2022 Index of Economic Freedom

Finland

OVERALL SCORE78.3
WORLD RANK9
Rule of Law

Property Rights100.0

Judicial Effectiveness97.8

Government Integrity96.4

Government Size

Tax Burden68.4

Government Spending10.7

Fiscal Health83.2

Regulatory Efficiency

Business Freedom88.7

Labor Freedom65.1

Monetary Freedom84.9

Open Markets

Trade Freedom79.2

Investment Freedom85.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $275.5 billion
    • -2.9% growth
    • 1.1% 5-year compound annual growth
    • $49,853 per capita
  • Unemployment:
    • 7.8%
  • Inflation (CPI):
    • 0.4%
  • FDI Inflow:
    • $2.6 billion

Finland’s economic freedom score is 78.3, making its economy the 9th freest in the 2022 Index. Finland is ranked 6th among 45 countries in the Europe region, and its overall score is above the regional and world averages.

Finland’s economic growth turned negative in 2020 but rebounded in 2021. A five-year trend of expanding economic freedom has continued. Led by an increase in its rule of law (property rights, judicial effectiveness, and government integrity) scores, Finland has recorded a 4.3-point overall gain of economic freedom since 2017 and is now near the top of the “Mostly Free” category. Business freedom, monetary freedom, and trade freedom are strong, but government spending is excessive.

IMPACT OF COVID-19: As of December 1, 2021, 1,348 deaths had been attributed to the pandemic in Finland, and the government’s response to the crisis ranked 132nd among the countries included in this Index in terms of its stringency. The economy contracted by 2.9 percent in 2020.

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Background

Formerly part of Sweden and later part of the Russian Empire, Finland gained independence in 1917, joined the European Union in 1995, and adopted the euro in 1999. In December 2019, Sanna Marin of the Social Democratic Party of Finland became the world’s youngest prime minister, taking over from Antti Rinne, who had resigned because of controversy surrounding his handling of a postal strike. Prime Minister Marin heads a center-left coalition with the Centre Party, the Green League, the Left Alliance, and the Swedish People’s Party of Finland. President Sauli Niinistö of the National Coalition Party won a second term in 2018. The export-led economy is centered on manufacturing, principally in the wood, metals, telecommunications, and electronics industries.

Rule of Law

Property Rights 100.0 Create a Graph using this measurement

Judicial Effectiveness 97.8 Create a Graph using this measurement

Government Integrity 96.4 Create a Graph using this measurement

Property rights are protected by one of the world’s strongest enforcement regimes. Finland adheres to many international agreements that are 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 3rd out of 180 countries surveyed in Transparency International’s 2020 Corruption Perceptions Index.

Government Size

The top individual income tax rate is 31.3 percent, and the top corporate tax rate is 20 percent. Other taxes include value-added and capital income taxes. The overall tax burden equals 42.2 percent of total domestic income. Government spending has amounted to 54.6 percent of total output (GDP) over the past three years, and budget deficits have averaged 2.2 percent of GDP. Public debt is equivalent to 67.1 percent of GDP.

Regulatory Efficiency

Not all trades in Finland require a license; some require only notification or registration with the authorities. Labor laws are rigid and excessive. The aging of the population and the shrinking working-age demographic threaten future economic growth. According to government statistics, direct business subsidies amounted to €1.75 billion in 2020, up 268 percent from 2019.

Open Markets

As a member of the EU, Finland has 46 preferential trade agreements in force. The trade-weighted average tariff rate (common among EU members) is 2.9 percent with 640 EU-mandated nontariff measures in force. Finland has an additional 13 country-specific nontariff barriers. In general, government policies do not interfere significantly with foreign investment. The competitive financial sector provides a wide range of services.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland84.22.3
2Ireland820.6
3Luxembourg80.64.6
4Estonia801.8
5Netherlands79.52.7
6Finland78.32.2
7Denmark780.2
8Sweden77.93.2
9Iceland77-0.4
10Norway76.93.5
11Germany76.13.6
12Lithuania75.8-1.1
13Latvia74.82.5
14Czech Republic74.40.6
15Austria73.8-0.1
16Cyprus72.91.5
17United Kingdom72.7-5.7
18Georgia71.8-5.4
19Malta71.51.3
20Bulgaria710.6
21Portugal70.83.3
22Slovenia70.52.2
23Slovak Republic69.73.4
24Belgium69.6-0.5
25Poland68.7-1.0
26Spain68.2-1.7
27Croatia67.64.0
28Romania67.1-2.4
29Hungary66.9-0.3
30Albania66.61.4
31France65.90.2
32North Macedonia65.7-2.9
33Italy65.40.5
34Armenia65.3-6.6
35Serbia65.2-2.0
36Bosnia and Herzegovina63.40.5
37Azerbaijan61.6-8.5
38Greece61.50.6
39Moldova61.3-1.2
40Kosovo60.1-6.4
41Montenegro57.8-5.6
42Turkey56.9-7.1
43Russia56.1-5.4
44Ukraine54.1-2.1
45Belarus53-8.0
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