Audit: Innovation support measures have had little impact (2)

Tarmo Olgo (Postimees/Scanpix)
12/9/2014 9:26 AM
Category: Economy

The National Audit Office of Estonia found that innovation support measures, paid out by the Estonian government through Enterprise Estonia and KredEX between 2007-2013, have a had limited and random effect on competitiveness of companies.

Between that time period, Estonia paid out 166 million euros to companies and businesses in support measures for innovation and development. The audit investigated whether the measures actually had an effect on the recipients' total revenues, export revenues, added value and cooperation with other companies and/or research institutions.

The audit found that the effects have been haphazard at best. The success of the project is being hindered by dispersed responsibility that results from the fragmentation of national innovation policy, and the failure by the government to clearly state the objectives of the measures. There are a number of agencies and committees that give advice on innovation policy and suitable measures, but an overseeing body that has the decision-making power is lacking.

As a result, only three of the six key measures has had a positive impact on export and added value. Yet, in no cases that the audit office reviewed could it note an increase in total revenue.

The audit also revealed that the cooperation between Estonian businesses and research institutions is lacking and the financial measures have not strengthened the connections between the two.

Moreover, the number of jobs actually created with the help of the allocated funds was much below the levels reported by the companies to Enterprise Estonia. Instead of the initially promised 271 new jobs, the total number of employees in the companies receiving the grants diminished by 45. This indicates distortions in the data presented in the final reports, most probably by masking restructured of positions as new posts, the National Audit Office reported.

"When allocating support measures, especially for innovation, it is not the question of who hands out more grants faster. With a diminishing budget, the success lies in the ability to do it more efficiently. We should learn from this lesson that further effort is needed, more wisdom and a more systematic approach from both the entrepreneurs and the state, if the impact of those measures is to be increased," said auditor Tarmo Olgo, who introduced the report to the Parliament's State Budget Control Select Committee.

Anne Sulling, the Minister of Foreign Trade and Entrepreneurship, agreed that the innovation-related state procurement and oversight of the program need improvements, but disagreed with the suggestion that the measures have had very little real impact. The ministry and Enterprise Estonia conducted their own interim evaluation of the measures this year, using a slightly different methodology, which the minister said showed a positive effect on more areas than established by the National Audit Office.

The Minister of Finance, the Minister of Education and Research and the Secretary of State also expressed their doubts over the accuracy of the findings.

The innovation support measures aim to increase competitiveness of companies in the international markets and stimulate cooperation between different companies, as well as between companies and research institutions.


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