Ladies and gentlemen,
Thank you for coming to this conference! The topic is very important for Latvia's economy, science and, consequently, for all citizens.
I
We are indeed living in a very dynamic and interesting era.
A climate crisis that requires from us a comprehensive transformation of economy. This also means targeting investments to implement this transformation, which is not an easy task. We need to understand what is happening in Europe and the world and act accordingly. We see that there are problems with this.
We have a strong desire, influenced by geopolitical events, to reduce our dependence on international supply chains - to shorten those supply chains. We see that the optimistic and naive wave of globalism and the view of world globalisation within a single economic system has proved to be too simplistic. We need to take care of the economic security aspect.
Europe's technological autonomy is one of the issues that has been debated in Europe and Latvia in recent years. We need to think about how to achieve this technological autonomy, because our competitiveness will also depend on our technological capacity to succeed, particularly in strategic areas such as defence, microchips, batteries, hydrogen, space research and industry, quantum technologies.
II
This summer, the European Commission plans to set up a European Sovereignty Fund, primarily for economic sovereignty, which would facilitate the joint financing of European projects to develop strategic technologies. Latvia must be present at the right moment to make use of this fund.
Where do we see opportunities for Latvia in all this?
The question is simple: do we want to participate in the creation of new technologies, where the developed countries of the world are moving ahead, or are we content to be mere consumers of the products created by these countries?
We need to have a clear vision to be at the forefront.
We must become necessary. We must be indispensable in the development of these technologies.
III
Representatives from the public, private and academic sectors are invited to take part in this discussion. The conversation on the transfer of innovation from scientists to the final product is only possible if these three sectors are together.
Today, our primary task is to discuss this transfer pathway from universities and research centres to companies, which is, of course, a risky path full of challenges.
For an idea to get out of the laboratory and reach the production line, it has to ‘jump many barriers’ - from proof of concept, market research, product or service design to prototype, testing or clinical trial, patent application and business plan.
For all this, financing must be provided, a manufacturer and buyers are found.
All these stages are equally important. Of course, the human factor must also be taken into account.
IV
This government's primary objective is to transform the economy. What are the weak points in this process?
The performance of innovation policy is well illustrated by the European Innovation Scoreboard published by the European Commission.
In autumn 2022, when the latest data came out, Latvia was ranked 24th out of 27 countries in the European Union (EU) in terms of innovation performance. This describes where we are today.
I think it is too low, even compared to our neighbours. Lithuania and Estonia have moved up to the so-called Moderate Innovator group, while Latvia continues to be an Emerging Innovator.
This shows that Latvia does not currently have an active innovator image in Europe.
It also, of course, makes it more difficult to attract investment from EU countries if they see that we are unable to actively accumulate potential investment.
I have to say that the image of the innovator is not sufficiently appreciated in Latvian society either, despite the fact that we have successful companies and excellence in science.
Our media also do not think these topics are as important as sports news and the like. We lack media coverage of our own success stories.
V
Innovation policy in Latvia is primarily the responsibility of two ministries - the Ministry of Economy and the Ministry of Education and Science.
The main national priorities, lines of action and measures are set out in the National Industrial Policy Guidelines 2021-2026 and Science, Technology Development and Innovation 2021-2027 Guidelines, respectively, developed by the two ministries.
We also have a national research and innovation strategy for transforming the economy towards higher added value (Smart specialisation strategy for research and innovation (RIS3).
In this strategy, Latvia has defined smart specialisation areas: bioeconomy, biomedicine, smart materials, smart energy, ICT, and social sciences and humanities.
The Latvian Council of Science and the Latvian Investment and Development Agency are closely involved from both ministries to coordinate, advise, and assist in the implementation of the plans.
VI
And yet...
We are lagging behind in many economic indicators and there are currently few signs of our ability to successfully transfer innovation to the economy.
We have a number of success stories of innovative and exporting companies. However, most Latvian companies are low-tech firms and small businesses with a very limited capacity to absorb research results.
In recent years, Latvian scientists have been more active in various international cooperation networks and European consortia. For example, we have become an associate member of the European Space Agency and CERN.
However, there is still a large number of scientists researching ideas that are not commercially aligned with the interests of entrepreneurs and therefore with the interests of the end consumer.
I have to say here that, when it comes to fundamental research, it is the basis for further research in applied sciences. But there are applied studies with good results that do not lead to a final result - a product that is sold, exported.
The success of these scientists is judged only by their publications and citations, but I think there must be another criterion - the ability to produce innovative final products.
For example, we are about to be 20 years in the European Union, but we are still not able to organise the planning periods for EU funds evenly over the years, so that there are no gaps in the process of science and innovation.
The problem here is in our planning system, in bureaucracy and also in incompetent politicians. There is also no incentive system for scientists to think about commerce.
VII
International experience shows that in countries with a small internal market, effective transfer of innovation without public financial support is very difficult.
Latvia also has a relatively small number of large companies that can set up technology transfer centres and the necessary infrastructure for innovation.
The overall level of funding for research and development is also critically low. While European countries are aiming for a 3% share of GDP for research and development, we are only aiming for 1.5%.
Therefore, I think that we need to talk about national policy in this area.
VIII
Bureaucracy and administrative burdens are one of the issues where institutionalisation is needed. Until there is an institution to deal with it, it is a matter of enthusiasm. There has to be a responsible person who looks at how to reduce bureaucracy in a systemic way. Of course, we cannot do without bureaucracy, but it has to function well.
IX
Colleagues,
Economic transformation and the transfer of innovation involve risk. And one of the principles of our bureaucracy is that the state does not tolerate risk, because risk means not only success but also failure.
Science cannot work without risk. Failure is also a lesson.
We have extremely poor risk management. We simply say that there must be no risks. However, we must be able to manage them, to accept failure and loss, which, of course, must be numerically smaller than the benefits. Without failures, there can be no gains.
X
Today we will try to identify where the ‘cogs’ in the innovation chain are turning less smoothly. We therefore need to look at the innovation chain as a whole in order to reach common conclusions.
We have no alternative, dear colleagues.
Thank you!
