Productivity-promoting Policy Measures and the Dynamics of the Business Sector

Fornaro PaoloKiema IlkkaKuosmanen NataliaMaczulskij TerhiMaliranta MikaSaarelma Kalle


Public support for R&D can promote productivity in the long run. Support for joint projects has a better justification than support for the projects of single firms because they promote knowledge spillovers and radical innovations.

R&D funding can also contribute to responding to major social challenges such as climate change. The reduction of carbon dioxide emissions can promote labor productivity. There are theoretical reasons for public sector coordination also in R&D policy, but a detailed ”orchestration” of research ecocystems is problematic for several reasons.

Digitalization does not by itself guarantee higher productivity. When promoting productivity growth through digitalization, influencing standards, the digitalization within the public sector, and educational policies may be more important than direct financial support.

The lack of suitable personnel forms a bottleneck when R&D activities are increased. This is a reason to increase the share of employees with higher education. Also immigration can increase labor productivity. This may be the case also when immigrants are employed in low-productivity work if this increases the supply of labor in higher-productivity employments.

Policy measures were often described in very general terms in policy documents from the last few years. It would be desirable that policy proposals were more precise and specific in the future.

Publications of the Government’s analysis, assessment and research activities 2023:58.

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Förnyelse av företag
Productivity, Innovation policy, Green transition, Digitalisation
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Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja 2023:58
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