Stable economy, efficient infrastructure, enterprise-friendly business environment and highly educated labour force with good language skills provide many opportunities for companies and investors interested in Finland. Finland also serves as an ideal route to the markets of Russia and Northern Europe.
International investments growing
According to Invest in Finland, operating as part of Finpro, in 2013, a total of 213 foreign direct investments (FDI) were made in Finland. The year before, the figure had been 153. Most of the investments were made in consumer trade, business services, the health care and well-being sector, and the ICT sector. The most important investor countries were Sweden, the United Kingdom, Germany and the United States.
According to a preliminary estimate of the United Nations Conference on Trade and Development (UNCTAD), the foreign direct investments rose from the previous year by 11%, to USD 1,460 billion. The amount of investments made in developing economies continued to grow (share was 52% of total flow), whereas investments in developed countries remained historically low for a second time (39% of total flow), even though international investments in EU countries increased.
According to the World Economic Forum (WEF)’s ”The Global Competitiveness Report 2014–2015” comparison Finland ranked fourth among the most competitive countries of the world. In the comparison of 144 countries, Finland was preceded by Switzerland, Singapore and the United States.
Finland’s strengths include the health care system, basic and higher education, functionality of the economy and societal institutions, and innovations. The weaknesses, on the other hand, are the small size of the market area, and ineffectiveness of the labour market.
Finland reached the top position also in the Europe 2020 Competitiveness Index comparison produced by WEF. According to the report, Finland’s ranking reflects the state’s large focus on education and training, which has provided the workforce with the skills needed to adapt rapidly to a changing environment, and has laid the groundwork for high levels of technological adoption and innovation.
Finland also improved its economic competitiveness ranking in the annual survey assessing the competitiveness of various countries conducted by the Swiss Institute for Management Development (IMD). Among the 60 countries studied, Finland ranked 18th, climbing up two positions from last year.
According to IMD, Finland has improved its competitiveness as regards, for example, international trade and financing. Finland’s positions were further enhanced by alleviations in the corporate tax, stronger confidence in the opportunities of the Finnish cleantech industry, and the increase of foreign direct investments in Finland and from Finland to other countries.
According to Prof. Arturo Bris, Director of IMD World Competitiveness Centre, Finland’s prospects look good. In a Taloussanomat interview, Prof. Bris said that Finland belongs among those European fringe-area economies that has clearly improved its competitiveness in spite of unemployment and the challenging situation of public finances.
Skilled labour force
Finland has skilled and highly educated labour force with good language skills. Exchange of information between universities and the business world is one of the key factors behind Finland’s recognised innovation competence and economic success. Finland has particularly strong competence in the ICT and mobile technology sectors, and in generation of renewable energies.
The Finnish education system has repeatedly reached excellent results. For example, in the PISA benchmarking study conducted in OECD member states every three years, measuring the skills of 15-year-olds in mathematics, sciences, and literacy, Finland has held top positions from year to year. In spite of a drop in the results, the skills of Finnish young people still rank among the best in the OECD area. In the latest study, conducted in 2012, Finland came sixth in mathematics, third in literacy, and second in sciences.
About one third of the Finnish labour force has a degree or a higher qualification. According to WEF report, Finland has the world’s best offering of research scientists and engineers, and they have been educated in one of the world’s best educational systems. Labour costs, on the other hand, are lower than in other Nordic Countries.
English is the universal language of Finland’s highly international business community. More than 90% of under 30-year-old Finns speak English. Swedish is one of the two national languages of Finland and many Finns also speak Russian.
Robust innovation system
Finland is known as a strong innovator, and it has focused on, for example, seeking creative solutions to global problems. The sum used on research and development per capita is one of the highest in the world. Finnish companies and consumers adopt new technologies rapidly, which makes Finland an ideal test platform for new solutions and technologies.
The foreign direct investments in Finland are also often related to knowledge and expertise. Finland has several high technology clusters, and technology companies with top competences in the areas related to, for example, wireless and mobile solutions, cleantech, health care and well-being, and new materials and processes.
Finland is one of the very few countries that still holds the highest possible AAA credit rating according to two biggest credit rating agencies Fitch Ratings and Moody’s. According to Standard & Poor’s, Finland’s credit rating is AA+. According to Fitch estimate, published at the end of September 2014, Finland’s economic and political foundations and the financing of the pension system still rest on a firm foundation.
In the WEF comparison, Finland was ranked at the European top for its strong social inclusion. The inequality in the country is low, the state provides social services, and the citizens have the opportunity to improve their economic status independent of their socio-economic background. In terms of sustainable development, Finland came second, which demonstrates that its economic prowess does not come at the expense of environmentally sustainable practices and outcomes.
In 2010, the U.S. Newsweek magazine compared the living conditions of citizens in one hundred countries. Finland came out as the best country in the world. The categories included in the comparison were the national educational and health care services, quality of life, economic competitiveness, and the political environment.n
Gateway to the east
Finland provides a well-functioning gateway to Russia, and it also holds a central position with a view to the Northern European markets of 80 million consumers.
Finland has a long experience of trade with Northern Europe, and strong historical and cultural ties with its neighbouring countries, which provides the country with valuable information and understanding of the region. Finland’s modern logistics and communications networks contribute to smoothly running and safe traffic. Finnish and Russian railways have the same rail width, so the carriages do not need to be adjusted or reloaded when crossing the border. Consequently, most of the transit trade from EU to Russia already passes through Finland.
Uncomplicated business environment
The Finnish business environment promotes generation of business activities. There is not much bureaucracy, financing is available for investments, and also foreign-owned companies can benefit from various investment incentives, research and development subsidies, and research data, which is produced in extensive collaboration with Finnish universities and private sector actors. According to Transparency International, a non-governmental organisation monitoring corruption, Finland is one of the least corrupt nations in the world.
- Promotion of Finland’s external economic relations, the internationalisation of Finnish enterprises, investments in Finland and the country brand: team.finland.fi
- Statistics about international companies in Finland, tailored services from the beginning to the end of investment process: investinfinland.fi
- News about investments in Finland: goodnewsfinland.fi
IMD World Competitiveness Yearbook 2014: imd.org/wcc/news-wcy-ranking/
The Europe 2020 Competitiveness Report 2014: reports.weforum.org/europe-2020-competitiveness-report-2014/
The Global Competitiveness Report 2014 – 2015: weforum.org/issues/global-competitiveness