Concepts and definitions

R&D; appropriation

Government R&D funding refers to appropriations and outlays for research and development in the state budget, i.e. intentions to spend money. Public funding for research and development includes R&D appropriations allocated to ministries, central government agencies and institutions. Development work of government-owned enterprises and municipalities is not included in the calculations.

R&D; in full-time equivalents (FTE)

R&D in full-time equivalents refers to the amount of time spent on R&D work during one year of full-time work (approx. 35 hours per week), allowing for 4-6 weeks of holidays.

R&D work done outside normal working hours is taken into account in calculating R&D in full-time equivalents, provided it is remunerated.

Research and development activity

Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge.

The five criteria for identifying R&D:

To be aimed at new findings (novel)

The aim of the R&D is to produce new knowledge and novelties. Mere application of the existing knowledge in development of new solutions, products or procedures is not R&D activity.

To be based on original, not obvious, concepts and hypotheses (creative)

Characteristic to R&D activity is creativity, setting and testing of new hypothesis and concepts. Routine activities in the development of products, processes or other procedures in not R&D activity.

To be uncertain about the final outcome (uncertain)

R&D involves uncertainty regarding outcomes and costs.

To be planned and budgeted (systematic)

R&D is conducted in a planned way, with records kept of both the process followed and the outcome. The purpose of the R&D project and the sources of funding for the R&D performed should be identified. R&D is often organized as a project, but it can also be goal-oriented activity of a person or a group.

To lead to results that could be possibly reproduced (transferable and/or reproducible)

An R&D project should result in the potential for the transfer of the new knowledge which also can be reproduced.

Distribution by type of R&D

Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.

Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective.

Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Socio-economic objective

Government budget appropriations or outlays for R&D are considered in the statistics according to the social policy (socio-economic) objective. The division of government R&D funding into different objectives depends on the viewpoint of the classifier, in this case the provider of funding. The definitions used in Finland are based on the NABS classification (Nomenclature for the Analysis and Comparison of Scientific Programmes and Budgets, rev. 2007):


Industrial production and technology


Transport, telecommunication and other infrastructures


Exploration and exploitation of the earth




Culture, recreation, religion and mass media

Political and social systems, structures and processes

General advancement of knowledge: R&D financed from other sources than GUF

General advancement of knowledge: R&D financed from general university funds (GUF)

Exploration and exploitation of space

State research institute

The 12 central government research institutes in Finland operate in seven different administrative sectors. Ten of them are performance-managed agencies, one a limited company owned and controlled by the state, and one an independent public corporation. The institutes define the research priorities together with the ministry responsible for performance management. The actual research is independent and its funding comes increasingly on a competitive basis from several sources in the domestic public and private sectors, as well as from international funders.

State research institutes, with abbreviations (administrative sector):

Finnish Institute of International Affairs, UPI (Parliament of Finland)

VATT Institute for Economic Research (Ministry of Finance)

Natural Resources Institute Finland LUKE (Ministry of Agriculture and Forestry)

Finnish Food Authority (Ministry of Agriculture and Forestry)

National Land Survey of Finland NLS (Ministry of Agriculture and Forestry)

Finnish Meteorological Institute (Ministry of Transport and Communications)

Geological Survey of Finland, GTK (Ministry of Employment and the Economy)

VTT Technical Research Centre of Finland Ltd * (Ministry of Employment and the Economy)

Radiation and Nuclear Safety Authority, STUK (Ministry of Social Affairs and Health)

National Institute for Health and Welfare, THL (Ministry of Social Affairs and Health)

Finnish Institute of Occupational Health, TTL (Ministry of Social Affairs and Health)

Finnish Environment Institute, SYKE (Ministry of the Environment)

* non-profit state enterprise with special tasks

Central government research institutes conduct solution-oriented research which supports social decision-making and the renewal of business life. In addition to research activities, the institutes have a varying number of different expert and official tasks, as well as charged and other service activities. The research institutes maintain significant research infrastructures, data files and long time series on different sectors of society. Research institutes produce services horizontally to most administrative branches, the rest of the public sector, as well as enterprises and third sector operators. International co-operation plays a key role both in research activities of research institutes and in expert and official tasks.

The majority of research and development activities carried out in research institutes are financed with appropriations allocated in the state budget. In addition to budget funding R&D activities are increasingly financed by external funding consisting of income from charged services and funding from elsewhere than the institute's own budget classes. External funding mainly comes on a competitive basis from several sources and from both domestic public and private sectors and international sources. The share of external funding is based on the performance targets of the institutes and is thus estimated.

Referencing instructions:

Official Statistics of Finland (OSF): Government R&D funding in the state budget [e-publication].
ISSN=2489-3250. Helsinki: Statistics Finland [referred: 17.10.2021].
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