Government’s analysis, assessment and research activities
Study: What is the reason for a reduction in corporate investment volumes?

Government Communications Department 16.2.2017 8.43 | Published in English on 16.2.2017 at 10.06
Press release 73/2017

Since 2008 corporate investments have fallen considerably but nearly 90% of the drop is explained by two factors: a reduction in construction investments and the plunge in research and product development investments of the Nokia cluster. In addition to these main factors, cuts in investments in machinery and equipment have contributed to the decrease.

After the financial crisis investment trends have varied internationally. In Sweden, Germany and Austria corporate investment levels clearly surpass 2008 levels. On the other hand, investments in Finland, Denmark and the Netherlands remain below levels before the financial crisis.

The differences cannot be explained on availability of funding. During the current financial crisis only approximately one fifth of Finnish corporations have had problems acquiring debt financing for their investments. In comparison with other European countries the number of Finnish companies experiencing difficulties in finding debt financing remains low.

There is fierce international competition to receive investments. Results of the study show that Estonia in particular competes with Finland for industrial investments. In recent years nearly 30% of foreign companies considering investments have considered Estonia as a potential location. Estonia rose to be the most popular choice for the location of a head office or the location of the entirety of the company’s activities. 

Due to the fact that our total production has fallen nearly in step with investments, the corporate investment level is currently nearly at the same level as in 2000-08. However, in the longer term attention should be devoted to a sufficient number of investments. Since the early years of 2000s, the industry’s investment level in machinery and equipment has been at a lower level in Finland in comparison with other countries. The reasons for the phenomenon are not known. Reasons behind it may be the forceful transition of the Finnish economy from an investment-driven to an innovation-driven growth model at the start of the 1990s.

Innovation-driven solutions seem to continue to provide the best basis for policies encouraging growth. However, the results indicate that outside the electronics sector Finnish R&D product development investments are at an average European level. In addition, the stop of the recent growth in R&D investments raises the question whether the time of innovation-driven growth is now over. The fact that the electronics industry does not increase its R&D investments seems to indicate that the investment trend between the sectors has shifted. In this respect it’s fair to say that Finland is a similar turning point for policies promoting growth as at the beginning of the 1990s. Market failures are connected to changes in innovation activities but the public authorities can try to remedy the situation by offering funding. Therefore, the transition at hand – just like the one before – requires active support from innovation policy.

The study is part of the implementation of the 2016 Government plan for analysis, assessment and research.

Report (in Finnish)

Further information about the Government’s analysis, assessment and research activities at

Inquiries: Jyrki Ali-Yrkkö, Deputy CEO, Etlatieto Oy (Etla subsidiary), tel. +358 46 851 0501, jyrki.ali-yrkko (at)