Policy Suggestions for Integrated Public Innovation Policies in a Small Country

In recent decades, economists have been increasingly concerned with the role of the public sector in improving public policy for innovation processes; the link between transition of a small country and other factors have not yet been considered in detail. Therefore, we discuss (a) public innovation conditions prevailing in and policy measures available to a small country such as Estonia and (b) which might be effective there. The instruments to promote innovation of private Estonian firms, such as good conditions for entrepreneurs, taxation conditions, financial aid, and so on, are assigned to strategy (1); additional instruments, such as public demand, public procurement, and so on, are related to strategy (2), whereas sales of public property and participation in ownership to assist innovative firms are due to strategy (3). Private and public innovations concern the innovative activities of public enterprises according to strategy (4) and that of strategy (5), dealing with public research and the supply of infrastructure services. Public sector-oriented innovation refer to strategies (6) concerning education and (7) infrastructure, and strategy (8) referring to legislation and public management. The reform policies in strategy (9) are completely oriented to public sector innovation pointing to functional and territorial reforms, intergovernmental fiscal relations and similar policy measures.