Finland aims to increase its research and development expenditure to four per cent of GDP by 2030. In line with this target, the Finnish government will raise the central government funding for R&D activities to 1.2 per cent of GDP by the end of the decade, assuming the public sector roughly accounts for one third of R&D investments and the private sector for two thirds.
For context, in 2022 the overall GDP share of R&D expenditure in Finland was 3.0 per cent (EUR 7.9 billion). Out of this, the share of the public R&D expenditure (Government and Higher Education sectors) was roughly a third (32%) at 0.95 per cent of GDP / EUR 2,539 billion. Total R&D expenditure increased by EUR 445 million / 5.9 per cent from the previous year. However, the change in R&D expenditure adjusted for the rise in price level was only 0.6 per cent.
4% of GDP target enshrined in law
An R&D funding law, that came into force in 2023, sets the annual level of central government R&D expenditure in a way that raises public sector R&D expenditure to 1.33 per cent of the GDP by 2030 under the projected economic development. Alongside R&D funding law, a law for a more extensive and permanent tax incentive for R&D activities was approved in 2022.
Parallel to legislation, a Parliamentary Working Group on Research, Development and Innovation (RDI) set objectives for the allocation of research and development funding. This work was published in early 2023. The Finnish government is committed to these objectives.
In addition to its proposals on funding, the working group made recommendations related to strengthening the management of the RDI system, increasing the availability of R&D skills and labour force, making strategic choices at the national level, assessing the effectiveness of R&D funding and developing a favourable operating environment for research and innovation.