2013 Index of Economic Freedom

Finland

overall score74.0
world rank16
Rule of Law

Property Rights90.0

Freedom From Corruption94.0

Limited Government

Government Spending12.2

Fiscal Freedom66.9

Regulatory Efficiency

Business Freedom94.8

Labor Freedom45.3

Monetary Freedom79.5

Open Markets

Trade Freedom86.8

Investment Freedom90.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 5.4 million
  • GDP (PPP):
    • $195.7 billion
    • 2.9% growth
    • 0.7% 5-year compound annual growth
    • $36,236 per capita
  • Unemployment:
    • 7.9%
  • Inflation (CPI):
    • 3.3%
  • FDI Inflow:
    • $53.8 million
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Finland’s economic freedom score is 74, making its economy the 16th freest in the 2013 Index. Its score is 1.7 points better than last year, with improvements in half of the 10 economic freedoms including the management of public finance, investment freedom, and labor freedom. Finland is ranked 7th out of 43 countries in the Europe region, and its overall score is well above the world average.

The Finnish economy continues to be one of the 20 freest in the Index. Well-secured property rights, including for intellectual property, promote entrepreneurship, productivity growth, and economic resilience. Minimum tolerance for corruption is institutionalized in an efficient legal framework that strongly sustains the rule of law. The judicial system, independent of political influence, ensures effective and transparent enforcement of commercial contracts.

Finland’s openness to foreign trade and investment provides real stimulus for a dynamic and resilient economy. A sound regulatory environment and minimal barriers to trade have contributed to competition and innovation. However, with government spending over 50 percent of GDP and public debt growing in recent years, fiscal policy is a serious concern. In a move to restore fiscal sustainability, the 2013 budget aims for greater prudence and balance in government budgeting.

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Background

In April 2011, the center-right National Coalition Party formed a six-party governing coalition with Jyrki Katainen as prime minister. In the February 2012 presidential elections, the National Coalition Party’s Sauli Niinistö won in the second round of voting, ending 30 years of Social Democrat presidencies. Finland became a member of NATO’s Partnership for Peace in 1994 and sits on the Euro–Atlantic Council, but it has not pursued full NATO membership because of its neutral military status. It joined the European Union in 1995 and adopted the euro as its currency in 1999. Finland is sparsely populated, with about one-fourth of its land mass above the Arctic Circle. It boasts a modern and competitive economy with vibrant information and communications technology sectors.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 94.0 Create a Graph using this measurement

Property rights are well protected, and contractual agreements are strictly honored. The quality of the judiciary is generally high. Finland adheres to numerous international agreements concerning the protection of intellectual property. In 2012, a district court handed down unprecedentedly strong sentences to several businessmen who were accused of bribing politicians in the 2007 general election.

Limited GovernmentView Methodology

The top income tax rate is 30.5 percent, and the top corporate tax rate is 24.5 percent. Other taxes include a value-added tax (VAT) and a capital income tax. The overall tax burden is 42.1 percent of total domestic income. Government spending remains high at 54.1 percent of GDP, but the budget deficit has shrunk. Public debt remains under control, with implementation of fiscal reforms scheduled for the next few years.

Regulatory EfficiencyView Methodology

The efficient and transparent regulatory framework encourages entrepreneurship. Launching a business costs about 1 percent of the level of average annual income and takes only three procedures. The non-salary cost of employing a worker is moderate, and severance payments are not overly burdensome. Monetary stability has been well maintained, although rising food prices have edged inflation higher.

Open MarketsView Methodology

Finland’s trade policy is the same as that of other members of the European Union, with the common EU weighted average tariff rate standing at 1.6 percent. Finland is open to international trade and investment, and investment regulations are transparent and efficient. The well-developed financial system is competitive and provides a wide range of services. Banking remains generally sound despite strains in global financial markets.

Country's Score Over Time

Bar Graph of Finland Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Finland to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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