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wholly devoted to, or dependent on, Nokia. For example, it would be wrongto say that the growth of the tele-operators TeliaSonera and Elisa or the systemintegrator TietoEnator – all cooperating with Nokia in some projects – hasbeen based on Nokia. The electronics manufacturing service companiesElcoteq and Flextronics also have other customers than Nokia, and so on.Some 3 percent of the Finnish labor force work in these IT companies.Again, Nokia is the biggest employer, but it still has a limited role. In 2002,Nokia employed 24,000 workers in Finland, which represents approximately1 percent of the total labor force. There are many others working in Nokia’snetwork of partners but, as these companies also have other customers, theiremployment is mainly independent of Nokia.Elements of the Finnish ModelSilicon Valley and Finland 67In a simplified form, the main elements of the Finnish model can be representedgraphically as figure 2.9. At the center of the Finnish model is innovation:technological, product, and process (organization) innovation.Ultimately, technological and product innovation combined with the newnetwork form of organization have been behind the growth of Finnish productivity(Koski et al., 2002). This is especially true in mobile telecommunicationswhere Finland is the world leader. Finnish innovativeness is also one ofthe highest in the world, as measured by the receipts of royalties and licensefees per capita.Innovation is based on talented people, the availability of finance for newrisky projects, and a culture of innovation. The existence of these three conditionsdepends on the nature and connections between the university, business,and the state, as shown in figure 2.9.The state has a double function both as a developmental and a welfare state.As a welfare state, Finnish policy has been to invest in a free, public, and highqualityeducation system that gives people equal opportunities to learn andthus incorporates the potential of the population more fully than in most othercountries. The university system includes 70 percent of the young generation,with over a quarter of these students in technology fields, and thus forms thehuman talent needed to continue innovation in Finnish business. Because ofuniversal health, unemployment, and pension protection, in addition to thesystem of collective bargaining that generates stable industrial relations (80percent of the labor force remain unionized), people are better prepared for thebig structural changes that the information economy requires.In its role as a developer of the information economy (developmental state),the government’s key actor is the Science and Technology Policy Council.Largely under its guidance, national R&D investment increased from 1percent of GDP at the beginning of the 1980s to 3.6 percent of GDP by 2001.