2015 Index of Economic Freedom

Finland

overall score73.4
world rank19
Rule of Law

Property Rights90.0

Freedom From Corruption89.0

Limited Government

Government Spending3.6

Fiscal Freedom66.4

Regulatory Efficiency

Business Freedom92.6

Labor Freedom54.8

Monetary Freedom79.9

Open Markets

Trade Freedom88.0

Investment Freedom90.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $194.2 billion
    • -1.4% growth
    • -1.0% 5-year compound annual growth
    • $35,617 per capita
  • Unemployment:
    • 8.1%
  • Inflation (CPI):
    • 2.2%
  • FDI Inflow:
    • $-1064.8 million
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Finland’s economic freedom score is 73.4, making its economy the 19th freest in the 2015 Index. Its score is unchanged from last year, with improvements in labor freedom, fiscal freedom, monetary freedom, and trade freedom counterbalanced by declines in the management of government spending, freedom from corruption, and business freedom. Finland is ranked 9th out of 43 countries in the Europe region, and its overall score is well above the world average.

Finland, a top performer in economic freedom in both Europe and the world, remains a dynamic and flexible economy. However, over the past five years, its strong growth in economic freedom has ended, with declines in business freedom, monetary freedom, and control of government spending offsetting significant improvements in labor freedom. Economic growth has also stagnated.

A European leader in information and communications technology, Finland has developed a strong domestic market with openness, efficiency, and flexibility at its core. The rule of law is buttressed by strong property rights, and the perceived level of corruption is one of the world’s lowest. As with other Nordic countries, government spending is high relative to the domestic economy, but the government remains committed to meeting deficit targets.

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Background

With about one-fourth of its land mass above the Arctic Circle, Finland is sparsely populated. Prime Minister Jyrki Katainen of the center-right National Coalition Party stepped down in 2014. His successor, Alexander Stubb, formed a five-party government coalition in June. Finland joined the European Union in 1995 and adopted the euro as its currency in 1999. It also became a member of NATO’s Partnership for Peace in 1994 and sits on the Euro–Atlantic Council. Public debate on pursuing full NATO membership has renewed in response to recent Russian aggression against Ukraine. Although growth remains sluggish, Finland’s economy is modern and competitive, with a focus on international trade and vibrant information and communications-technology sectors.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 89.0 Create a Graph using this measurement

Corruption is not a significant problem in Finland, which was ranked second out of 177 countries surveyed in Transparency International’s 2013 Corruption Perceptions Index. Secured interests in movable and real property are recognized and enforced. Contractual agreements are strictly honored. The quality of the judiciary is generally high. Finland adheres to many international agreements that aim to protect intellectual property.

Limited GovernmentView Methodology

Finland’s top individual income tax rate is 31.8 percent, and its top corporate tax rate has been reduced from 24.5 percent to 20 percent. Other taxes include a 28 percent flat tax on capital income and a value-added tax. The total tax burden equals 44.1 percent of domestic income, and government spending is equivalent to 56.7 percent of domestic output. Public debt equals 57 percent of GDP.

Regulatory EfficiencyView Methodology

The overall regulatory framework is transparent and competitive. Launching a business is subject to minimum capital requirements but takes only three procedures. Bankruptcy procedures are modern and efficient. Labor regulations are relatively rigid, and the non-salary cost of employing a worker is high. Monetary stability has been well maintained, but the government subsidizes numerous biogas, wind, and solar energy projects.

Open MarketsView Methodology

EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. The Finnish government generally treats foreign and domestic investors equally. The financial sector, market-driven and competitive, offers a wide range of financing options. Supervision of banking is prudent, and regulations are largely consistent with international norms. Credit is allocated on market terms.

Country's Score Over Time

Bar Graph of Finland Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Switzerland80.5-1.1
2Estonia76.80.9
3Ireland76.60.4
4Denmark76.30.2
5United Kingdom75.80.9
6Lithuania74.71.7
7Germany73.80.4
8The Netherlands73.7-0.5
9Finland73.40.0
10Luxembourg73.2-1.0
11Georgia730.4
12Sweden72.7-0.4
13Czech Republic72.50.3
14Iceland72-0.4
15Norway71.80.9
16Austria71.2-1.2
17Latvia69.71.0
18Belgium68.8-1.1
19Poland68.61.6
20Cyprus67.90.3
21Spain67.60.4
22Slovakia67.20.8
23Armenia67.1-1.8
24Macedonia67.1-1.5
25Hungary 66.8-0.2
26Bulgaria66.81.1
27Romania66.61.1
28Malta66.50.1
29Albania65.7-1.2
30Portugal65.31.8
31Montenegro64.71.1
32Turkey63.2-1.7
33France62.5-1.0
34Italy61.70.8
35Croatia61.51.1
36Slovenia60.3-2.4
37Serbia 600.6
38Bosnia and Herzegovina590.6
39Moldova57.50.2
40Greece54-1.7
41Russia52.10.2
42Belarus49.8-0.3
43Ukraine46.9-2.4
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