2017 Index of Economic Freedom

Finland

overall score74.0
world rank24
Rule of Law

Property Rights90.6

Government Integrity90.0

Judicial Effectiveness82.7

Government Size

Government Spending0.0

Tax Burden66.6

Fiscal Health77.3

Regulatory Efficiency

Business Freedom90.2

Labor Freedom53.4

Monetary Freedom85.1

Open Markets

Trade Freedom87.0

Investment Freedom85.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $225.0 billion
    • 0.4% growth
    • 0.0% 5-year compound annual growth
    • $41,120 per capita
  • Unemployment:
    • 9.6%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $8.3 billion
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Finland’s economy is characterized by openness and transparency. The quality of the legal framework is among the world’s highest, providing effective protection of property rights. The rule of law is well maintained, and a strong tradition of minimum tolerance for corruption continues.

Over the past five years, the economy has experienced economic slowdown and uncertainty. Efforts to restore economic growth, increase competitiveness, and reduce public debt continue to be at the top of the policy agenda. Government spending accounts for over half of GDP and has proven to be a drag on the economy instead of a stimulus, and public debt continues to rise.

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Background

Prime Minister Juha Sipilä of the Centre Party formed a coalition with the Eurosceptic conservative Finns Party and center-right National Coalition Party following elections in April 2015. Finland joined the European Union in 1995 and adopted the euro in 1999. It became a member of NATO’s Partnership for Peace in 1994 and sits on the Euro–Atlantic Council. In 2014, Finland became one of five nations to deepen their cooperation with NATO as enhanced opportunity partners. Recent Russian aggression against Ukraine has prompted renewed public debate about full NATO membership. Declining exports and flagging business for key Finnish companies have negatively affected the economy.

Rule of LawView Methodology

Property Rights 90.6 Create a Graph using this measurement

Government Integrity 90.0 Create a Graph using this measurement

Judicial Effectiveness 82.7 Create a Graph using this measurement

Finland has one of the world’s strongest property rights protection regimes and adheres to many international agreements intended to protect intellectual property. Contractual agreements are strictly honored. The quality of the judiciary is generally high. Corruption is not a significant problem in Finland, which was ranked second out of 168 countries surveyed in Transparency International’s 2015 Corruption Perceptions Index.

Government SizeView Methodology

The top personal income tax rate is 31.8 percent, and the top corporate tax rate is 20 percent. Other taxes include a value-added tax and a tax on capital income. The overall tax burden equals 43.9 percent of total domestic income. Government spending has amounted to 58 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.1 percent of GDP. Public debt is equivalent to 62.4 percent of GDP.

Regulatory EfficiencyView Methodology

The efficient business framework is conducive to innovation and productivity growth. The labor market, however, is characterized by high costs and burdensome regulations. The nonsalary cost of employing a worker is high, and the severance payment scheme remains costly. The government has reduced spending on subsidies for wind power and has cut entitlements and welfare spending in response to increased deficits.

Open MarketsView Methodology

Trade is important to Finland’s economy; the value of exports and imports taken together equals 74 percent of GDP. The average applied tariff rate is 1.5 percent. Finland generally welcomes foreign investment, but state-owned enterprises distort the economy. The financial sector, with sound regulations that encourage prudent lending practices, provides a wide range of services.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
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