Government’s analysis, assessment and research activities
Study: Current state and good practices of innovation-friendly regulation – how can regulation be used as an instrument for innovation policy?

Rapid technological development and the need to find solutions to challenges in society create a need for new regulatory approaches. Many countries have introduced innovation-friendly regulation practices, and regulation has become an increasingly important instrument for innovation policy. A report published on 11 May examines the current state of innovation-friendly regulation in Finland, highlights good national and international practices and makes recommendations on how innovation-friendly regulation could be further developed.

The report presents a reference framework for innovation-friendly regulation and describes the current state of innovation-friendly regulation in Finland. In addition, it identifies good practices related to innovation-friendly regulation both in Finland and internationally. Along with providing a general picture, the report examines the topic through three sector-specific examples (platform economy, circular economy and utilisation of health data).

The report concludes, among other findings, that the importance of innovation-friendly regulation has been widely recognised in Finland, but, in practice, it has been taken into account to varying degrees in different administrative sectors. The impact of legislative drafting on innovation activities has been assessed only occasionally. Clearer principles and definitions concerning how innovation can be promoted through legislative drafting will be needed in the future.

The sector-specific examples investigated as part of the study illustrated the central role of regulation in the development of new growth sectors and the importance of anticipating regulatory needs and engaging in dialogue. The international comparison showed that although several good examples of innovation-friendly regulation can be identified in Finland, Finland is still clearly lagging behind the leading countries, especially when it comes to anticipating regulatory needs and implementing “advisory regulation” practices.

As concrete policy measures, the report recommends defining the general principles and conditions for innovation-friendly regulation more precisely, strengthening cross-sectoral cooperation between ministries, specifying guidelines for evaluating legislative proposals and developing the dialogue between the authorities and businesses. The report also calls for the strengthening of the role of regulation as an instrument of innovation policy, the bolder use of innovation-friendly legislative solutions (e.g. experiments), better identification and anticipation of regulatory needs, and more efficient use of advisory regulation and implementation practices.

The project was implemented as part of the 2019 Government plan for analysis, assessment and research. The study was carried out by 4FRONT, MDI, Technopolis Group, KPMG, Tuomas Takalo (Bank of Finland/VATT Institute for Economic Research) and Otto Toivanen (Aalto University).

Inquiries:

Vesa Salminen, 4FRONT Oy, +358 40 1252 370, [email protected]
Kirsti Vilén, Ministry of Economic Affairs and Employment, +358 29 5064 008, [email protected] 

The Government’s joint analysis, assessment and research activities (VN TEAS) produce data used to support decision-making, everyday operations and knowledge-based management. They are guided by the Government’s annual plan for analysis, assessment and research. The content of the reports published in the publication series of the Government’s analysis research and research activities is the responsibility of the producers of the data in question and does not necessarily represent the view of the Government.