Monitoring Report: Finland progresses towards national research and development target, global competition in science and innovation gathers momentum
Finland is well on the path towards achieving the nationally set target for research and development (R&D) activities, but the coming years will be highly challenging. This is the conclusion of the Monitoring and Evaluation Report on Government R&D Funding. The report also shows that global competition in innovation keeps getting stronger. In international comparison there is nothing exceptional about Finland’s R&D investments, but they are an absolute necessity to succeed in global competition.
In 2021 all parliamentary groups committed to the ambitious target to raise the national R&D expenditure to four per cent of GDP by 2030. Accordingly, Prime Minister Petteri Orpo’s Government has increased central government research and development (R&D) funding by around EUR 280 million each year. With the increase in R&D investments, the aim is to boost productivity and Finland’s competitiveness, support long-term economic growth, strengthen the financial base for the welfare society, raise the level of competence and produce solutions to societal challenges.
The first Monitoring and Evaluation Report describes the current situation in terms of central government research and development (R&D) funding and its leverage effects, development of companies’ R&D expenditure and the need for skilled professionals. Besides the increasingly tense global competition in R&D investments, the report explores the allocation of additional R&D funding, use of tax incentives and economic and productivity impacts or R&D funding and activities.
The companies’ R&D investments grew in 2024 despite the difficult economic and geopolitical conditions. Large companies account for a major share of the business sector’s R&D investments, but growth companies that are built around data, software and profound science and technology expertise are gaining an increasingly important role both as R&D investors and innovators.
The growth in companies’ investments required to reach the nationally set four per cent target for R&D expenditure must take place in a very short time and the volumes that are needed are quite high. Growth in R&D investments is needed throughout the business sector and, besides this, Finland should be able to attract foreign investments. The tax deduction introduced in 2023 also encourages companies to increase R&D activities, and it could be used more widely than it is at present.
Supply of skilled professionals a challenge
The inadequate supply of R&D professionals may become an obstacle to reaching the four per cent target. A significant increase in R&D requires tens of thousands of new skilled professionals in a short time. Determined action will be needed to achieve this.
Additional funding has been targeted to all main topics outlined in the multiannual plan for central government R&D funding adopted in 2024. The funding for Business Finland has increased the most. The Business Drivers of Business Finland and Flagships of the Research Council of Finland have been the key instruments in the use of additional funding.
The report supports the work of the Research and Innovation Council and the parliamentary RDI monitoring group in monitoring the achievement of the national R&D target and the implementation of the multiannual plan for the use of central government R&D funding.
The Research and Innovation Council is an advisory body led by the Prime Minister. Its goal is to support the Government in developing its long-term and comprehensive research and innovation policy, present initiatives for national strategic choices and put forth proposals for the allocation of R&D funding.
Inquiries: Research and Innovation Council: Antti Pelkonen, Chief Specialist, tel. +358 295 160 533, Johanna Moisio, Secretary General, tel. +358 295 160 625