The annual RIO Country Report offers an analysis of the R&I system in Estonia, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Estonian research and innovation system and assesses the policy response.
Estonia received country specific recommendations in the 2012, 2013, 2014 and 2015 European semester cycles. The Council recommendations have been almost identical during the years 2013-2015 and they focus on intensifying prioritisation and specialisation in the research and innovation system. The 2015 CSR is worded as follows: "Focus public support for research and innovation on a coordinated implementation of the limited number of smart specialisation areas."
Estonia does not have a separate national or regional R&I strategy on Smart Specialisation. Instead, the country's smart specialisation framework comprises the Entrepreneurship Growth Strategy (adopted by the government in October 2013) and the Research, Development and Innovation Strategy (adopted in January 2014).
Synergy in the implementation of the two strategies is critical for stimulating RD&I investment in Estonia. Part of the problem is exactly the fact that the S3 is "divided" among two strategic documents and it is not clear to what extent the focus of the S3 priorities is shared between the public research and the business sector. Moreover, according to the Innovation Union progress report 2014 for Estonia, there is little correlation between the areas of Estonia's scientific production (measured by the number of publications) and technological production (patents).
The two above mentioned strategies, the Entrepreneurship Growth Strategy and the Research, Development and Innovation Strategy 2014-2020 came as a response to the CSRs of 2013 and 2014 on fostering the prioritisation and the specialisation of the research and innovation systems. In the Implementation plan for the RDI strategy approved in September 2014, the responsibilities for R&D policies have been clarified, the process of establishing smart specialisation growth areas has been set up and growth areas have been narrowed down. The S3 process was guided by the Estonian Development Fund.
Estonia has identified the following smart specialisation growth areas:
• ICT supporting other sectors (use of ICT in industry including automation and robotics, cyber security, software development);
• Health technologies and services (biotechnology, e-health);
• Resource efficiency (material science and industry, knowledge-based construction, health-promoting food industry, chemical industry).
The budget for Smart Specialisation in 2014-2020 (including structural funds and state budget co-financing) is planned to be about €140m (Estonian Development Fund, February 2015), which is a significant amount considering that the total Estonian GERD in 2013 was €326m.
In its Estonia 2020 Action Plan 2014-2018, the government plans to launch a smart specialisation monitoring system in 2015, to develop a longer term and more strategic model of cooperation for technology development centres and (industrial) clusters, linking both formats to smart specialisation and to start the SF funded programme “Supporting applied research in growth areas of smart specialisation” 2015 - 2020.
Now that Estonia has come up with its smart specialization areas (although the process has been rather top-down, oscillating between narrowing down and broadening the priorities not necessarily as an outcome of an entrepreneurial discovery process), it needs to set up a sound implementation system to support it. The operational programmes have been approved but the instruments that have been designed to support smart specialization are too recent to be assessed. In any case, the key issue in successfully addressing the 2015 CSR is to ensure synergies in the implementation of the two strategic documents related to RD&I and to avoid an overlap of measures that are too small and too fragmented to be impactful. In order for public spending to be maximally efficient, investing in smart specialisation high-growth areas to increase the return on public investment in R&D should be the guiding principle for targeting priority areas (OECD, 2014). Through the Estonian Entrepreneurship Growth Strategy, the government aims to shift to a more market-based approach to public support, with fewer direct grants and more financial instruments, including venture capital. Whether this would be a successful strategy remains to be seen.