A sign outside the Ministry of Economic Affairs and Employment in Helsinki in March 2021. The Finnish government is planning on discontinuing a research division established under the ministry to evaluate and monitor the effectiveness of business subsidies, reports Helsingin Sanomat. (Heikki Saukkomaa – Lehtikuva)
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THE FINNISH GOVERNMENT is intent on shutting down the research division on business subsidies, an independent research division established under the Ministry of Economic Affairs and Employment in 2019.
Heli Koski, the research director at Etla Economic Research, described the decision as baffling in an interview with Helsingin Sanomat on Monday.
“It seems that the government doesn’t want to make use of research-based information in decision-making, an approach that’s also reflected in the earlier decision to discontinue the government’s analysis, assessment and research activities,” she analysed.
Headed by Koski, the research division has been responsible for producing information on developing the business subsidy scheme, promoting the evaluation of subsidy effectiveness and increasing the utilisation of research in policy making. Its budget for last year was around 140,000 euros, while the government has annually coughed up over four billion euros in business subsidies, including tax benefits.
Helsingin Sanomat reminded that economists are relatively unanimous that many business subsidies are ineffective and detrimental. Typically they prop up existing business operations and distort competition, thereby complicating and slowing down innovation and operational reforms.
“The need to monitor and investigate the effects of business subsidies hasn’t disappeared. Funding for search and development has been increased by 280 million euros a year until 2024. Not all of it is business subsidies, but some is,” said Koski.
The Russian invasion of Ukraine, trade tensions between China and the US and the investments required by the climate crisis are all changes that should be examined carefully also from the viewpoint of business subsidies, she argued.
“Investigating and monitoring the effects of business subsidies is very important so that we can use state funds effectively.”
Shutting down the research division will require a decision in a plenary government session. Timo Jaatinen, a permanent secretary at the Ministry of Economic Affairs and Employment, said the political decision was made by Minister of Economic Affairs Wille Rydman (PS).
“It’s a political decision that was made due to spending cuts. Examining business subsidies is of course important, but today that work is done also by Etla and VATT Institute for Economic Research,” Jaatinen said to Helsingin Sanomat.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
