OECD report: Finland lags behind in foreign investments – more policy measures needed
Despite its openness to trade and investment, Finland lags behind the other Nordic countries and Baltic countries as a destination for foreign investments. In 2019, foreign direct investment (FDI) to Finland accounted for 31% of GDP – less than in 2010 and well below the 49% average in the peer countries.
This is the conclusion of the OECD’s report “The Impact of Regulation on International Investment in Finland,” published on 19 May 2021. The report compares Finland’s regulatory landscape with that of its Nordic and Baltic peers and identifies potential bottlenecks. In its report, the OECD proposes a number of targeted measures to streamline regulation and improve the business environment.
As national regulation can increase the costs of conducting business, in some cases it influences investors’ choice of where to invest, according to the OECD. The OECD report recommends that Finland continues to improve its country image and develop digital solutions that reduce companies’ administrative burden. The implementation of digital solutions would require coordination between different operators as well as more resources. Permit procedures related to business activities should also be developed to make them less lengthy.
The report also recommends that foreign-owned companies should become more actively involved in the reform of business regulation. Impact assessment of regulations should be developed further. In its report, the OECD also recommends that Finland makes more effort to attract foreign companies, including to its different regions and further increase dialogue with foreign-owned companies operating here.
Finland has already recognised some of the bottlenecks described in the report. For example, the Talent Boost programme to attract international experts to Finland includes ongoing reforms that will speed up the residence permit procedure and improve access to language studies. The Government’s objective is to increase work-based immigration by 50,000 people by 2030.
According to the OECD report, Finland benefits from FDI in many ways. Although foreign-owned companies accounted for slightly over 1% of all companies operating in Finland in 2019, they generated almost a quarter of the total turnover and employed 18% of the workforce. Foreign companies accounted for almost one-third of research and development expenditure. Foreign companies also open doors for the Finnish economy to global production networks and international markets.
Inquiries:
Francesca Spinelli, Head of International Investment Statistics Unit, OECD, [email protected]
Petri Peltonen, Permanent State Under-Secretary, Ministry of Economic Affairs and Employment, tel. +358 29 506 3662
Liisa Lundelin-Nuortio, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 8261
Kimmo Sinivuori, Commercial Counsellor, Ministry for Foreign Affairs, tel. +358 29 535 0061
Antti Aumo, Senior Director, Invest in Finland (Business Finland), tel. +358 40 505 0477
Ulla Hiekkanen-Mäkelä, Head of Talent Boost (Business Finland), tel. +358 50 557 7706