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työ- ja elinkeinoministeriö

Innovation Policy

Innovation policy refers to the decisions taken to develop the innovation system. The Ministry of Employment and the Economy is responsible for most decisions on innovation policy. Development of Finland’s innovation system is coordinated by the Research and Innovation Council, led by the Prime Minister.

Companies seek success in competition through new products or by renewing their current ones – by way of innovations. These are based on various forms of competence and are a source of competitive edge for enterprises. Innovations help companies to succeed in business, build up their competitiveness and enhance productivity. This facilitates high wages and new jobs. Innovations boost productivity in the national economy and make a high standard of living and wellbeing possible. For these reasons, society uses a variety of measures, many of which enhance competitiveness, to motivate companies to engage in innovation activity. Finland has an innovation-driven economy.

The public sector encourages enterprises to innovate

Since innovations do not always succeed as expected in the markets, innovation activity involves an economic risk. For this reason, companies do not invest in innovation activity as much as society would wish. Through various measures, the public sector therefore tries to motivate companies to engage in innovation activity. Public research funding and other incentives for private sector research and development activities are good examples of this.

Within the business environment, in addition to financing many factors influence enterprises’ willingness to innovate. These include legislation, access to international markets, and the functioning of the EU’s internal market. Such incentive systems, and the institutions planning and implementing them, constitute the national innovation system. Finland’s innovation system has been ranked among the best in the world (see link).

Public sector innovations

In the public sector a number of measures are in place to encourage engagement in innovation activity. Since the public sector does not produce goods for the markets, the goals of its innovation activities differ from those of the private sector: among other tasks, the public sector seeks to provide citizens with more-useful public services. On the other hand, improved productivity is nevertheless an aim of public sector innovation activities.

International competition challenging the innovation system

The European and world economies are undergoing profound change. In particular, Asia’s emerging economies are challenging the innovation systems of Finland and other EU countries. As business becomes more global, when choosing where to locate their activities companies are influenced by the attractiveness of countries’ innovation systems. Our innovation system must therefore be continuously developed on a national basis, so that Finland can offer excellent conditions in this respect.

Government´s Communication on Finland´s National Innovation Strategy to the Parliament (pdf) (349 KB)

Page last updated: 24.03.2014

Further information

Peltonen, Petri


Lehto, Petri