The evolution of the finnish ICT cluster

Laura Paija and Petri Rouvinen 3.1 INTRODUCTION Despite bankrupted dotcoms and collapsed market valuations of technology companies, it is generally agreed that information and communication technologies (ICTs) have indeed induced a new techno-economic paradigm or the third industrial revolution. Consequences of this revolution have been particularly pronounced in Finland. In the late 1990s Finland, besides the United States, became known as the leading new economy, or a country where '… the 21st century is in beta’ (Wired magazine, September 1999). This reputation was primarily earned by the rapid growth of and heavy specialization in mobile telecommunications equipment manufacturing. As a user of ICT, Finland is advanced but not exceptional as compared to other high-income countries (see, for example, Koski, Rouvinen and Ylä-Anttila 2002a). Koski, Rouvinen and Ylä-Anttila (2002b) show that ICT-related production has an intensifying concentration tendency and that laggards in ICT provision rarely catch up, let alone leapfrog the leaders. In other words, originally ICTspecialized countries tend to become more so. Finland is a rare exception to this rule. During the 1990s it went from being one of the least ICT-specialized industrialized countries to becoming the most specialized one. Figure 3.1 below shows the situation in the year 2000. Finland is the only country that ranks high according to all of the three indicators considered. This chapter studies the evolution of the Finnish ICT sector as well as the dynamics and interactions behind its success. We also discuss future developments and speculate as to what might lie ahead….