Finland is often presented as a model example of a country with a strong economy, high competitiveness, and innovation. However, in recent years, like other European countries, it has not been immune to challenges. The country is facing issues such as an aging population and declining productivity. According to an expert analysis by the Bank of Finland, these two factors will weaken Finland’s economic growth and fiscal stability. While the country’s GDP is expected to grow by approximately 1.8% annually until 2030, without investments in education, attracting foreign talent, and fostering new technologies, Finland’s growth prospects will weaken. Finland needs development investments. The country requires more private capital. Why not from Poland?
From a Golden Era to Economic Challenges
Finland offers a highly business-friendly environment. The country ranks high in global competitiveness and innovation indices. It holds the 6th position among 132 economies in the Global Innovation Index and the 12th position among 184 countries in the latest Index of Economic Freedom. This success is backed by a highly industrialized economy that heavily relies on foreign trade.
However, in recent years, the country has faced growing challenges. In the past, Finland’s trade balance was traditionally positive, but over the last decade, its results have deteriorated, fluctuating in subsequent years. Two decades ago, Finland was best known for Nokia’s success and its traditionally strong but modernized industries, such as forestry, paper, and engineering. According to Finnish data, during Nokia’s golden era (2000–2008), labor productivity increased by 14.6%, but following the financial crisis (2008–2023), labor productivity grew by only 1.1% in total. Since the financial crisis, Finland’s GDP per capita has stagnated. This stagnation is also reflected in international comparisons: according to the World Bank, Finland dropped to 28th place in 2023, while the U.S. Central Intelligence Agency ranked it as low as 59th in GDP based on purchasing power parity.
Finnish media highlight that the main problem is that no new major enterprises have emerged in Finland in the past 20 years to drive the country’s growth. Meanwhile, various sectors are awaiting investments, including energy, transportation infrastructure (especially railways), construction, and machinery industries.
The Need for More Investments
According to World Bank data, the inflow of foreign direct investments (FDI) to Finland has fluctuated significantly due to geopolitical conditions. Statistics Finland reports that the value of incoming FDI increased by €3.3 billion in 2023, reaching €81.6 billion by the end of the year. The largest investment inflows came from Sweden, the Netherlands, and Luxembourg.
Although foreign-owned companies represent only 1% of all companies in Finland, they have a significant impact on the country’s economy. These companies generate 23% of total revenue (€130 billion) and provide 308,800 jobs across 5,306 firms. They also employ 16% of the private-sector workforce and account for 39% of Finnish exports, worth €32 billion. According to data from the Invest in Finland platform, 247 new foreign companies were established in Finland in 2023. The last time such a low number of investments was recorded was in 2019. Preliminary data indicates that last year was not significantly different in this regard.
Polish Investments in Finland: Appetite for More
“In my opinion, Polish direct investments in Finland are still too small to fully reflect the potential and capabilities of Polish enterprises as well as the ambitions of Polish investors,” says Marek Buczak, manager of the Foreign Expansion Fund 2 at PFR TFI. “For decades, we have looked across the Baltic Sea with interest but also with caution toward the unknown. Recent months and shared geopolitical conditions and threats create a mutual need for intensified cooperation. The Foreign Expansion Fund is open to engaging in such plans and co-financing Polish investments in Finland. That’s why we are working on new investment projects in this country.”
In 2024, the Foreign Expansion Fund 2, in collaboration with Sanok Rubber Company, invested in the acquisition of Teknikum, a Finnish manufacturer of specialized industrial hoses and products made from rubber, silicone, and plastics. This transaction is one of the largest Polish direct investments in Finland. Poland is Finland’s 7th largest trade partner in both imports and exports, accounting for 3.6% of Finnish imports and 3.4% of exports.
According to Finnish customs data, the estimated value of Finnish goods exported to Poland in 2023 was €2.6 billion, while imports from Poland to Finland amounted to €2.8 billion. Polish investments in Finland in 2023 were relatively small. The value of Polish direct investment in Finland at the end of 2023 stood at 474.6 million PLN. However, investment revenues were negative, amounting to −30.7 million PLN. The largest Polish investment in Finland remains Can-Pack S.A. in Hämeenlinna, which operates a beverage can manufacturing plant.
Sources:
- High investment income to Finland from direct investments in 2023 | Statistics Finland
- Foreign direct investment (FDI) in Finland – International Trade Portal
- https://managerplus.pl/zlota-era-nokii-minela-finlandia-szuka-nowych-impulsow-wzrostu-32585
