleased with our performance according to the Lisbon assessment.

Compared to most EU countries,

Norway has a high GDP and a high productivity.

We have low unemployment

and a high rate of work participation for both men and women.

The Global Competitiveness Report – a ranking of world competitiveness – also suggests that we are doing well.

Actually, all the Nordic countries hold prominent rankings.

These results must be seen in perspective.

But still, they indicate that the Nordic economies are not working that bad.

The bumblebee supports the belief that our welfare states are not a burden – but the basis of our prosperity and social cohesion.

It shows that competitiveness and social security are not contradictions,

but rather preconditions for each other.

In short, fair play and growth are mutually supporting.

This is why

• better employee protection
• equal opportunities for men and women to combine work and family
• and better kindergartens, schools, hospitals and nursing homes

are not only policies for wealth distribution.

They are also policies for wealth creation.

This is the Nordic model in practice.

But mind you, our model is not perfect.

We have to improve.

And we want to discuss what we can do better and how.

For example, we are not satisfied with our share of GDP spent on research.

Here, we are below the average.

Our industrial structure may explain some of it.

However, we want to make our economy more research-based.

Another area that we must pay more attention to is transfer of business ownership.

One third of European business owners will retire within the next ten years.

Business transfers are complex.

Possible loss of jobs and profitable businesses pose a great challenge.

The Commission has suggested measures to prepare for the coming wave of ownership transfers.

Norway too, has to prepare for this challenge.

We will follow the EU’s efforts closely.

Norway also takes part in many EU-activities in the innovation area.

Our institutions and industry tell us that it is really worthwhile.

We participate in the 6 ^th> Framework Program, and have participated actively in the planning of the 7 ^th>.

We have followed the development of the new Competitiveness and Innovation Framework Programme (CIP) with great interest.

We aim to clarify the issue of potential Norwegian participation in CIP shortly.

Norway’s participation in EU’s programs has great significance for our enterprises and knowledge institutions.

As a small country, we have limited possibilities

to perform research in all relevant areas.

And the results for Norway in the 6 ^th> Framework Program have not been so bad.

1 out of 4 Norwegian applicants had their projects approved.

The EU average was 1 out of 5.

I would like to applaud the EU’s new innovation strategy.

During their Presidency,

Finland has managed to reinforce the drive for innovation.

I am looking forward to hear Ms Paula Nybergh’s presentation after lunch.

Now, I would like to give some comments on the Commission’s communication. I will also elaborate on some Norwegian efforts with relevance to the areas in the EU’s new strategy.

Namely, the areas of entrepreneurship and lead markets.

Innovation is about making profit from ideas and knowledge.

This is a major reason for investing in new knowledge.

But: It is the enterprise that brings innovations to the market.

Most radical innovations are brought forward by entrepreneurs.

Not from well established firms.

Therefore, the entrepreneur is a very important person in the innovation process.

In the Commision’s Innovation Communication, action 1 is

“ Establish innovation-friendly education systems”

I could not agree more with this strategy.

In Norway too, we are trying to foster a culture for innovation and entrepreneurship.

We believe that the educational system plays an important role in stimulating people’s creativity and entrepreneurial spirit.

We try to start with the younger generation.

The organization “ Junior Achievement – Young Enterprise Norway” offers a practical program

in which young students learn to set up and run a business by doing it.

They often come up with innovative products and services.

17 per cent of the students from the program say that they will start their own business later in life.

Non-participants have a rate of 7 per cent.

Our efforts have already shown some results.

This summer, the student enterprise “Flush” won the European championship for student enterprises.

As their name suggest, their business is related to toilets.

More precisely, they have developed an automatic toilet cleaning system.

It is not hard to imagine that the market potential is enormous.

Norway aims to be a driving force and partner in the EU’s work on entrepreneurship in education.

A couple of weeks ago, the Norwegian Government in cooperation with the European Commission hosted a conference on this subject.

At the conference, the Commission presented its communication

“ Fostering Entrepreneurial Mindsets through Education and Learning”.

Norway’s revised strategy on entrepreneurship in education was also presented.

We were able to share our experiences and learn from each other.

In my view, the event was very inspiring.

Another area I want to comment on

is the Commission proposal to develop a strategy

for innovation friendly lead markets.

The aim is to facilitate markets in promising areas

such as renewable fuels, eco-innovation, health and education.

The strategy is not to select winning technologies,

but rather to identify and remove existing barriers to innovation.

I would like to praise this initiative.

I believe that focusing on specific areas will be rewarding.

As I mentioned earlier, this is about customizing policies.

Also, it is about taking advantage of comparative advantages.

The challenge is to find the right policy instruments.

However, the search will confront us with several dilemmas.

How do we promote development in some areas

while keeping free and fair competition?

How do we support early movers without picking winners?

The Communication also mentions the area of carbon capture and storage.

This has a clear parallel to Norway’s efforts

in developing technologies for carbon dioxide capture and storage.

Our goal is that Norway shall be at the forefront

• on carbon capture and storage
• and environmentally friendly technologies in general

My government has recently made a major step towards this goal.

We have agreed with Statoil,

Norway's biggest oil and gas producer,

to establish a full-scale carbon capture facility

at the Mongstad heat and power plant.

Full-scale carbon capture shall be in place by the end of 2014.

This target is ambitious.

And binding.

We don’t know exactly how to reach it.

But we know when.

We already know that carbon can be captured.

But we haven’t done it in full scale,

or with technology that allows profitable use.

We are now moving from a small-scale research phase to actual construction of a full scale CO ₂ capture facility.

This is the breakthrough we are aiming at.

The Mongstad project will be the world’s largest of its kind.

From 2010 to 2014 different technological solutions will be tested in a joint project between the government and Statoil.

Other parties and companies will be invited to join the project.

I am certain that Mongstad will be relevant to any other future power plants.

And hopefully, the technology may represent a lucrative kinder egg:

• more energy
• reduced greenhouse gas emissions
• and an innovation-friendly market.

We have entered a race against time – which is also a race against one of the biggest threats in our time: Global climate change.

It will not be easy to get there. That is not why we do it.

We do it because it is important.

Now, a few words on coming Norwegian efforts.

For my government, innovation is a top priority.

Therefore, we decided this autumn that we will present

a White Paper on innovation policy.

This will be the first Norwegian White Paper on this subject.

The White Paper on Innovation shall lay a policy foundation for wealth-creation in a long-term perspective.

As innovation policy involves several policy areas,

we plan to involve all parts of the Government in a broad process.

Among possible focus areas in the White Paper are:

• The relationship between R&D and Innovation
• Diversity and inclusion: how to make better use of our human resources
• Innovation in services
• Innovation in the public sector
• Policies for intellectual property rights

I hereby invite those of you who are interested to share your ideas on topics and policy areas for our white paper.

Written proposals are most welcome to my Ministry in the coming months.

To sum up:

• In the European Economic Area, we share many of the same challenges, objectives – and tremendous possibilities
• We want to become innovative, dynamic and competitive
• This requires
• • healthy competition and collaboration
  • solid and effective economies
  • and active policies for innovation

I opened my speech by using a sports metaphor.

I will now pass the ball to the next speaker.

Enjoy the seminar.

And thank you for your attention.