ABSTRACT
This chapter shows how universities and research groups are reacting to the some of the contradictions in Europe. It argues that a key element in the emergence of the Estonian paradox is the hollowing out of universities as strategic actors in the research and development (R&D) system. The chapter shows how New Public Management (NPM) based thinking has evolved in the Estonian R&D system over the last 20 years. It also looks at the strategic responses by the universities and research groups to some of the contradictions of academic capitalism. Given the predominance of competitive project-based funding of public R&D, research groups in Estonia are essentially responsible for generating their own R&D budgets. At the same time, research on energy technologies especially given the importance of the oil shale industry in Estonia seems to indicate the opposite pattern of a vicious circle. As a result, the main Estonian industry actors tend to cooperate more with foreign universities and R&D institutes.
