Finland

	Score	Rank
Financial Standards Index	47.50 out of 100	42
Business Indicator Index	10.98 out of 12	12

Business Indicators Summary

With an overall score of 10.98/12, Finland is at standard on the economic, legal, and political indicators that make up our Business Index. Finland has a market-based, private sector economy, however, government spending remains high totaling 50.7 percent of the country's GDP. Finland welcomes foreign investment and provides equal incentives for both foreign and domestic investors. The country has little impediments to trade signified by little or no import controls or protective tariffs. Finland's tax rates are considered average compared to international standards. The political parties in Finland, both ruling and the opposition, are pro growth and globalization. Property rights, including intellectual property rights, are well protected, as are contractual agreements. Corruption is of no concern to investors, as reflected in Finland’s ranking of 6th out of 180 countries in Transparency International’s 2009 Corruption Perceptions Index.

Business Indicators

Economic Model
Forex Regulations
- Capital Controls
- Exchange Controls
Foreign Investment Law
Trade Regulation
Tax Regime
Tax Rates
Bankruptcy Indicators
International Dispute Settlement
Political Environment
Political Stability
Corruption
Adherence to global labor standards

Economic ModelMarket-based economy

The 2009 Economic Freedom of the World Annual Report by Gwartney et al. calculates a score of 10.0 (out of 10, with a higher value signifying greater economic freedom) for the factor "Government Enterprises and Investment" as a percentage of total investment for Finland. Countries received a score of 10.0 when there were few State-Owned Enterprises (SOEs) and government investment was generally less than 15 percent of total investment. The 2009 Heritage Foundation Index of Economic Freedom indicates that total government expenditure, including consumption and transfer payments, equaled 50.7 percent of GDP, with 3.1 percent of government revenues coming from SOEs and government ownership of property.

According to the 2009 U.S. Department of Commerce (DoC) Country Commercial Guide, the Finnish government has been privatizing its SOEs since the 1990s and has shifted its focus to investing in new, innovative high-tech companies as a risk investor. The Finnish government maintains holdings in 53 companies, and is majority shareholder in 31 of them.

The International Monetary Fund's (IMF) 2008 Article IV Consultation with Finland indicates that strong macroeconomic policies have supported substantial growth in Finland, with the both government budget and current account presently in surplus. Despite the demonstrated robust growth in 2007 of 4.5 percent however, the Finnish economy is expected to drastically slow. Growth for 2008 and 2009 has been projected at 2.1 and 0.6 percent respectively. Inflation increased to 4.7 percent in September 2007, exceeding the European Union (EU) average. The IMF report cites a number of factors for this, including excise increases, energy and food price shocks as well as rising unit labor costs.

Finland’s ageing population is expected to have a fiscal impact of 5.5 percent of GDP in additional annual expenditures by 2050. While Finland are currently well equipped to deal with this issue, certain recently adopted discretionary measures involving a significant reduction of surplus, threaten the sustainability of public finances.

Sources

Gwartney, J., et al., “Economic Freedom of the World – 2009 Annual Report,” September 2009. Available from Frazer Institute website. Accessed on December 1, 2009. (Gwartney et al. 2009)
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Heritage Foundation, "2009 Index of Economic Freedom," 2009. Available from Heritage Foundation website. Accessed on December 1, 2009. (HF 2009)
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International Monetary Fund, "IMF Executive Board Concludes 2008 Article IV Consultation with Finland," Public Information Notice (PIN) No. 09/39. February 2009. Available from International Monetary Fund website. Accessed on December 1, 2009. (IMF 2009)
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U.S. Department of Commerce, "Doing Business in Finland: A Country Commercial Guide," February 2009. Available from U.S. & Foreign Commercial Service and U.S. Department of State website. Accessed on December 1, 2009. (U.S. DoC 2009)
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