Finland lags far behind competitors in research and development funding – shortage of skilled employees slows down R&D investments

Research and development activities in Finland are growing,
but the 4% R&D intensity targeted by the government will not be achieved by 2030 with these prospects. According to a study published today, Sweden, the Baltic countries and Germany are Finland’s toughest competitors in terms of companies’ R&D locations. In the research and development activities of large companies, Finland has maintained its competitiveness, but major changes in the operating environment or the persistence of problems with the availability of skilled personnel may change the situation.

The study published today focuses on factors affecting companies’ research and development (R&D), Finland as a location for R&D activities, and R&D intensity (R&D/GDP). According to the results, R&D investments are increasing in Finland but the R&D intensity will not reach 4 % target by 2030. The results showed that Sweden, the Baltic countries, and Germany are Finland’s main competitors regarding the location of R&D investments. However, as a location for large companies’ R&D sites, Finland has maintained its competitiveness fairly well. The key factors affecting R&D location are the availability of R&D personnel, and the geographical proximity to the companies’ other units and customers.

The study recommends comprehensive and long-term innovation policy which considers policy actions – not only affecting the increase of R&D and its impacts – but also the increase of capabilities. More precisely, it is suggested that R&D subsidies should be directed more towards growth-oriented companies. Furthermore, the supply of potential inventors should be stimulated by facilitating an immigration process for potential R&D employees and by increasing the student quotas in universities.

– The decrease in research and development expenses in Finland is largely due to Nokia’s changes, but the growth in R&D activities of other companies has not been significant either. In relation to GDP, Finland’s R&D expenditure has fallen sharply since the financial crisis of the 21st century. It should be noted that this is not only about the activities of companies, but also that Finland’s public investments in research and development have decreased in real terms, says Research Director Jyrki Ali-Yrkkö, who led the project at Etla Economic Research.


This publication is part of the implementation of the Government Plan for Analysis, Assessment and Research. (

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