This chapter assesses the overall policy implementation and effectiveness of measures aimed at strengthening economic resilience, security, and regional development in Finland’s eight eastern and southeastern border regions. Effective implementation has been strongest where multi-level governance, regional leadership, and innovation ecosystems are well developed. However, persistent challenges, including demographic decline, workforce shortages, regulatory complexity, and dependence on external funding, continue to constrain outcomes. The chapter concludes that achieving long-term resilience will require more flexible, region-specific policies, co-ordinated governance, and sustained national and EU support.
Transition Strategies for Finland’s Eastern and South‑Eastern Border Regions
Adapting to Geopolitical Change
Abstract
The eight eastern and southeastern border regions of Finland face a range of common challenges stemming from their geographical position, economic structures, and demographic trends. However, these regions also present unique opportunities in various sectors, including renewable energy, defence‑related industries, mining, and international trade. This chapter examines briefly both the shared challenges and opportunities across these regions and the specific difficulties and opportunities that set them apart.
Shared challenges across the regions
While each region has distinct characteristics, several key challenges are common across all eight border regions. One of the most pressing issues is obvious: the economic fallout from the closure of the Russian border and the resulting disruption to trade, tourism, production, and investment. Many of these regions had long-standing economic ties with Russia, and the sudden loss of cross-border business has affected local economies. This is particularly evident in sectors such as tourism, forestry, manufacturing, and retail trade, which operated in Russian markets and utilised supply chains.
Another major shared challenge is demographic decline and workforce shortages. Population decline has been a persistent trend across these regions, exacerbated by the population ageing and outmigration of younger, highly skilled workers to southern Finland’s urban centres. This has resulted in a shrinking labour force, creating difficulties in filling vacancies in key sectors. Attracting domestic and international talent has been difficult. International migration has faced both bureaucratic barriers and limited local infrastructure to support integration efforts.
Infrastructure deficits and transport connectivity limitations are also common concerns. The loss of cross-border transport routes has forced regions to reorient logistics flows. This will require significant investments in alternative transport corridors. While rail and road connections remain vital, many regions lack direct international air links, limiting their attractiveness for foreign investors and businesses with global operations.
Energy security and the transition to renewables present additional shared challenges. The collapse of Russian energy imports has intensified the need for self-sufficiency, but not all regions have equal capacity to scale up renewable energy production. Military radar restrictions have further constrained wind energy development in some areas, while national grid infrastructure limits the ability of certain regions to benefit from their renewable energy potential.
Finally, security concerns and resilience-building have become critical issues across the eastern border. These regions are at the frontline of Finland’s national security strategy following Finland’s NATO membership. The need for enhanced border security, cyber resilience, enhancing security of supply and emergency preparedness has grown, yet many municipalities lack the expertise and financial resources to address these challenges effectively. The regions have increasingly sought national and EU-level support to reinforce their security infrastructure and emergency response capabilities.
Opportunities across the regions
Despite these challenges, several opportunities exist for economic growth, innovation, and security‑driven development in the eastern border regions. The shift in geopolitical orientation has encouraged regions to strengthen ties with Nordic and EU partners, creating new avenues for trade, investment, and research and innovation collaboration.
One of the most significant opportunities lies in renewable energy development. With Finland aiming for energy self-sufficiency, several regions have substantial potential in wind, solar, and bioenergy production. Hydrogen economy initiatives are also gaining traction. However, unlocking this potential requires improvements in national grid infrastructure and strategic policy support to overcome defence‑related restrictions on wind power development.
The expansion of defence and security-related industries presents another potential growth avenue. Finland’s NATO membership has increased the strategic relevance of eastern border regions, particularly in terms of military mobility and logistics. Lapland’s Arctic location makes it a key site for NATO exercises, while South Savo’s NATO sub-command in Mikkeli strengthens its role in defence planning. These developments create opportunities for defence-related investments, including the production of dual-use goods and cybersecurity innovations. Additionally, the presence of allied troops training in Finland presents opportunities for service provision, including logistics, maintenance, and support industries.
Mining and raw materials extraction represent another major opportunity for several of these regions. Lapland and North Ostrobothnia are already significant players in Finland’s mining sector, with critical minerals essential for battery technology and the green transition. Kainuu, with its Terrafame mine in Talvivaara, also plays a key role supplying materials crucial for European industries. North Savo and North Karelia also hold potential for further exploration of industrial minerals. However, environmental concerns and regulatory constraints must be carefully managed to ensure sustainable mining practices and long-term economic benefits for local communities.
Digitalisation and remote work trends offer another opportunity to counteract population decline and economic stagnation. Improving broadband infrastructure and smart work hubs could attract professionals who prefer to live in smaller communities while working remotely for national or international employers. Expanding digital connectivity would also enhance the regions' ability to participate in global markets and foster innovation-driven businesses.
Finally, sustainable tourism and bioeconomy innovation remain promising sectors for certain regions. Lapland’s tourism industry continues to attract international visitors, serving as a model for other regions seeking to expand their tourism offerings. Several border regions also have strong forestry sectors, with opportunities to develop bio-based industries and sustainable construction materials. Ensuring that these sectors receive targeted investments and workforce development support will be crucial to maximising their potential.
Unique challenges and opportunities by region
Despite overarching similarities, each region faces unique challenges and opportunities that shape its development path. This subsection does not aim to be exhaustive but rather highlights a few key aspects for each region.
Lapland benefits from its strategic Arctic location and NATO-related military activities, while its tourism and mining sectors provide significant economic opportunities. However, its sparse population and vast geography present difficulties in service provision and infrastructure expansion.
North Ostrobothnia leads in innovation, renewable energy, and mining but requires grid investments to fully capitalise on its wind and bioenergy potential.
Kainuu is struggling with demographic decline, but its mining sector, tourism, ICT, and bioeconomy, provide strong industrial potential. However, the region's infrastructure, particularly in terms of transportation and connectivity, needs improvement to support economic growth,
North Savo remains a key industrial hub but must navigate supply chain disruptions and competition from southern regions for high-tech investment. It also has growing opportunities in sustainable mining and mineral processing.
North Karelia has strong bioenergy capabilities and sustainable forestry initiatives but has been forced to reorient its economic strategy away from Russian markets.
South Karelia was among the hardest-hit regions following the loss of Russian trade and tourism. However, new economic opportunities are emerging in the green transition, where LUT University plays a key role. The region is also home to Europe’s most significant forest industry cluster, which has strong potential for future growth.
South Savo has strengths in tourism, agriculture, and small-scale industry, with its NATO sub‑command in Mikkeli opening up new defence-related prospects.
Kymenlaakso has strong logistics and port infrastructure, positioning itself as a key node in Finland’s western trade corridors, yet must replace the trade volume lost from Russia.
Conclusion
The eastern and southeastern border regions of Finland face a complex set of challenges and opportunities as they adapt to shifting geopolitical, economic, and security conditions. While they share common struggles - such as economic disruptions, demographic decline, and security vulnerabilities - each region has distinct assets that can be leveraged for future growth. Renewable energy expansion, NATO-driven economic opportunities, digital transformation, tourism, mining, and sustainable industries present viable pathways for resilience and prosperity. However, unlocking these opportunities requires targeted investments, co‑ordinated governance, and strong national and EU-level support to ensure that these regions remain competitive.
The implementation of policies aimed at fostering economic resilience, security, and regional development in Finland’s eastern and southeastern border regions has faced varied levels of success. The effectiveness of these policies is influenced by a range of factors, including regional capacity, governance structures, funding availability, and geopolitical developments. While some initiatives have yielded positive results in specific areas, persistent challenges continue to hinder comprehensive policy impact. This chapter assesses the outcomes of key policy measures across the eight regions, aiming to identify factors that have contributed to successful implementation, and highlight the primary barriers preventing the achievement of policy objectives.
Assessment of policy outcomes across the eight regions
The eight eastern and southeastern border regions have seen mixed outcomes in policy implementation. While national and EU-level support has provided essential funding and strategic direction, regional disparities in economic structure, governance capacity, and external conditions have led to differing levels of effectiveness.
Economic diversification policies have had varied impacts across regions. While Lapland and North Ostrobothnia have successfully attracted investment in renewable energy and mining, regions such as Kainuu continue to experience problems due to demographic decline and workforce retention challenges, despite strengths in mining, ICT, and bioeconomy sectors.
Infrastructure and connectivity investments have improved access to markets, particularly in Kymenlaakso and South Karelia, where port and logistics development has been prioritised. However, the loss of cross-border trade routes with Russia has weakened the economic position of regions that previously depended on these connections.
Labour market and skills development initiatives have been unevenly implemented. While North Savo and North Karelia have seen positive results from vocational training programs and research-driven economic strategies, other regions, such as Kainuu, continue to face difficulties in attracting and retaining skilled workers despite targeted interventions.
Security and resilience measures have seen increased attention due to Finland’s NATO membership. Investments in border security, military infrastructure, and cybersecurity have strengthened resilience in eastern and southeastern regions, but integration with broader regional development policies remains a work in progress.
Factors influencing successful implementation
Certain key factors have contributed to the successful implementation of policies in some regions, leading to more effective economic and social outcomes.
Strong multi-level governance and co‑ordination have played a crucial role in ensuring that national and EU policies are effectively adapted to regional contexts. In North Ostrobothnia and Lapland, close co‑operation between regional authorities, local businesses, and educational institutions has facilitated industrial innovation and workforce development.
Strategic use of EU cohesion funding and national funding has enabled regions such as Kymenlaakso and South Karelia to invest in transport infrastructure and energy transition projects, creating new economic opportunities.
Proactive regional leadership and innovation ecosystems have driven economic transformation in regions like North Savo, where targeted investments in research and development (R&D) have supported emerging industries such as smart manufacturing and hydrogen economy initiatives.
International partnerships and alternative market access strategies have been critical in mitigating the effects of losing Russian trade. Some regions have successfully repositioned their economies by strengthening ties with Nordic and Baltic partners, opening new avenues for trade and investment.
Barriers to achieving policy objectives
Despite these successes, several structural and operational barriers continue to impede the full realisation of policy objectives in the eastern border regions.
Financial constraints and dependence on external funding limit the ability of regions to implement long-term development strategies. Many municipalities are reliant on national and EU subsidies, making them vulnerable to shifts in funding priorities.
Bureaucratic complexity and regulatory challenges slow down project approval processes, particularly in sectors such as energy infrastructure, where environmental and defence-related restrictions complicate investment decisions.
Workforce shortages and demographic decline create ongoing difficulties in sustaining regional economies. While efforts have been made to attract foreign workers, slow administrative procedures and insufficient integration support have hindered these initiatives.
Limited policy adaptability to regional needs remains a concern. National policies do not always account for the unique challenges faced by individual regions, leading to a mismatch between policy design and on-the-ground realities.
Geopolitical uncertainty and security considerations have added new layers of complexity to policy implementation. The need to balance economic development with national security priorities - such as military mobility and border control - has led to trade-offs that slow down progress in other areas.
Conclusion
The implementation of policies aimed at enhancing the resilience and development of Finland’s eastern and southeastern border regions has yielded both successes and ongoing challenges. While infrastructure investments, economic diversification efforts, and security measures have contributed to regional adaptation, significant barriers remain in financial sustainability, workforce retention, and policy adaptability. Ensuring the long-term effectiveness of these policies will require a more flexible, region-specific approach that takes into account both local conditions and broader national and international dynamics. Strengthening governance structures, improving funding mechanisms, and streamlining regulatory processes will be essential in addressing the remaining gaps and securing sustainable development for Finland’s eastern and southeastern border regions.
The Eastern Border Region’s attractiveness profile (as explored by individual regions in Chapter 4) shows shared assets and shared gaps across many domains of regional attractiveness. Meanwhile, some domains illustrate notable variance, even within this larger region (see Figure 6.1). In terms of Economic Attractiveness, the heterogeneity is especially evident in Innovation. While North Ostrobothnia leads within the EU, most other regions lag significantly behind. Conversely, Labour Market indicators are uniformly below the EU average, driven mainly by high youth unemployment. Cultural and Visitor Appeal also shows variation. Most regions lag behind the EU average in tourism, but two regions, Lapland and Kainuu, stand out as leaders. On the other hand, cultural assets are a shared strength, characterized by a rich array of theatres, galleries, museums, and a vibrant cultural industry. Land Resilience is notably low in some regions, such as North Savo and Kymenlaakso. However, Housing affordability emerges as a key strength, serving as a significant determinant of talent attractiveness. In terms of Resident Well-being, all regions demonstrate strong performance in Social Cohesion, supported by ample community amenities and high levels of safety. However, accessibility to Health and Education services remains a significant challenge, with long distances and limited infrastructure reducing access, particularly in larger regions farther from the capital. Connectedness dimension present additional barriers, with low levels of digital connectivity and sparse road networks hindering both social and economic integration across the region. Finally, Environment stands out as a major strength with clean air and renewable energy powering most of the regional energy grid, however higher emissions from the transport sector pose a threat to environmental well-being. In addition, the large region boasts one of the largest forest areas in the EU, though tree coverage has been declining in recent decades.
Note: The figure illustrates the compound score for each dimension, taking into account comparisons with the EU.