Ali-Yrkkö, Jyrki Lindström, Maarit Pajarinen, Mika Ylä-Anttila, Pekka
ETLA Discussion Papers 927
In the globalized world economy the crucial issue is locational competition - where internationally competitive firms invest and locate their high value-added production. The policy challenge is to enhance firms' capabilities to create firm-specific competitive advantages linked to certain locations and regions. According to a largescale survey to foreign and domestic-owned firms, conducted for this study, Finland's strengths in locational competition relate to social and economic stability, high technology base, high-skilled labor, and integrity of people and society. The main weaknesses relate to high personal tax rate and labor costs. International direct investment flows are expected to pick up over the next years after a couple of years decline. Consequently, deepening of international division of labor between regions and countries will continue and parts of production relocate offshore. According to survey results Baltic states and Central East European countries are among the most attractive targets for Finnish small and medium-sized companies. Investments to these countries are, to a large extent, costdriven.
Competitiveness foreign direct investment internationalization of business relocation Finland