This report examines Finland’s recent foreign direct investment (FDI) trends and how the country’s domestic regulatory landscape may affect its ability to attract foreign investors. The report compares different sources of FDI activity in Finland to those in other Nordic-Baltic economies, benchmarks Finland’s regulatory environment and broader investment climate against those of its neighbours and explores the link between regulatory frameworks and FDI flows. It brings novel, granular evidence on FDI flows towards Finland through an analysis of transaction-level data and gathers businesses’ views on the country as a destination for FDI, adding new perspectives to the OECD’s analysis of Finnish policies in the areas of international trade and investment.
The work leading to this publication was undertaken in the context of and co-financed by the European Commission’s Structural Reform Support Programme, which seeks to advance institutional, administrative and growth-sustaining reforms in EU Member States across a variety of policy areas. A steering group, composed of representatives from the Ministry of Economic Affairs and Employment of Finland, the Ministry for Foreign Affairs of Finland, Business Finland, the European Commission and the OECD, provided support and oversight of the project from start to completion. The role of the steering group in the preparation of this report was limited to advisory functions to ensure the independence of the analytical work and results.
The research and analysis were jointly carried out by the OECD Directorate for Financial and Enterprise Affairs and Trade and Agriculture Directorate, using in-house indicators, such as the OECD Services Trade Restrictiveness Index and the OECD International Direct Investment Statistics database, as well as various other data sources. Stakeholder consultations, consisting of a business questionnaire and a series of interviews, were held in October 2020 to complement the quantitative assessment. In addition to interviews with senior executives of foreign-owned companies in Finland, additional comments were sought from Finnish authorities, business organisations and research institutes (such as Amcham Finland, the Confederation of Finnish Industries, Helsinki Business Hub and VATT Institute for Economic Research).
The purpose of this report is to contribute to a better understanding of what drives FDI towards Finland and which regulatory aspects may act as impediments to foreign investment flows into the country. It identifies areas where Finland could consider reviewing its domestic regulation to further improve its investment climate. The set of policy conclusions put forward in this report are intended to support Finnish policy makers in the development and implementation of measures that will strengthen the country’s attractiveness as a destination for FDI. The proposed policy actions have potential to also benefit existing players in the Finnish economy, by improving the country’s general business environment and reinforcing the positive impact of FDI in Finland.