We present an overview of the recent productivity development in Finland. In particular, we focus on what distinguishes companies at the frontier of productivity from other companies. The measures needed to support the development of Finnish companies into high-productivity companies are assessed.
Innovation policy measures that promote the creation of innovations that benefit society at large and the dissemination of knowledge in the economy have an exceptionally high national economic productivity growth potential. Such actions include:
1. Allocation of public R&D subsidies i) to companies that have the highest capabilities to produce radical innovation that benefit society more broadly and ii) to projects that require cooperation between companies and universities.
2. Allocation of public funding to the R&D projects taking place in the centers of expertise.
3. Strengthening funding aimed at quantitative and qualitative improvements of basic research and teaching in higher education institutions.
4. Promotion of work-based immigration (accelerating permit processes, financial incentives for skilled immigrants).
5. Ensuring that the product and labor markets are well-functioning and provide an operating environment that encourages companies to make R&D investments and other intangible investments.
