Date Added: Jun 2009
Low aggregate investment in Finland has been argued to merely reflect structural change to an innovation economy, with high R&D levels adequately compensating for reduced physical investment. This paper briefly reviews the issues and discusses the severity and persistence of the shortage. Immaterialization of investment clearly plays a role and outward FDI crowds out domestic investment to some extent. Yet, the authors find no obvious explanation to low investment in the real economy relative to other western economies, since Finland fares rather well in multi-factor productivity and country risk and the supply of capital abode before the onset of the global crisis.