”New” Nordic success formula: From a Finnish to a Danish model

Since the 1990s Finland and “The Finnish model” has been unanimously accepted as the role model for efficient Nordic research- and innovation policy. As a result, Denmark and Norway have been seen as lagging behind the other Nordic countries. Now, however, something is happening – in Denmark.
The Finnish Model
The so called “Finnish model” for economic growth and success in the knowledge based society, has been regarded as the valid explanatory model to Nordic success in social welfare for several years. Compared to their Nordic sister countries, Finland and Sweden have had higher scores on most indicators of growth in economy, research and innovation.

Dano-Norwegian Industrial Structure
While the industrial structures of Sweden and Finland are characterized by high-tech business, large firms and a considerable high-tech export; both Denmark and Norway are below the EU average in high-tech export, and their industrial structure is dominated by small to medium sized enterprises (SMEs) specialized in products with low R&D intensity. Denmark expresses strength within low-tech industry like foods, furniture, fabric industry and toys.

Danish shooting star
Lately, however, Denmark has enhanced it’s position on rankings of economic growth, competitiveness and research; even ranking higher than Sweden and Finland in some surveys. Although the EU 2010 goal that national R&D expenses should constitute 3 % of GDP is not yet achieved, Denmark has improved its scores with respect to the GDP indicator several years in a row. In particular, private R&D investments have made considerable contributions to Denmark’s strengthened position on this indicator.

The new model: a technological ”low road” to knowledge based economy
Compared to Finnish policy documents, the Danish strongly emphasize the social dimensions of economic growth and technological development; social cohesion and security. In this respect the Danish model constitutes a clear alternative to the American model, according to which economic growth involves increased social inequalities. Danish growth in economy and innovation takes a different path; described as a technological “low road” and characterized by incremental innovation – learning by doing – in low-tech SMEs, motivated by practical needs and a considerable degree of interaction. This model clearly contrasts with the Finnish model, which is a distinguished technological “high road”.

This “alternative” Nordic Model also sheds new light on distinctive qualities of Norwegian economic and innovation structures. Based on Danish industrial structure and a “low road” to technological and economic growth, the Danish model may solve the puzzle about Norway and explain why the Norwegian economy is so healthy despite its low scores on traditional indicators for research and innovation.

(Egil Kallerud ”Norden som forsknings- og innovasjonspolitisk foregangsregion – med fokus på Danmark og Norge”, NIFU STEP)