Finland attracts less foreign direct investments than other Nordic, Baltic countries

Finland has been losing its appeal in the eyes of foreign investors compared to other countries in the region, a report published on Wednesday by the OECD shows. 

According to the report entitled “The Impact of Regulation on International Investment in Finland”, the country’s inward foreign direct investment (FDI) stock amounted to 31% of its GDP, compared to a 49% average in Nordic-Baltic countries.

Worrying for Finland is that even if the country has recorded the largest number of greenfield investment projects in the region, the average value of such projects has been declining since 2016. The value of cross-border merger and acquisition deals has also decreased.

In its report, the OECD nevertheless listed a few business climate strengths, including high-quality institutions, transparent regulation, as well as economic and political stability. 

However, it also mentioned seven weaknesses for the country, including the fact that setting up a business takes longer than in other countries in the region, and that the lengthy processing of operational permits is slowing down or undermining investments. Stringent labour market regulation and bureaucracy also hampers the smooth recruitment of non-EEA workers.

In its conclusions, the OECD recommended increasing the scope of local-level bargaining in collective agreements and called for the strengthening of dialogue between the government and the business community as this would help gain a better understanding of companies’ needs. Collaboration between domestic and foreign firms should also be encouraged and foreign businesses should be attracted also outside the capital region, the report added. (Pekka Vänttinen | EURACTIV.com)