Bottlenecks in the Development of the Finnish Private Service Sector: How to Accelerate Productivity?

Natalia Kuosmanen, Ville Kaitila, Tero Kuusi and Terhi Maczulskij

No 164, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract Productivity growth in Finland’s service industries has fallen behind that of peer countries, weakening the economy’s growth potential. This policy brief summarizes key findings from ETLA’s recent research on the challenges and opportunities for service-sector productivity. The analyses show that capital intensity in services is low, firms employ fewer workers than profit-maximizing conditions would imply, and digital adoption remains uneven across firms and industries. Service imports increase employment but do not improve productivity. Generative artificial intelligence (GenAI) could provide a new source of growth, but its impact will depend on skills and technology adoption. The brief presents policy recommendations to support investment, skills development, and structural reforms to strengthen productivity in the service sector.

Keywords: Capital intensity; Digitalization; Offshoring; Productivity; Service industries (search for similar items in EconPapers)
JEL-codes: F14 L80 O14 O30 O33 O47 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2025-09-24
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