The crisis of the euro has overshadowed the fact that there are currently dozens of countries in the world with economies growing at an annual rate of 5 to 10 per cent. In addition to China and India, these rapid-growth economies include countries such as Indonesia, Malaysia, Thailand and Vietnam. Out of the vast countries in Latin America, Brazil and Argentina are members of the rapid-growth club, and in Africa, too, there are countries with economies growing at a rate of more than 10 per cent per year.
This is not a temporary phenomenon, as the 25 fastest growing economies managed to maintain an average annual growth of nearly 6 per cent throughout the 2000s. The figure is more than three times the rate achieved in Western Europe and other developed economies. If the situation remains unchanged, more than half of the world's GNP will be generated in fast-growth economies outside of Europe and North America by the end of the decade.
A working group led by Matti Alahuhta analysing Finland's economic external relations concluded that developing nations have already become the number one market in the world in many business-to-business industries. They are also rapidly becoming the world's largest consumer market. Yet, the majority of goods exported from Finland go to Western Europe. Out of our major trade partners, only Russia is counted among the rapid-growth economies. Otherwise, we trade in markets plagued by slow growth or, at worst, economic downturn. What is hindering the breakthrough of Finnish innovations in rapid-growth economies?
Innovation is activity that creates and delivers new value to customers. In the end, it is the customer – the owner of the problem to be solved by the innovation – who defines the value of the innovation in their particular case. Determining the needs and preferences of the customer is not straightforward in any circumstances, and it becomes especially difficult if the producer of the innovation and the users operate in entirely different business environments. For example, how do we use Finnish knowhow in education to develop export products for countries where, instead of smart board, blackboard is still the number one teaching tool? Or, how, and with what contacts, should we proceed with selling the products in countries where business and government are closely interlinked?
Tekes accelerates the growth and internationalisation of innovative companies by financing projects with the aim of analysing customer needs, developing innovative business models and creating partnerships and networks necessary for business. If you are interested in developing the business, products and services of your company with the aim of targeting international markets, do not hesitate to contact us.
I would also like to hear your ideas on how Tekes as a funder of research and development projects and innovation activities could assist you in locating growth opportunities for your company in rapid-growth markets. If you are a researcher I challenge you to present research ideas that could evolve into the type of high-quality competence and business required in rapid-growth markets.
Among Finnish companies who have understood the opportunities available in the developing markets is Blaast, a software company that uses a cloud service to introduce the features of smartphones to cheap mobile phone models. The company, who has received Tekes funding for young innovative companies, has already made an opening in Indonesia.
Director, International Network
Photo: Susanna Lehto