Foreign direct investment (FDI) in Finland

FDI in Figures

Foreign direct investment (FDI) flows to Finland have been fluctuating in recent years, and were negative by USD 1.6 billion in 2023 (compared to +5.8 billion one year earlier) according to the World Investment Report 2024 published by UNCTAD. At the end of the same period, the total stock of inward FDI stood at USD 149.6 billion. Just above half of new foreign investment in 2023 was directed to the Uusimaa region in southern Finland, which includes the capital Helsinki and other major cities like Hyvinkää and Espoo. Examined by country, net inward FDI stock (immediate investor) is highest from Sweden (EUR 16.3 billion), the U.S. (EUR 14.2 billion), Germany (EUR 6.2 billion), Luxembourg (EUR 6 billion), and Norway (EUR 5.5 billion – data Finnish Investment Agency). Foreign-owned companies represent just 1% of all firms in Finland, yet they have a significant impact on the country's economy. These companies generate 23% of the total turnover, amounting to EUR 130 billion, and provide 308,800 jobs across 5,306 firms. They also account for 16% of the private sector workforce and contribute 39% of Finland's exports, valued at EUR 32 billion. In research and development, foreign-owned firms make up 27% of investments, totalling EUR 1.2 billion. Furthermore, they contribute EUR 1.68 billion in corporate tax revenue (official governmental figures). According to the latest figures from the OECD, FDI inflows to Finland totalled USD 859 million in the first half of 2024, compared to a negative inflow of USD 8.68 million in the same period one year earlier.

The country’s strengths include a highly educated workforce, a knowledge-based and innovative economy, a reputation for stability and lack of corruption, competitiveness, a strategic position at the centre of a dynamic zone formed by Russia, Scandinavia and the Baltic countries and its orientation towards high technology, research and development. The country also offers a strong expertise in ICT and cutting-edge technologies, such as microelectronics, quantum and supercomputing, shipbuilding, forestry, and renewable energy. In recent years, the country's government announced several tax incentives for foreign investors to conduct research and development activities in Finland. Among the country’s weak points are the small size of its market, a high vulnerability to the international situation, substantial labour costs and a high degree of dependence of the country’s banking sector on the Swedish and Danish financial sectors. Furthermore, significant amendments to the Monitoring of Foreign Corporate Acquisitions Law (172/2012) entered into force, widening the scope of acquisitions that are subject to mandatory pre-approval. Overall, Finland has a very friendly business environment, as shown by the fact that the country ranks 15th out of 67 countries in the World Competitiveness Index published by the International Institute for Management Development (IMD). Furthermore, Finland ranks 6th among the 132 economies on the Global Innovation Index and 12th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Finland

Strong Points

The country's strong points:

• Political stability
• A strategic geographic location between Scandinavia, Russia and the Northern European expanding markets
• A multilingual population
• One of the least corrupt countries in the world
• Expertise in green technology, manufacturing, health and the ICT industry
• An extremely industrialised economy, based mainly on the free market and with a high work productivity 
• High spending in R&D
• High-end industries

Weak Points

Finland's main weak points:

• Geographic vulnerability
• A decrease in industrial competitiveness
• Fragility of the banking sector (regional exposure, especially to Russia)
• A small internal market
• Ageing population 
• Deterioration of the current account
• Large household debt

Government Measures to Motivate or Restrict FDI

Finland does not discriminate between foreign and national companies. As such, support in the form grants, loans, tax benefits, equity participation, guarantees, and employee training can be available to all firms. Subsidies for start-up companies are available for establishing and expanding business operations during the first two years of activity. Investment aid can be granted to companies in the regional development areas, especially SMEs (but also bigger companies in case of significant job creation).
In order to promote foreign investment, the government has created a Team Finland network that serves as a one-stop shop for businesses.

Bilateral investment conventions signed by Finland

Finland is a signatory to over 80 bilateral investment treaties. You can consult them on UNCTAD's International Investment Agreements Navigator.