English 
Suomi 
Finland has advanced from a technology follower towards a technology leader. Firms’ technology choices are increasingly risky. For various reasons there may be too little experimentation and risk taking compared to the social optimum. This calls for a policy intervention. We develop numerical models for (pre-)evaluating alternative policies.
By the mid-1990s, at the latest, the Finnish economy had achieved a new phase in its economic development. As international productivity comparisons witness, many firms and industries had moved close to the global technology frontier (Maliranta, Rouvinen, & Ylä-Anttila, 2010). The competitive advantage in the previous phase of development was primarily based on abundant and cheap production inputs. In the new economic environment, firms must develop and implement new technologies (new products, processes and new ways of organization), i.e. innovate, at an increasing rate. More importantly, it is increasingly important that innovations are not only new to the firm but also new in the global markets.
Experimentation in the markets and reallocation of resources between firms are now key mechanisms of economic growth. Increasing risk and higher failure rates are inevitable consequences of the appropriate growth strategy in this new phase of economic development. Productivity gains are achieved through a process of creative destruction that involves intensive experimentation, selection and incessant reallocation of resources and market shares between successful and less successful firms (Acemoglu, Aghion, & Zilibotti, 2006; Aghion & Howitt, 2006; E. Bartelsman, 2005). Job creation and destruction rates are particularly high in industries that are undergoing a fundamental technological renewal, of which the use of information and communication technology is a recent example (see E. J. Bartelsman, Gautier, & de Wind, 2010). As an indication of a healthy creative destruction process, industry (or aggregate) productivity growth rate may be higher than that of its firms by a wide margin (e.g. Petrin, White, & Reiter, 2011). This is an example of the situation where considering individual units (e.g. firms) in isolation is not enough but one needs also take into account the whole system (e.g. industry) with various interactions and feedback mechanisms (e.g. entry, exit and reallocation).
Participants: Mika Maliranta and Niku Määttänen
