Estonia, Export, Innovations, Investments, Markets and Companies, Technology

The budget of the support measure totals one million euros in the pilot stage this year and is planned to total 20 million euros over the next four years, spokespeople for the ministry said.

Minister of Entrepreneurship and Information Technology Urve Palo said in a press release that when it comes to certain products and services, markets in Estonia do not function well enough. Since investments in product development, the development of services and technology are high risk investments for businesses, also the support of the state is necessary, the minister said.

"The innovativeness of businesses needs to be increased, therefore the state is ready to make a contribution to product development," she added.

The support measure is aimed to encourage industrial companies to bring new own products on the market and increase their own export capability. The size of the budget of the measure during the first year is one million euros. During the discussion on the national fiscal strategy for the next four years, the government gave its nod to allocating 20 million euros more to the measure during the four-year period.

To give momentum to innovation, the government is planning also other activities, including in support of the automation of work processes.

"Today business operators can use the services of the business development program or the Kredex technology loan for the digitization of business processes within a company. Still during this year, measures will open which support analyses of digitization of businesses and contributing to innovation more broadly," the minister said.

It appears from a pan-European study on innovation in business that Estonian companies are almost as innovative as companies in Europe on the average. A positive change is first and foremost the readiness for innovation within industrial companies, which are focusing increasingly on technology renewal.

It appears from a survey conducted by Statistics Estonia that altogether 47.7% of enterprises in Estonia were innovative in 2016. The survey deems as technologically innovative a business which introduced new products or services to the market during the reference period or contributed to improving its own basic or support processes to increase efficiency. In 2016, there were 1,650 technologically innovative enterprises in Estonia, more than half of which were companies of the industrial sector.

At the same time, Estonian businesses' spending on research and development equaled just 0.66% of GDP, compared with the EU average ratio of 1.32%.

Where in the period from 2014–2016, the sales revenue of innovative companies grew by a couple of%, the sales revenue of non-innovative companies decreased by more than one-third and exports by even more. In order to be competitive on external markets, a business must consistently engage in innovation, the ministry said.

The findings of the survey also demonstrate that innovation in private sector is held back by shortage of money, difficulties getting a loan and the fact that for a big portion of Estonia's small businesses research and development activities are beyond their means.

The biannual innovation survey is conducted across Europe and OECD countries by the same methodology, which is based on the Oslo Manual. The 2016 survey covered 3,714 enterprises with at least 10 persons employed, of which 1,878 belonged to the industrial sector and 1,836 to the service sector.