INTERNATIONAL POSITION OF ESTONIA IN IMPLEMENTING RESEARCH AND DEVELOPMENT POLICY

The research and development policy (R&D policy) plays a central role in innovation policy since it consists of public sector measures that initialize and promote innovation. When designing policies in other areas (education, employment, fiscal, tax policy, etc.) the mutual interactions with R&D policy should be considered. The article first discusses the theoretical reasoning for public sector intervention in R&D processes. In general, the existence of market and system failures is used as a justification for government intervention. The government should intervene with adequate measures and only in an extent that is needed to overcome the failures. At the same time, the government should avoid overreacting and prevent giving state aid that distorts competition in the market. This study examines the level and structure of R&D policy resources and expenditures in EU member states and in countries that are closely linked to EU. Thus, the evaluation of the role of the R&D policy in innovation system is given. However, it has to be considered that different countries (small and large, developed and undeveloped, with open and closed economies) have different innovation policy goals and measures to achieve them. In addition, the R&D policy is designed in even wider institutional conditions. All of these qualitative aspects have to be considered when interpreting the results of quantitative comparative analysis of countries’ R&D policies. The aim of the articles is to assess the international position of Estonian R&D policy in the aspects of resources and expenditures among EU member states and other closely linked countries in order to create the basis for an international comparative analysis of Estonian R&D policy. In order to achieve the aim, the following research tasks are posed and resolved: ? on the basis of research literature, the necessity, essence, measures and anticipated outcomes of R&D policy are explained; ? on the basis of empirical analysis, the assessment on the international position of Estonian R&D policy implementation among EU member states and other closely linked countries is given. The data used in the empirical analysis (32 countries in years 2004, 2006 and 2008) is gathered from Eurostat database (including Community Innovation Surveys) and the component analysis is conducted. The results allow to design Estonian R&D policy measures that are based on acknowledged theoretical viewpoints and international experience.