Insights on growth and renewal

Long-term economic growth is based on investment and productivity growth, with RDI investments and innovation at its core. Without productivity growth, the funding base of the welfare state will not hold. Finland’s competitiveness and growth will therefore be determined by the quality of its innovation, competence and operating environment.

Economic growth materialises through companies’ investments, renewal and internationalisation: companies turn R&D investments into revenue, exports and jobs. The state’s R&D investments are at a reasonable level, and when allocating the planned additional funding, the key question is how to increase the leverage effect on private investments.

Currently, less than 14% of Finland’s public R&D funding is directly allocated to incentives for companies.

When the objective of additional R&D funding is specifically to accelerate economic growth, it is crucial to also direct public R&D investments in a way that supports companies’ innovative renewal and sustainable growth as effectively as possible.

But where should each public euro go? Targeted, competitive RDI funding specifically supports projects with high growth and export potential and strong societal relevance. Each public euro attracts private capital and helps build new export industries.

Business Finland-funded SMEs increase exports, turnover, employment and value added clearly more than their comparison groups. In particular, the flagship funding multiplies R&D investments in Finland, strengthening the innovation ecosystem and supporting the growth and wellbeing of the entire national economy.

Internationalisation accelerates Finland’s economic growth through three channels: foreign direct investment, talent mobility and tourism. Foreign investment is essential for achieving the 4% RDI target and strengthens Finland’s competitiveness and innovation-driven renewal; foreign-owned companies already finance a significant share of private RDI activities. Economic growth requires international talent, who are competed for globally, so attracting them must be tied to growth sectors and properly resourced.

Tourism is growing faster than the rest of the economy and is at the core of Finland’s service industry, generating export revenues worth billions, tens of thousands of jobs and tens of thousands of companies. It diversifies the economic structure through strong multiplier effects in, among other things, transport, retail and construction, and provides pull for sustainable international growth by supporting investment, trade and talent attraction.