This chapter presents a comprehensive set of recommendations for strengthening resilience, competitiveness, and sustainability across Finland’s eight eastern and southeastern border regions. It outlines common priorities shared by all regions, such as advancing the bio- and circular economy, improving labour market matching, upgrading transport and digital infrastructure, promoting renewable energy, enhancing security and preparedness, and deepening multi-level governance. Alongside these cross-cutting recommendations, the chapter provides tailored guidance for each region, reflecting their distinct strengths, vulnerabilities, and development needs. For each region, targeted actions are accompanied by proposed implementation pathways, key actors, indicative resources, and potential indicators, forming the basis for actionable transition strategies in a rapidly changing geopolitical and economic context.
Transition Strategies for Finland’s Eastern and South‑Eastern Border Regions
11. Recommendations for the eight regions
Copy link to 11. Recommendations for the eight regionsAbstract
This section presents recommendations for each of the eight regions individually. As many of the priorities and challenges are shared across all or most of the regions, a set of common recommendations is outlined first. These apply to all eight regions and provide a foundation for co‑ordinated planning, advocacy, and joint investment. In addition, a set of region-specific recommendations are outlined to address the specific situation of each region.
The region-specific recommendations are organised under six main themes:
1. Economic resilience and diversification
2. Labour market and skills development
3. Infrastructure and connectivity
4. Environmental sustainability
5. Security and readiness
6. Multi-level governance
Common recommendations across all regions
Copy link to Common recommendations across all regionsThis section summarises the recommendation that are made to all regions, with different degrees and strengths depending on the region’s situation.
Promoting bioeconomy and circular economy initiatives (Theme 1). All regions are recommended to prioritise the development of the bioeconomy and circular economy to build resilience and sustainable growth. For example, some regions are encouraged to develop biorefineries and circular tourism, expand the use of forestry by-products and industrial bioenergy, strengthen agro-forestry value chains, or support large-scale bioproduct and hydrogen projects. Others are advised to leverage local universities to drive innovation in hydrogen and carbon capture.
Aligning education and vocational training with regional industry needs (Theme 2). A common recommendation for all regions is to align vocational education and training more closely with regional industry needs. Examples include focusing on key sectors such as tourism, forestry, and digital industries; expanding hybrid and digital formats to reach remote learners; and adapting to national funding cuts through local vocational training innovations. All regions should deepen collaboration between educational providers and industries.
Attracting and retaining skilled workforce (including international talent) (Theme 2). All regions are recommended to address demographic decline and labour shortages through targeted workforce strategies. For example, some regions could pilot financial incentives such as housing support and student loan repayment schemes. Others are advised to expand integration services for international talent, including language and employment support. Marketing regions as attractive destinations for digital and skilled professionals is also encouraged. All regions are encouraged to enhance onboarding processes, language training, and international student retention efforts.
Transport infrastructure improvements (Theme 3). The eight regions are recommended to support efforts to fill gaps in transport connectivity through targeted infrastructure investments and strategic advocacy. Examples include improving east-west corridors and infrastructure relevant to national defence, upgrading rail and road networks to support industrial and logistical development, and advancing plans for major railway and port access infrastructure. All regions are advised to advocate for the inclusion of these priorities in national investment and planning programmes.
Expansion and improvement of digital connectivity (broadband and 5G) (Theme 3). All regions are recommended to address digital infrastructure gaps, particularly in rural and border municipalities. Examples include developing strategies to overcome 5G restrictions in border areas, positioning regions as digital work hubs, promoting the development of regional digital centres, and expanding rural broadband to support innovation and resilience.
Developing and promoting renewable energy sources (Theme 4). All regions are advised to advance renewable energy initiatives to enhance energy security and attract investment. For example, some regions should explore opportunities in wind, hydrogen, solar, and energy storage, while others may leverage significant wind capacity or promote agro-bioenergy and solar energy. Promoting flexibility in wind power zoning and supporting green hydrogen projects are also recommended.
Enhancement of regional crisis co‑ordination and preparedness (Theme 5). All regions are encouraged to strengthen crisis co‑ordination and preparedness. Illustrative recommendations include focusing on defence co‑ordination and dual-use infrastructure, establishing comprehensive security centres, developing regional security hubs, and investing in cybersecurity measures to protect logistics and industrial assets.
Expansion of decentralised energy for resilience (Theme 5). All regions are advised to explore decentralised energy models to enhance resilience. For instance, regions are encouraged to promote biogas, small-scale hydro, and solar energy projects, support decentralised production to address grid limitations, and aim for greater energy self-sufficiency in light of security risks.
Cross-border and international collaboration (Theme 6). All regions are recommended to redirect efforts toward Nordic and EU collaboration following the loss of Russian co‑operation. Examples include strengthening ties with neighbouring countries, expanding participation in EU-funded programmes such as Interreg and cross-border research initiatives, and advocating for common interests at EU level.
Formalisation of youth participation in governance (Theme 6). All regions are encouraged to formalise youth participation in governance to ensure that regional strategies reflect the aspirations of younger generations. For example, it is recommended that regions establish youth councils or similar frameworks.
Recommendations for Lapland
Copy link to Recommendations for LaplandEconomic resilience and diversification
To enhance economic resilience and diversification in Lapland, the region should prioritise the advancement of the bioeconomy and circular economy. This includes encouraging collaboration between regional businesses, universities, and research institutes to develop bio-based innovations and attract EU and national funding. Practical steps involve supporting the establishment of bio-refineries and pilot projects by providing planning assistance, facilitating partnerships, and co‑ordinating regional project development. At the same time, circular economy initiatives - such as waste reduction, recycling, and resource efficiency - should be promoted through awareness campaigns and municipal co‑operation.
Lapland’s strategic location and Arctic expertise also provide a strong basis for positioning the region as a national hub for defence, cybersecurity, and dual-use technology industries adapted to Arctic conditions. Regional authorities should promote partnerships and networks to strengthen these sectors and actively advocate for national incentives, including the potential establishment of Special Economic Zones (SEZs) (see Box 11.1 for an example from Sweden).
In the energy sector, Lapland can contribute to the green transition by co‑ordinating investments in alternative energy sources such as solar, bioenergy, hydrogen, and energy storage. These efforts should include feasibility assessments, planning co‑ordination, and advocacy for national and EU-level support. Furthermore, opportunities for wind power development should continue to be explored in locations compatible with defence-related restrictions, based on recent surveys.
Tourism remains a critical sector for Lapland’s economy. To secure its sustainability and growth, the region should support investments in low-impact tourism infrastructure and digital innovations, alongside international marketing efforts to offset the decline in Russian visitors, particularly in Eastern Lapland. Infrastructure improvements to boost accessibility will be vital for long-term development. At the same time, maintaining Lapland’s appeal as a tourism destination requires co‑ordinated action to address housing supply, affordability, and access to essential services. The Lapland Regional Council should also continue advocating at the national level for improved investment conditions, including faster permitting processes for mining and green transition projects. Strengthening regional self-sufficiency should also be a priority, through support for local value chains and industries that process local raw materials, reducing reliance on unprocessed exports.
Box 11.1. Sweden's civil-military innovation program: strengthening defence through dual-use technologies
Copy link to Box 11.1. Sweden's civil-military innovation program: strengthening defence through dual-use technologiesIn April 2025, Vinnova, Sweden's innovation agency, in collaboration with the Swedish Armed Forces, announced new investments aimed at enhancing the nation's defence capabilities by leveraging civilian innovations. This initiative focuses on developing dual-use technologies - solutions applicable in both civilian and military contexts.
Key Objectives:
Fostering collaboration: Encourage partnerships between civilian innovators and military stakeholders to address defence-related challenges.
Accelerating dual-use innovations: Support small and medium-sized enterprises (SMEs) in adapting groundbreaking civilian technologies for military applications.
Addressing modern battlefield challenges: Develop solutions for issues such as constant surveillance on the battlefield, utilising technologies like AI, autonomous systems, and advanced sensors.
The Luleå region, with its strong Arctic expertise and technological infrastructure, has been actively involved in this initiative. Luleå University of Technology (LTU) has participated in projects focusing on autonomous systems and advanced materials, contributing to the development of technologies suitable for cold-climate operations. Additionally, local SMEs in Luleå have engaged in collaborations to adapt their innovations for defence applications, further integrating the region into Sweden's national defence strategy.
Source: (VINNOVA, 2025[1])
Labour market and skills development
Improving the match between labour supply and demand is essential for Lapland’s economic sustainability. Regional authorities should strengthen collaboration between businesses, vocational institutions, and universities to design tailored training programmes aligned with the needs of priority sectors such as tourism, digital industries, bioeconomy, and defence. To address acute skill shortages, Lapland could pilot regionally co‑ordinated incentives such as relocation grants, housing support, or temporary wage supplements in partnership with municipalities and employers.
National-level reforms are also essential. Lapland should actively advocate for broader fiscal incentives to attract and retain talent, such as student loan compensation schemes inspired by models used in countries like Norway.
Youth engagement should be institutionalised by formalising frameworks that allow younger residents to participate in strategic regional planning, ensuring their perspectives are reflected in long-term development goals. In parallel, regional initiatives should be developed to attract and retain talent by promoting foreign-language degree programmes in co‑operation with local higher education institutions.
The integration of skilled workers should also be supported through stronger onboarding programmes and regional integration efforts, co‑ordinated with employers and schools. To ease labour market entry, Lapland should advocate for streamlined administrative procedures and practical models such as work-based learning and simplified employment pathways for international talent.
Infrastructure and connectivity
Infrastructure upgrades are critical to support Lapland’s economic development and ensure security in its role as a NATO border region. The region should actively advocate and strategically plan for the modernisation of key transport routes, particularly east-west road and rail links and border-crossing points with Sweden and Norway. These improvements should serve both civilian connectivity and military mobility requirements.
Digital infrastructure is equally important. Lapland should co‑ordinate regional efforts to expand broadband and explore alternative wireless technologies in border areas where 5G deployment is restricted. Achieving 100% digital coverage will require targeted national and EU financial support. Likewise, modernisation of the electricity grid - especially the 400 kV transmission network - is essential to improve energy resilience, maintain grid stability, and attract energy-intensive industries.
All regional infrastructure planning should integrate military mobility considerations, ensuring that roads, railways, and logistics systems are fit for dual-use and aligned with Finland’s NATO commitments. Major projects such as the Fell Railway and the Sokli railway should be reframed in terms of national interest, particularly their importance for supply chain resilience and strategic connectivity in the event of maritime disruptions. Active engagement with national policymakers is crucial to secure support for these projects.
Environmental sustainability
Environmental sustainability should remain a cornerstone of Lapland’s development. The region should prioritise nature-based solutions by integrating biodiversity conservation and climate resilience into land-use planning. This includes protecting natural habitats, promoting biodiversity-friendly forestry practices, and ensuring the ecological sustainability of tourism infrastructure.
At the same time, municipalities and local businesses should be encouraged to adopt circular economy principles, including waste reduction and recycling, through co‑ordinated regional initiatives and support for bio-based innovation. For example, the Regional Council of Lapland and local municipalities could develop tools to advance green infrastructure and implement zero-waste tourism models, building on successful approaches from other parts of Finland and the Nordic region, such as green infrastructure planning in Sweden’s Norrbotten region (see also Box 11.2).
Clean mobility should also be a focus area. Investments in electric vehicle (EV) charging networks and alternative fuel infrastructure (e.g. biogas, LNG) should be facilitated, especially in tourism-intensive areas where such investments align with national decarbonisation goals. Securing national and EU co-financing will be vital to make these infrastructure projects viable.
Box 11.2. Green infrastructure planning in Norrbotten, Sweden
Copy link to Box 11.2. Green infrastructure planning in Norrbotten, SwedenIn Sweden’s northernmost region of Norrbotten, regional and municipal authorities have proactively integrated green infrastructure into land-use and spatial planning to enhance biodiversity, climate resilience, and sustainable development. The initiative is part of Sweden’s national green infrastructure strategy and has been supported by national environmental agencies.
The approach involves mapping ecologically valuable areas, establishing green corridors that connect habitats across municipal boundaries, and incorporating ecosystem services into local zoning decisions. Municipalities like Luleå and Boden have used this framework to preserve wetlands, support rewilding, and promote multifunctional landscapes that also serve recreation and climate adaptation goals.
The process is facilitated by inter-municipal co‑operation, technical support from the Swedish Environmental Protection Agency (Naturvårdsverket), and EU co-financing through programmes like LIFE and ERDF. The Norrbotten case demonstrates how co‑ordinated, regional-scale planning can make green infrastructure a foundational component of rural and urban development, especially in Arctic and sub-Arctic settings where natural ecosystems are both fragile and central to economic identity.
Security and readiness
Given its strategic location, Lapland should take a proactive role in strengthening regional security and preparedness. Co‑operation with national authorities and the Wellbeing Services County should be deepened to establish enhanced regional co‑ordination centres and explore the deployment of AI-based early-warning systems to improve emergency response capacity.
Lapland should also work to establish a regional defence innovation hub, bringing together NATO actors, the Finnish Defence Forces, academic institutions, and private companies. Such a hub would position Lapland at the forefront of national and EU security strategies. At the same time, the region should ensure that its specific security needs are fully reflected in national-level planning - particularly in border security - by maintaining strong dialogue with the Finnish Border Guard and other authorities.
The deployment of advanced surveillance technologies, including drones and sensor networks, should be supported through national investments. Additionally, regional security planning must involve municipalities, businesses, and civil society organisations to build a broad-based approach to resilience and preparedness.
Multi-level governance
Effective multi-level governance is essential for implementing the above priorities. Lapland should continue to strengthen international co‑operation, particularly with Northern Norway and Northern Sweden, and participate actively in cross-border programmes such as Interreg Europe and the Aurora initiative. These collaborations are especially important given the decline of Barents co‑operation in recent years.
To maintain strategic development and regional resilience, Lapland should also work with other eastern and southeastern Finnish regions to develop new cross-border co‑operation frameworks. These efforts can help address co‑ordination gaps at the national level and support joint solutions for common challenges. Moreover, Lapland should play an active role in municipal-level collaborative initiatives like the 'Rajakuntahanke', to develop joint projects and policy responses tailored to the unique conditions of the eastern border.
Proposal for Action Plan
The proposed action plan for Lapland (Table 11.1) sets out concrete measures to strengthen the region’s resilience, competitiveness, and long-term sustainability in light of global, European, and national transitions. Lapland’s distinctive Arctic position, natural resources, and expertise in tourism and cold-climate innovation provide strong opportunities for diversification and growth, but the region also faces structural challenges related to remoteness, demographic pressures, and exposure to geopolitical risks.
The proposed plan addresses these issues across six interconnected themes: economic resilience and diversification, environmental sustainability, infrastructure and connectivity, labour market and skills development, security and readiness, and multi-level governance. Key actions include piloting an Arctic-focused SEZ proposal, promoting circular bioeconomy and dual-use testbeds, advancing TEN-T Arctic Corridor and 5G pilot corridors, and launching an Arctic defence innovation hub. The plan also emphasises the importance of civil society and Sámi organisations in preparedness, as well as cross-border co‑operation with Northern Norway and Sweden.
Table 11.1. Proposed action plan for Lapland
Copy link to Table 11.1. Proposed action plan for Lapland|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Map key actors and initiatives in bioeconomy, circular economy, and Arctic innovation; organise cluster-building workshops and prepare proposals for Arctic innovation hubs; launch pilot projects on bio-based and circular products with SMEs and universities; support commercialisation pathways for dual-use Arctic testbeds (e.g. cold-climate technologies, defence-related trials); prepare and submit SEZ pilot proposal focused on Arctic industries (dual-use, clean energy, mining tech) co‑ordinated with the national SEZ framework. |
Regional Council of Lapland; municipalities and their coalitions (joint municipal authorities); universities (Lapland University, Lapland UAS, other universities); VTT; SMEs and industrial firms; Business Finland; Ministry of Economic Affairs and Employment; Ministry of Defence |
Business Finland; Ministry of Economic Affairs and Employment; ERDF; Horizon Europe; Interreg Europe; Sitra; national innovation and defence funds; private sector co-investment; targeted EU funding mechanism (if established) |
2026–2030; aligned with EU innovation programming cycles and SEZ pilot development timelines |
Number of SEZ proposals submitted; dual-use pilots launched; private investment mobilised; jobs created in circular and Arctic industries; number of public–private partnerships formed |
|
Environmental sustainability |
Update municipal and regional land-use plans to integrate green infrastructure (e.g. ecological networks, protected areas); promote sustainable tourism models (with an eco-tourism focus in sensitive areas); develop regional sustainability guidelines for municipalities and businesses; provide training on eco-friendly planning and energy efficiency; pilot low-impact infrastructure projects in major tourism zones (e.g. Rovaniemi, Levi). |
Regional Council of Lapland; municipalities; Lapland University; environmental NGOs; Ministry of the Environment; Ministry of Agriculture and Forestry; tourism businesses and associations |
Ministry of the Environment; Ministry of Agriculture and Forestry; ERDF (green transition); LIFE; RDP; EU Innovation Fund; national climate/environment funds; tourism development grants; targeted EU funding mechanism (if established) |
2026–2030; aligned with green transition funding cycles and tourism infrastructure investments |
Area of land zoned for biodiversity corridors; number of eco-certified tourism firms; CO2 reductions in pilot sites; share of zero-waste tourism providers |
|
Infrastructure and connectivity |
Identify and prioritise east–west transport and broadband gaps; prepare investment proposals for TEN-T Arctic Corridor upgrades (rail, road, ports); develop dual-use logistics hub concepts (civil + defence); pilot 5G corridors for Arctic industries and tourism hotspots; co‑ordinate regional advocacy with national ministries and EU institutions. |
Regional Council of Lapland; municipalities; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; ELY Centre for Lapland; airport and airline operators; telecom and broadband providers; Business Finland; logistics operators |
Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; CEF; ERDF (digitalisation, transport); Business Finland (5G/AI pilots); national security-of-supply funding; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2032; matches typical transport and broadband infrastructure cycles |
Km of TEN-T Arctic Corridor upgraded; % households with 1 Gbps broadband; number of dual-use logistics hubs piloted; % population covered by 5G corridors |
|
Labour market and skills development |
Map skill needs in Arctic industries (tourism, mining, ICT, energy, health); co-design modular training programmes with employers and education providers; launch pilots for housing, relocation, and retention incentives; develop Arctic talent campaign to attract national and international professionals; monitor outcomes to refine mobility and retention approaches. |
Lapland Employment areas; vocational education institutions; Lapland University; Lapland UAS; employers and employer associations; municipalities; Ministry of Education and Culture; Ministry of Economic Affairs and Employment |
Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Employment areas; ESF+; Erasmus+; national continuous learning programme; employer co-financing; targeted EU funding mechanism (if established) |
2026–2029; allows time to pilot, scale, and institutionalise talent initiatives |
Number of professionals attracted; retention rates at 1–3 years; participation in training programmes; employer satisfaction with training relevance |
|
Security and readiness |
Identify location and partners for an Arctic defence innovation hub; support securing funding for pilots on cold-climate testing, drones, secure communications; align with NATO/EU innovation platforms and national defence strategies; engage NGOs, Sámi organisations, and volunteer groups in preparedness planning and exercises. |
Regional Council of Lapland; Wellbeing Services County; municipalities; emergency services; Ministry of the Interior; Ministry of Defence; National Emergency Supply Agency; Finnish Border Guard; Cybersecurity Centre of Finland (Traficom); NGOs and Sámi organisations |
Ministry of the Interior; Ministry of Defence; National Emergency Supply Agency; EU Civil Protection Mechanism; ERDF (resilience); NATO resilience funds (if applicable); NGO support schemes; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2029; timeframe sufficient to establish Arctic hub, strengthen co‑ordination, and implement dual-use pilots |
Arctic hub operational; number of dual-use innovation projects supported; number of preparedness workshops involving NGOs/Sámi groups; number of cross-agency drills conducted |
|
Multi-level governance |
Join cross-regional co‑ordination platforms with the eight eastern and southeastern border regions; work with national government to advance shared priorities with Northern Norway and Sweden; organise cross-border planning meetings and prepare joint Interreg Aurora projects; establish thematic working groups on Arctic innovation, climate, and security; and host strategic planning workshops for youth and Sámi representatives |
Regional Council of Lapland; municipalities; Ministry of Economic Affairs and Employment; Ministry for Foreign Affairs; regional councils of Eastern Finland; Norwegian and Swedish regional partners; EU programme authorities (Interreg Aurora, Interreg Europe, NEXT CBC); youth and Sámi councils |
Interreg (Aurora, Europe, NEXT CBC); Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; EU Technical Support Instrument (TSI); ERDF (capacity building); ESF+ (youth participation); municipal co-funding |
2026–2029; sufficient to operationalise cross-border platforms and align with EU cycles |
Number of joint cross-border projects launched; degree of alignment with 8-region strategy; youth and Sámi participation rates in planning; participation in EU/national platforms |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
Recommendations for North Ostrobothnia
Copy link to Recommendations for North OstrobothniaEconomic resilience and diversification
To promote economic diversification and innovation, North Ostrobothnia should focus on co‑ordinating efforts to strengthen the ICT and technology sector. Leveraging Oulu's established cluster and supporting the emerging potential in Koillismaa will require facilitating collaboration between research institutions and businesses, particularly in fields such as 5G/6G, cybersecurity, and digital security. Promoting investment in digital infrastructure and supporting the development of innovation hubs in Koillismaa would help attract tech talent and mitigate the effects of peripherality. The area's unique topography also presents an opportunity to advocate for and co‑ordinate the establishment of a Radio and Drone Testing and Innovation Hub.
Expanding the bioeconomy and circular economy is another critical priority that North Ostrobothnia can support to enhance industrial resilience. With Koillismaa’s strong sawmill industry, co‑ordinated efforts and partnerships can enable the development of sustainable construction materials and wood-based innovations. Municipal and private sector collaboration in developing circular economy solutions will help ensure efficient use of by-products and reduce reliance on imported raw materials.
Improving regional trade connectivity is also essential to boosting economic security. Active advocacy for improved transport links, including the development of the Narvik-Rovaniemi-Kuusamo corridor, would enhance access to western markets and reduce reliance on long-distance suppliers. Co‑ordinating strategies to strengthen supply chains and promoting investment in sustainable mining and mineral processing industries will further support the region’s role in Finland’s green transition.
Labour market and skills development
Addressing labour shortages in key sectors will require co‑ordinated efforts to support both domestic and international recruitment. In Koillismaa, where around 1 000 job openings are expected in the near future, initiatives that promote the region as an attractive destination for skilled professionals in tourism, forestry, and digital industries are needed. Advocacy for national and municipal incentive schemes - such as housing support or student loan benefits - can also play a critical role.
To better align vocational training with regional labour market needs, North Ostrobothnia should support co‑ordination between industry representatives and educational institutions. Expanding vocational education in sectors like tourism, bioeconomy, and construction, and promoting digital learning platforms for remote areas, will help broaden access to skills development. In Koillismaa, where higher education opportunities are limited, partnerships with universities can improve access to training.
Enhancing the region’s overall attractiveness to young professionals is also important. Improving housing, cultural amenities, and recreational services, and promoting Koillismaa as a hub for remote work and digital entrepreneurship, can help retain talent and support long-term growth.
Infrastructure and connectivity
Improving transport and digital infrastructure is a vital enabler of regional development, and North Ostrobothnia should lead in advocating and co‑ordinating such efforts. The lack of railway infrastructure in Kuusamo poses a major barrier to economic and tourism development. National and EU-level investments in railway and highway upgrades, including VT20 and VT5, are needed to improve both civilian and military mobility.
In digital infrastructure, North Ostrobothnia should pursue strategies to ensure universal high-speed broadband and 5G coverage to support digital entrepreneurship and remote work in Koillismaa. Encouraging targeted investments and facilitating partnerships can help position the region as a hub for AI-driven and low-latency digital industries. Canada’s experiences in this regard could serve as inspiration for North Ostrobothnia, as well as for Finland as a whole and its eastern and southeastern border regions (see Box 11.3).
The region’s energy infrastructure also requires attention. Advocacy for improved electricity transmission capacity in Koillismaa is essential to support renewable energy projects and enable the development of decentralised energy solutions like biogas, solar, and small-scale hydropower. These steps will strengthen energy security and contribute to sustainable growth.
Box 11.3. Bridging the digital divide: Canada’s dual approach with broadband funding and LEO satellites
Copy link to Box 11.3. Bridging the digital divide: Canada’s dual approach with broadband funding and LEO satellitesCanada has adopted a twofold strategy to close the digital divide in remote and rural areas - combining public investment on broadband technology with satellite-based innovation. This approach can offer valuable lessons for Finland’s eastern and southeastern border regions.
The CRTC Broadband Fund, launched in 2019, supports broadband and mobile projects in underserved communities with up to CAD 750 million in funding. It uniquely covers both capital and operational costs, helping ensure long-term service delivery, particularly in high-cost areas such as Indigenous and northern regions.
Complementing this, the Universal Broadband Fund (UBF) - launched in 2020 by Innovation, Science and Economic Development Canada - allocates over CAD 3.2 billion to accelerate high-speed internet rollout. The UBF also supports Low Earth Orbit (LEO) satellite connectivity, funding partnerships with providers like Telesat and Starlink to reach the most inaccessible areas.
Canada’s example shows how combining ground infrastructure with LEO satellites can overcome geographic and economic barriers to connectivity. The OECD also highlights the importance of hybrid satellite-terrestrial solutions for building resilient digital infrastructure in sparsely populated areas.
Looking ahead, the EU’s IRIS² programme - expected to be operational by 2030 - will provide secure satellite broadband across Europe, supporting remote regions and complementing national infrastructure.
For Finland’s remote areas, Canada’s experiences may offer ideas for a roadmap: flexible funding mechanisms, multi-stakeholder co‑ordination, and hybrid solutions combining fibre, 5G, and satellite technologies would help to closing the connectivity gap and fostering digital resilience.
Environmental sustainability
North Ostrobothnia has a key role to play in Finland’s green transition. Although the region already generates a large share of Finland’s wind energy, accounting for about 40% of the country’s wind energy production, Koillismaa’s potential is constrained by limited grid capacity. Strong advocacy for investments in energy storage and the development of the 400 kV transmission grid in Eastern Ostrobothnia is needed to support continued expansion in wind and hydrogen energy.
Supporting the forestry industry through circular economy solutions is another priority. Efforts should be made to promote the formation of regional bioeconomy clusters, support innovation in wood-based products, and encourage the reuse of industrial by-products. These actions will enhance the sustainability and resilience of the sector while creating new economic opportunities.
Tourism development should be balanced with environmental integrity. Co‑ordinating sustainable tourism zoning and ecological restoration efforts in high-traffic areas like Ruka and Syöte is essential. Integrated planning that incorporates environmental sustainability into broader infrastructure and land-use strategies will also be important.
Security and readiness
Enhancing regional resilience through enhanced security co‑ordination is essential for North Ostrobothnia. In Koillismaa, collaboration among municipalities, businesses, and authorities should be strengthened to improve preparedness for crises related to energy, transport, and food security. Developing regional frameworks and supporting critical research infrastructure - such as drone and radio testing facilities - will contribute to national security.
The expansion of decentralised energy production will also support energy security. Promoting wind, solar, and bioenergy projects, and advocating for local energy storage infrastructure, will reduce reliance on central grids and improve self-sufficiency.
With Oulu’s strengths in ICT, North Ostrobothnia is well-placed to become a national cybersecurity leader. Regional actors should collaborate to establish a cybersecurity innovation hub in Oulu, potentially in partnership with NATO and EU stakeholders. Broader adoption of enhanced digital governance and data protection across municipalities and institutions will further increase regional resilience.
Multi-level governance
To ensure long-term resilience, North Ostrobothnia should continue efforts to strengthen cross-border co‑operation with Sweden and Norway. Joint infrastructure, energy, and trade projects can diversify economic ties and reduce dependency on distant markets. Active participation in EU and Nordic policy forums will help integrate the region into broader strategic frameworks.
Improving governance capacity is critical for effective transition management. Establishing a dedicated co‑ordination body to align project implementation with long-term development goals can help ensure effective use of resources. Supporting local development organisations - such as Naturpolis Oy in Koillismaa - will also strengthen planning and project delivery.
Finally, North Ostrobothnia should advocate for EU and national funding mechanisms that reflect the specific needs of sparsely populated and border regions. Special funding instruments targeting infrastructure and workforce development in Koillismaa are essential for a successful economic transformation. Formalising frameworks that support youth participation in planning processes will help ensure inclusive and forward-looking policymaking.
Proposal for Action Plan
The proposed action plan for North Ostrobothnia (Table 11.2) outlines targeted measures to strengthen the region’s role as an innovation hub and growth centre while addressing persistent demographic and labour market challenges. With Oulu as a national and international leader in ICT, health technologies, and digitalisation, the region is well positioned to drive clean energy solutions, industrial diversification, and cross-border co‑operation. At the same time, Koillismaa in eastern North Ostrobothnia faces distinct pressures linked to its border location, demographic decline, and the impacts of the closure of the Finnish–Russian border, requiring tailored measures to sustain services, employment, and connectivity.
The plan identifies concrete actions across six themes: economic resilience and diversification, labour market and skills development, infrastructure and connectivity, environmental sustainability, security and readiness, and multi-level governance. These include piloting 5G/6G applications in defence, cybersecurity, tourism, and the green transition; supporting international graduate retention and employer-led training in ICT, health, and energy; developing investment proposals for TEN-T corridors, broadband, and Kuusamo airport; preparing a hydrogen and renewable energy roadmap and launching eco-certification campaigns for tourism; strengthening preparedness in Kuusamo against GPS disruption and organised immigration scenarios; and enhancing Koillismaa’s participation in cross‑regional and national co‑operation frameworks.
Table 11.2. Proposed action plan for North Ostrobothnia
Copy link to Table 11.2. Proposed action plan for North Ostrobothnia|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Conduct detailed resource mapping of regional innovation, industrial capacity, and sustainable raw material opportunities. Organise sector-specific investor and R&D matchmaking events (ICT, energy tech, bioeconomy) and facilitate cross-regional project applications to Horizon Europe and Interreg on clean energy and digitalisation. Launch circular economy pilot sites with SMEs and industrial partners, and promote investment in sustainable mining and mineral processing industries to strengthen Finland’s green transition. Prepare and submit an SEZ pilot proposal (ICT/clean energy focus) co‑ordinated with the national framework. Advance dual-use innovation by piloting 5G/6G use cases with the University of Oulu and industry partners, and by establishing a Radio and Drone Testing and Innovation Hub to support defence-related applications and security of supply. |
Regional Council of North Ostrobothnia; City of Oulu; City of Kuusamo; Koillismaa municipalities; Business Kuusamo; Naturpolis; Business Oulu; University of Oulu; Oulu and Kajaani University of Applied Sciences; local chambers of commerce; SMEs; Ministry of Economic Affairs and Employment; Ministry of Transport and Communications; national SEZ co‑ordination bodies (if established); regional innovation ecosystems. |
EU Regional Development Fund (ERDF); Horizon Europe; Business Finland; Ministry of Economic Affairs and Employment; Interreg Aurora; National Recovery and Resilience Plan (RRF); private and municipality investments; targeted EU funding mechanism (if established); private investment |
2026 - 2030; Allows time for strategic planning, infrastructure feasibility, stakeholder engagement, and early innovation and connectivity initiatives. |
Number of new ICT or deep-tech startups; R&D investment volume per sector; number of cross-regional tech initiatives; number of SEZ or innovation hub proposals submitted; number of circular pilots launched; private investment leveraged |
|
Labour market and skills development |
Facilitate employer–education roundtables in ICT, health, and green industries to respond to the strong demand for specialised skills in ICT, health, and green industries; co-design modular VET and HEI training programmes with employers; launch mentoring and onboarding schemes for international graduates in Oulu; pilot housing and relocation grants in rural municipalities; expand apprenticeships and employer-led training in shortage sectors (ICT, healthcare, energy, forestry, and tourism). |
Regional Council of North Ostrobothnia; Northern Finland Economic Development Centre; University of Oulu; Oulu University of Applied Sciences; vocational education providers (e.g. OSAO); local employers; Koillismaa municipalities; Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Naturpolis Oy |
European Social Fund Plus (ESF+); Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Employment areas (Public Employment Services); Erasmus+; employer co-financing (apprenticeships, relocation support); targeted EU funding mechanism (if established) |
2026 - 2030; This timeframe could support regional transition planning |
Graduate employment rate in priority sectors; number of participants in regional upskilling programs; international students retained; retention rates of international graduates; number of apprenticeships launched; employer satisfaction with training relevance |
|
Infrastructure and connectivity |
Prepare feasibility studies and funding applications for TEN-T upgrades, focusing on Oulu rail/road links and east–west corridor connections; expand next-generation connectivity by deploying comprehensive broadband services and 5G/6G networks, and by piloting secure digital infrastructure upgrades in critical facilities such as healthcare and logistics; support renewable energy transition by developing regional proposals for grid integration and storage solutions, while also advocating for national and EU investment in the 400 kV transmission grid to remove bottlenecks; strengthen external connectivity through Kuusamo airport development and related tourism and business services. |
Regional Council of North Ostrobothnia; Finnish Transport Infrastructure Agency; Koillismaa municipalities; Ministry of Transport and Communications; Fingrid; local energy utilities; telecom providers; ELY Centre North Ostrobothnia; Business Finland; Naturpolis Oy |
Connecting Europe Facility (CEF); Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; EU Regional Development Fund (ERDF); Business Finland; Fingrid; telecom providers; Interreg Aurora; targeted EU funding mechanism (if established) |
2026 - 2031; Transport and energy infrastructure require long planning and permitting phases; digital upgrades can be phased earlier but need funding certainty. |
Km of modernised east-west roads; broadband coverage in underserved areas; number of TEN-T project proposals submitted and selected; km of broadband/5G coverage expanded; number of renewable energy grid projects launched |
|
Environmental sustainability |
Develop a regional hydrogen and renewable energy roadmap linked to national targets; support pilots for solar, wind, and bioenergy integration with SMEs; train and certify SMEs in sustainable forestry and circular economy methods; integrate biodiversity corridors into municipal land-use planning; launch eco-certification campaigns for tourism firms in Oulu and rural Lapland border areas; prepare zoning and ecological restoration plans for high-traffic tourism destinations such as Ruka and Syöte, balancing tourism growth with environmental integrity |
Regional Council of North Ostrobothnia; Koillismaa municipalities; Metsähallitus; local tourism operators; SMEs in green and circular economy; University of Oulu; Finnish Environment Institute (SYKE); Ministry of the Environment; Ministry of Agriculture and Forestry; other agricultural stakeholders |
LIFE Programme; EU Regional Development Fund (ERDF); Ministry of the Environment; Ministry of Agriculture and Forestry; Business Finland; Metsähallitus; Interreg Aurora; Sitra; Northern Finland Economic Development Centre; targeted EU funding mechanism (if established) |
2026 - 2030; Zoning and cluster formation take time, while renewable energy support must be aligned with grid upgrades. |
Installed capacity of renewable energy; number of circular economy pilot projects; biodiversity index in designated zones; number of hydrogen/renewable energy pilots launched; SMEs trained or certified; uptake of eco-certification by tourism operators |
|
Security and readiness |
Strengthen the existing regional preparedness co‑ordination group by expanding its mandate to cyber resilience and dual-use infrastructure; launch joint preparedness initiatives, including (i) cross-agency emergency response exercises with municipalities, universities, and industry, and (ii) community-level workshops with NGOs, volunteers, and residents; advance cybersecurity capacity by co-developing training with Oulu University and the Cybersecurity Centre of Finland, and by establishing a Cybersecurity Innovation Hub in Oulu, linked to NATO/EU platforms, to co‑ordinate regional testbeds for secure communications, drone systems, and GPS resilience pilots; address border-specific risks by implementing monitoring measures against GPS disruption in Kuusamo and preparing local contingency protocols for potential organised immigration scenarios. |
Regional Council of North Ostrobothnia; Wellbeing Services County; City of Oulu; City of Kuusamo; Koillismaa municipalities; Oulu University; Oulu cybersecurity actors; Finnish Border Guard; National Emergency Supply Agency; Ministry of the Interior; Ministry of Transport and Communications; Ministry of Economic Affairs and Employment; Finnish Innovation Fund Sitra; civil society organisations |
Ministry of the Interior; National Emergency Supply Agency (NESA); EU Civil Protection Mechanism; Horizon Europe (Cluster 3); Business Finland; Sitra; Ministry of Transport and Communications; targeted EU funding mechanism (if established) |
2026 - 2029; Critical infrastructure and security initiatives require technical preparation, international engagement, and alignment with NATO/EU efforts. |
Number of joint emergency simulations conducted; establishment of local preparedness actions; stakeholder participation in readiness planning; number of preparedness workshops including NGOs/volunteers; number of cyber training sessions; dual-use testbeds launched; GPS resilience measures deployed in Kuusamo; contingency protocols for organised immigration developed. |
|
Multi-level governance |
Join the 8-region co‑ordination platform; contribute to the joint eastern Finland strategy on resilience, connectivity, and innovation; develop cross-border project applications with Sweden and Norway through Interreg Aurora; organise joint planning workshops with youth councils and Sámi representatives; align regional strategies with Joint Co‑ordinating Body (JCB) if established; provide technical and financial support for Koillismaa municipalities and local actors to strengthen their participation in regional and national co‑operation frameworks |
Regional Council; municipalities in Koillismaa subregion; Naturpolis Oy; Ministry of Economic Affairs and Employment; Ministry for Foreign Affairs; Regional Councils of eastern border regions; Northern Finland Economic Development Centre; Youth organisations and youth councils; Cross-border partners in Sweden and Norway. |
Interreg Aurora; EU Technical Support Instrument (TSI); Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; Erasmus+; Youth Foundations; Structural Funds Technical Assistance (TA); national budgets. |
2026 - 2028; Allows time for regional preparedness assessments, co‑ordination with national security actors, and rollout of targeted technologies and protocols. |
Number of cross-border governance initiatives; participation rate in Interreg or Nordic co‑operation programmes; youth representation in planning; alignment with 8-region strategy; number of joint cross-border projects launched; youth and Sámi participation metrics |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
Recommendations for Kainuu
Copy link to Recommendations for KainuuEconomic resilience and diversification
Kainuu should focus on strengthening its bioeconomy and circular economy sectors to improve industrial resilience and foster new economic opportunities. While the region’s forestry sector remains a core asset, recent shifts in national supply chains - driven by the loss of Russian wood imports - have led to the redirection of Kainuu’s wood supply to other parts of Finland. This has contributed to delays in planned investments and weakened the region’s outlook for industrial growth. Targeted actions are needed to accelerate the development of bioeconomy solutions, including innovative wood‑based products, energy wood, and circular economy applications. Advancing the Kuhmo forest cluster can attract investment in sustainable construction materials and wood-based innovations. Simultaneously, Kainuu should prioritise the efficient use of industrial by-products for bioenergy production to reduce dependence on external energy sources and improve regional energy security.
To support economic diversification and long-term resilience, Kainuu should promote innovation and entrepreneurship. The closure of the Russian border has significantly impacted the regional economy, highlighting the need to help local companies adapt through digitalisation, research and development (RDI), and access to new markets. Cross-border co‑operation within the EU and Nordic region will be essential in driving innovation and attracting foreign investment. Co‑ordinating participation in EU funding programmes can provide vital financial support, particularly for emerging industries such as renewable energy and defence-related technology. SMEs in sectors central to the green transition and digitalisation should be supported with targeted advisory services and co‑ordination mechanisms.
Developing Kainuu’s defence and security industry can also unlock significant economic opportunities. Finland’s NATO membership and changing security environment open up new roles for regions like Kainuu. The ongoing development of Vuosanka, in Kuhmo municipality, as a defence training and testing area - through collaboration with the Finnish Defence Forces and private companies - represents a foundation for establishing a broader defence technology hub. Kainuu should co‑ordinate regional efforts to expand this initiative and foster partnerships between local firms and the defence sector, supporting dual-use innovations that benefit both military and civilian applications.
Labor market and skills development
Addressing labour shortages is a critical priority for Kainuu, which faces challenges from an ageing population and youth outmigration. Co‑ordinated action is needed to attract and retain skilled workers, including the development of relocation incentives, housing support, and student retention schemes. Models such as Norway’s approach, where student loan repayments are subsidised for those relocating to rural areas, could provide useful inspiration. Additionally, better integration of immigrants and Ukrainian refugees into the labour market, supported by language training and job placement services, can help address immediate workforce gaps.
Kainuu should also align vocational education with the specific needs of its key industries: forestry, manufacturing, mining, and tourism. Strengthening co‑operation between employers and training institutions will ensure that curricula reflect industry demands. Increasing access to digital and hybrid learning formats will make education more available to residents in remote areas, helping build a more locally anchored workforce.
Infrastructure and connectivity
Improving transport infrastructure is essential for enhancing Kainuu’s regional accessibility and enabling economic development. The region’s geographic remoteness and poor east-west connections limit industrial activity and tourism growth. The Savo railway line suffers from capacity issues, and much of the lower road network is in disrepair, hampering business operations and resource transport (see also Box 11.4). Kainuu should advocate strongly for national-level investments in upgrading these transport links, particularly to support logistics in forestry and mining. In parallel, continued funding and support for air traffic to Kajaani should be secured to maintain external connectivity and attract both business and tourism.
Digital infrastructure is another area where targeted co‑ordination is needed. Kainuu lags behind the national average in broadband coverage, limiting the potential of remote work and digital entrepreneurship. Expanding 5G and high-speed broadband access in rural areas should be a regional priority. In addition, supporting the establishment of digital work hubs in Kajaani and Kuhmo can help attract professionals and support business innovation.
Box 11.4. Private costs of poor local road quality: Insights for Finland’s eastern and southeastern border regions
Copy link to Box 11.4. Private costs of poor local road quality: Insights for Finland’s eastern and southeastern border regionsRecent research from the United States shows that poor-quality local roads impose significant costs on residents - particularly in peripheral and low-income areas. According to the study, a one standard deviation increase in road roughness raises user costs by approximately USD 0.30 per kilometre, amounting to around USD 450 annually for an average household. The analysis also reveals that only 10–16% of municipal resurfacing decisions were directed toward the roads most in need, underscoring systemic inefficiencies in maintenance prioritisation.
These findings resonate with the situation in Finland’s eastern and southeastern border regions, where road quality - especially on lower-level roads - is a persistent concern. According to the Finnish Ministry of Transport and Communications, Finland’s road network covers 454 000 km, comprising 78 000 km of state-maintained roads, 26 000 km of municipal street networks, and a substantial 350 000 km of private and forest roads. Maintenance responsibilities are distributed among several actors: the Finnish Transport Infrastructure Agency (Väylävirasto) and ELY Centres manage state roads; municipalities are responsible for local streets and roads; and private roads are maintained by road associations, landowners, or companies.
This fragmentation creates particular challenges for peripheral regions. Municipal and private roads - often essential for daily mobility and business activity - may suffer from underfunding and inconsistent upkeep. If this occurs, road users in these areas may face similar cost burdens to those highlighted in the US study.
To mitigate these issues, policymakers and regional stakeholders should consider the following actions:
Develop objective, data-driven tools (e.g. road roughness mapping and prioritisation models) to guide maintenance decisions for municipal and private roads.
Strengthen co‑ordination among state, municipal, regional, and private actors to enable more efficient targeting of maintenance across the full road network.
Advocate for tailored funding models that reflect the strategic value of lower-level roads in sparsely populated areas - particularly those critical for public services and industrial supply chains, such as the forest sector.
Environmental sustainability
Kainuu holds significant potential for renewable energy production, particularly in wind and solar, but progress has been constrained by limited grid capacity. The region should advocate for the upgrading of electricity transmission infrastructure to enable the full development of renewable energy projects. These upgrades should also be co‑ordinated with national authorities to ensure alignment with defence sector requirements.
Developing a circular bioeconomy is also vital for enhancing Kainuu’s sustainable industrial base. Expanding the use of wood by-products for bioenergy and sustainable construction materials would create new economic opportunities while improving resource efficiency. Regional co‑operation to support bio-based industries and foster innovation in sustainable materials will be essential to realising this potential.
Security and readiness
Kainuu’s contribution to Finland’s evolving security strategy should be strengthened through co‑ordinated regional advocacy and planning. Building on the development of the defence training and testing area in Kuhmo, the region should work together with Defence Forces and private sector to expand defence-related research, production, and infrastructure. Collaborating with national authorities to develop dual-use infrastructure that supports both civilian and military needs will also enhance regional resilience and readiness.
Multi-level governance
Kainuu should actively pursue new cross-border co‑operation opportunities with Nordic countries in light of the end of Finnish-Russian collaboration. Developing economic and research partnerships with Sweden, Norway, and the EU will open access to strategic funding and promote long-term development.
Finally, Kainuu should formalise institutional mechanisms that enhance youth participation in strategic planning processes. By ensuring that young people have a voice in regional policymaking, the region can better reflect their aspirations and foster inclusive, forward-looking governance.
Proposal for Action Plan
The proposed action plan for Kainuu (Table 11.3) identifies a set of targeted measures to strengthen the region’s resilience, competitiveness, and long-term development prospects. Kainuu is characterised by a strong forestry and bioeconomy base, a vibrant applied sciences institution in Kajaani, and significant natural resources. At the same time, the region faces demographic challenges, labour shortages, and the impacts of geopolitical shifts, making proactive planning and co‑ordinated action essential.
The action plan translates these opportunities and challenges into concrete actions across six themes: economic diversification, labour market and skills development, infrastructure and connectivity, environmental sustainability, security and readiness, and multi-level governance. Each action specifies the key actors, resources, timelines, and indicators1 needed to guide implementation.
In particular, the proposed action plan emphasises bioeconomy and clean energy pilots as drivers of diversification, the role of employer-led training and mobility schemes in meeting labour market needs, and the upgrading of digital and transport infrastructure to support regional investment attractiveness and SEZ opportunities. It also highlights the importance of civil society engagement in preparedness and security, ensuring that resilience is built not only through institutions but also through local communities. Finally, by linking Kainuu’s initiatives to joint governance structures such as a potential Joint Co‑ordinating Body (JCB), the proposed plan aims to strengthen the region’s ability to contribute to and benefit from broader Eastern Finland co‑operation.
Table 11.3. Proposed action plan for Kainuu
Copy link to Table 11.3. Proposed action plan for Kainuu|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Conduct detailed resource mapping of biomass, data economy opportunities, and industrial by-products; organise R&D matchmaking events with universities, SMEs, and large firms in bioeconomy, clean energy, and defence/cybersecurity sectors; support piloting of innovative wood-based products, data centre solutions, and logistics linked to commercialisation pathways (e.g. EU pilots, Business Finland calls); support zoning for forest cluster expansion and designate sites for bioeconomy/clean industry; prepare and submit investment proposals for strengthening the electricity transmission grid, including the Vaaralinja 400 kV line, to enable green industrial investment; develop a regional circular bioeconomy roadmap aligned with the 8-region strategy; prepare SEZ pilot proposal (bioeconomy, clean energy, and defence/cybersecurity focus) co‑ordinated with the national SEZ framework; launch targeted tourism investment campaigns in co‑operation with Visit Finland and regional businesses; develop joint tourism packages for international markets; and prepare funding proposals for eco-tourism infrastructure. |
Regional Council of Kainuu; municipalities and municipal coalitions; Kajaani University of Applied Sciences and other partner universities; research institutes; SMEs and industrial firms (bioeconomy, ICT, tourism, defence); Business Finland; Ministry of Economic Affairs and Employment; Finnish Forest Centre; Fingrid; Visit Finland; tourism businesses and associations |
Business Finland; Ministry of Economic Affairs and Employment; ERDF; Horizon Europe; Interreg Europe; Sitra; Fingrid investment programmes; tourism development grants; municipal and private co-investment; targeted EU funding mechanism (if established) |
2026–2030; aligned with EU innovation and green transition programming cycles, SEZ pilot development, and transmission grid investment planning |
Number of SEZ or bioeconomy proposals submitted and accepted; private investment mobilised; patents or commercialisation outcomes; number of industrial and tourism pilots launched; volume of tourism investment; number of joint tourism packages implemented; progress on Vaaralinja or other grid upgrades |
|
Labour market and skills development |
Facilitate employer–education roundtables to define skill needs in forestry, bioeconomy, ICT/data economy, health, and defence/cybersecurity sectors; co-develop short modular training programmes with VET providers and HEIs; expand apprenticeships and employer-led training with wage subsidies in shortage sectors; pilot mobility and relocation support schemes (housing, grants) to attract and retain workers in rural municipalities; and develop tailored training and reskilling programmes linked to diversification sectors (bioeconomy, clean energy, cybersecurity, dual-use technologies). |
Kainuu Employment areas; vocational education institutions (e.g. Kainuu Vocational College); Kajaani University of Applied Sciences; universities (partnerships); employers and employer associations; municipalities; Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Economic Development Centre (replacing ELY Centres in 2026) |
Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Employment areas; ESF+; Erasmus+; national continuous learning programme; employer co-financing (apprenticeships, relocation support); municipal support; targeted EU funding mechanism (if established) |
2026–2029; sufficient to pilot, scale, and institutionalise training, apprenticeships, and mobility programmes |
Number of apprenticeships and employer-led training places filled; graduate retention rates in Kainuu; number of new modular or reskilling programmes introduced; employer satisfaction with training relevance; number of participants in mobility and relocation schemes |
|
Infrastructure and connectivity |
Map digital coverage gaps and prepare funding proposals for broadband/5G pilots and comprehensive user-oriented connectivity services; identify transport bottlenecks on east–west and north–south corridors, including connections to coastal ports, and prepare upgrade proposals; develop airport connectivity measures for Kajaani; explore inland logistics hubs linked to bioeconomy and industrial clusters; prepare and submit investment proposals for strengthening the electricity transmission grid, including the Vaaralinja 400 kV line, to remove capacity bottlenecks and enable green industrial investment; align SEZ proposal with infrastructure planning (transport, energy, broadband). |
Regional Council of Kainuu; municipalities; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; Traficom; Fingrid; Economic Development Centre (from 2026); airport and airline operators; telecom and broadband providers; Business Finland; local logistics operators |
Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; CEF; ERDF (digitalisation, transport, energy); Business Finland (5G/AI pilots); Fingrid investment programmes; national security-of-supply funding; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2032; realistic timeframe for planning, lobbying, and implementing transport, grid, and digital upgrades |
Km of TEN-T and national corridors upgraded (east–west and north–south); % households with 1 Gbps broadband; number of 5G/broadband pilots launched; progress on Vaaralinja 400 kV and other transmission upgrades; airport connectivity improvements (routes, passenger numbers); number of SEZ-related infrastructure projects started |
|
Environmental sustainability |
Support SME-scale pilots for solar, wind, bioenergy, and hydrogen production; promote sustainable forestry training and certification schemes to raise uptake; integrate green infrastructure (e.g. wetlands, biodiversity corridors) into municipal and regional zoning; pilot wood innovation trials with SMEs and universities; prepare proposals for extending national hydrogen networks to Kainuu and link them with renewable generation sites. |
Regional Council of Kainuu; municipalities; Kajaani University of Applied Sciences; partner universities and research institutes; Ministry of the Environment; Ministry of Agriculture and Forestry; Business Finland; forestry SMEs; environmental NGOs; Fingrid (for hydrogen/grid integration). |
Ministry of the Environment; Ministry of Agriculture and Forestry; ERDF (green transition); LIFE; RDP; EU Innovation Fund; Business Finland; Sitra; energy agency grants; targeted EU funding mechanism (if established) |
2026–2030; matches green transition funding cycles and renewable/hydrogen pilot timelines |
Installed capacity of solar, wind, bioenergy, and hydrogen; number of forestry certifications issued and SMEs trained; hectares under biodiversity corridors; number of SME wood innovation pilots launched; number of hydrogen proposals submitted or integrated into national networks |
|
Security and readiness |
Strengthen regional preparedness protocols by integrating cyber and early warning systems; expand co‑ordination with national authorities for border safety and dual-use infrastructure; pilot cross-agency emergency response exercises with municipalities, wellbeing services, and industry; launch technology pilots such as drones, secure communications, and dual-use testbeds for defence-related trials; ensure systematic engagement of civil society organisations, volunteer groups, and community actors in preparedness planning and training; prepare contingency plans for cross-border risks, including organised immigration scenarios. |
Regional Council of Kainuu; Wellbeing Services County; municipalities; emergency services; Ministry of the Interior; Ministry of Defence; Finnish Border Guard; National Emergency Supply Agency; Cybersecurity Centre of Finland (Traficom); Kajaani University of Applied Sciences; NGOs and volunteer organisations; Kainuu Preparedness Forum, private sector security/ICT actors |
Ministry of the Interior; Ministry of Defence; National Emergency Supply Agency; EU Civil Protection Mechanism; ERDF (resilience); Horizon Europe (Cluster 3); NATO resilience funds (if applicable); NGO support schemes; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2029; sufficient to strengthen cross-agency protocols, integrate cyber elements, roll out joint training, and establish pilot testbeds. |
Number of cross-agency emergency drills; number of cyber/technology pilots launched (drones, secure comms, dual-use testbeds); share of preparedness exercises involving NGOs/volunteers; contingency plans developed for organised immigration; adoption of updated preparedness framework by regional actors. |
|
Multi-level governance |
Join cross-regional co‑ordination platforms with the eight eastern and southeastern border regions; contribute actively to joint strategy development on resilience, connectivity, and innovation; prepare and submit cross-border project proposals under Interreg Aurora, Interreg Europe, and NEXT CBC; organise strategic planning workshops with youth councils to embed youth perspectives; provide technical and financial support for Kainuu municipalities and local actors to participate in joint initiatives; align regional governance with the Joint Co‑ordinating Body (if established). |
Regional Council of Kainuu; municipalities; Ministry of Economic Affairs and Employment; Ministry for Foreign Affairs; regional councils of Eastern Finland; EU programme authorities (Interreg Aurora, Interreg NEXT CBC, Interreg Europe); youth councils and civic groups; Northern Finland Economic Development Centre |
Interreg (Aurora, NEXT CBC, Europe); EU Technical Support Instrument (TSI); ERDF (capacity building); ESF+ (youth participation); Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; municipal co-funding; Structural Funds Technical Assistance (TA) |
2026–2029; timeframe sufficient to operationalise platforms, align with EU cycles, and prepare/implement joint proposals |
Number of joint projects with other regions; youth engagement metrics (workshops, proposals); participation in EU/national platforms; number of municipalities engaged in cross-regional co‑operation |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
Recommendations for North Savo
Copy link to Recommendations for North SavoEconomic resilience and diversification
North Savo should expand its bioeconomy and circular economy sectors to strengthen industrial resilience and promote regional value creation. The region’s traditional strengths in forestry, agriculture, food production, and emerging industries such as biorefining and health technology provide a strong foundation. However, the closure of the Russian market and associated raw material losses, particularly in forestry, have exposed vulnerabilities in existing supply chains. North Savo’s strategic pivot to integrate the forest industry and biorefining into a broader bio- and circular economy theme responds to these challenges. Efforts such as the Regional Bioeconomy Implementation Plan aim to double the sector’s added value by 2035. These initiatives will help mitigate the effects of geopolitical disruptions and create sustainable economic growth. Regional co‑ordination should focus on expanding bio-based construction materials, biorefining activities, and the use of innovative wood-product solutions. Additionally, co‑operation between the agricultural and renewable energy sectors should be facilitated - particularly in biogas production from agricultural residues - to enhance regional value chains and energy resilience. For example, the region could support the development of small and medium-scale farm-based or co‑operative biogas plants. Establishing a regional biogas co‑ordination platform, bringing together farmers, municipalities, energy companies, and research actors, could help align investment plans, streamline logistics, and attract public and private funding. Similar models have proven successful in other parts of Finland, such as the Nurmon Bioenergia co‑operative (Bioenergy Insight Magazine, 2025[9]) in South Ostrobothnia.
Strengthening regional research, development, and innovation (RDI) capabilities is critical to diversifying North Savo’s economic base. Despite a strong RDI ecosystem and leading competencies in health technology and intelligent water systems, per capita RDI investment remains relatively low. Initiatives such as Business Center Pohjois-Savo and DigiCenterNS demonstrate successful collaboration between academia and industry. These models should be scaled to support growth in sectors like digitalisation, pharmaceuticals, and renewable energy. Regional actors should facilitate and advocate for increased funding and local enterprise participation in RDI activities and support enhanced collaboration between universities, applied sciences institutions, and businesses. Additionally, long-term, business-driven funding models and targeted investments in RDI infrastructure will be essential for attracting more local and international companies. Germany and the Netherlands provide interesting lessons from efforts to strengthen regional research, development, and innovation (RDI) ecosystems. Both countries have successfully developed institutional frameworks that link research more closely with enterprise needs, promote long-term collaboration, and ensure the commercial relevance of innovation efforts (Box 11.5).
Improving trade connectivity and diversifying export markets is critical to mitigating North Savo’s economic vulnerabilities. The closure of the Saimaa Canal and the disruption of eastern trade routes have severely impacted regional logistics and supply chains. Immediate investment is needed in alternative transport infrastructure, with strategic focus on road, rail, and air connections. Priority corridors include national roads 5 and 9, and the Savo railway. Strengthening air connectivity at Kuopio Airport is also essential. These improvements would support the region’s transition to alternative markets in Europe and the Nordic countries. North Savo should actively advocate at national and EU levels for these infrastructure upgrades. In parallel, the region should co‑ordinate planning and advocacy efforts to strengthen logistics connections with coastal and northern transport routes via Sweden and Norway. Supporting local enterprises in diversifying their trade relationships with Nordic and broader European markets will also be key to reducing economic vulnerability and unlocking new opportunities.
Box 11.5. International inspiration: strengthening RDI through strategic partnerships and applied innovation
Copy link to Box 11.5. International inspiration: strengthening RDI through strategic partnerships and applied innovationGermany's Fraunhofer Institutes offer a world-renowned model of applied research embedded in industry. With over 70 institutes across the country, Fraunhofer focuses on performance-based, mission-driven RDI that bridges the gap between academic research and market application. Funded through a hybrid model - approximately 30% public base funding and 70% competitive and industry contracts - Fraunhofer centers are key R&D partners for both SMEs and large firms. They support the development of prototypes, testing infrastructure, and spin-off ventures, and play a central role in training future innovators. This model demonstrates how regional RDI infrastructure can be designed to support industry needs, attract private investment, and drive economic resilience through innovation.
The Netherlands' Top Sectors policy offers an example of a national framework for aligning innovation policy with economic priorities. In this model, public-private partnerships (PPPs) bring together businesses, universities, and research institutions around nine strategically important sectors: Agri-Food, Horticulture and Propagation Materials, Water, Life Sciences & Health, Chemicals, High Tech, Energy, Logistics, and Creative Industries. These partnerships develop joint knowledge and innovation agendas, co-finance applied research, and link RDI activities to workforce development and internationalisation goals. The Top Sectors framework has successfully mobilised industry co-funding for research and stimulated long-term collaboration around shared strategic goals. It also demonstrates how mission-oriented innovation policy can respond to societal transitions such as climate neutrality and digital transformation.
Adapting these approaches to regional contexts requires focusing on local strengths. By tailoring the principles of applied research infrastructure, structured business-academia collaboration, and aligned innovation priorities to sectors such as bioeconomy, health technology, and renewable energy, and beyond, regions could enhance their capacity to attract funding, talent, and investment.
Labour market and skills development
To ensure economic sustainability, North Savo should address acute workforce shortages driven by demographic decline and limited regional attractiveness. Expanding initiatives like Talent Hub Eastern Finland will help retain international students and better integrate new workers. The sharp rise in net immigration in 2023, especially from Ukraine, signals both a short-term opportunity and a long-term imperative to improve regional integration services. Regional actors should expand co‑ordination of student retention and workforce attraction initiatives, including local incentive schemes such as housing support and relocation grants, and advocate for nationally supported measures. Addressing barriers to labour mobility - such as declining housing values - should also be prioritised. Integration support programmes for immigrants and refugees should be strengthened and better co‑ordinated to reduce fragmentation, improve access to employment, and encourage participation in activation measures.
Vocational education and training systems should be more closely aligned with industry needs. Sectors such as forestry, food production, health technology, bioeconomy, and tourism require tailored training programmes. Improved co‑ordination between vocational education providers, municipalities, and businesses will help tailor education more effectively to the labour market. Regional actors should promote flexible education models, including digital and hybrid learning opportunities, particularly in rural areas where access may be limited. Ongoing initiatives - such as the ESR+-funded skills account pilot project and privately launched coding schools - should be built upon to further strengthen sector-specific skills and regional labour availability.
Infrastructure and connectivity
As was discussed above, North Savo’s growth is constrained by outdated transport infrastructure. National investment is needed in priority projects such as the Savo railway and national roads 5 and 9. Enhancing air connectivity at Kuopio Airport is also crucial to maintaining external links. Regional actors should advocate for these strategic upgrades and co‑ordinate efforts to prioritise infrastructure maintenance and planning. These investments are essential to improving business logistics, attracting investment, and enabling sustainable economic growth.
Digital infrastructure is another key enabler of innovation and business development. Limited broadband coverage in rural and peripheral areas hinders the growth of digital industries and remote work. Regional efforts should co‑ordinate and advocate for the accelerated deployment of high-speed broadband and 5G networks. Supporting the establishment and expansion of digital innovation hubs - particularly in Kuopio - will help attract digital professionals and foster regional entrepreneurship.
Environmental sustainability
North Savo should accelerate renewable energy development to support sustainability and energy independence. The region has substantial potential in bioenergy, wind, and hydrogen energy. The North Savo Energy Masterplan sets out a pathway to carbon neutrality by 2035 and should guide regional efforts. Regional actors should co‑ordinate initiatives and continue to advocate for national-level investments in electric grid infrastructure and energy storage solutions. At the same time, they should facilitate co‑operation around biogas and hydrogen energy projects, especially those integrated into local industrial operations.
Promoting sustainable forestry and agriculture will also be essential for maintaining economic and ecological resilience. Regional actors should support initiatives that improve agricultural profitability, promote organic farming practices, and implement sustainable forestry management. These efforts should be coupled with initiatives to enhance market acceptance and consumer demand for organic products. Integrating forestry, agriculture, and renewable energy sectors through co‑ordinated initiatives will further strengthen the regional bioeconomy.
Security and readiness
North Savo’s approach to comprehensive security should be further developed to enhance long-term resilience and preparedness. The regional comprehensive security cluster initiative in Kuopio provides a strong foundation for integrating security thinking into broader development planning. Regional actors should co‑ordinate efforts to further develop the Centre of Excellence for Comprehensive Security, aligning regional RDI with national and NATO-aligned initiatives. Regional crisis preparedness should also be supported through investments in infrastructure and capacity - particularly in cybersecurity, healthcare, and logistical response systems.
Multi-level governance
Strengthening interregional and EU-level collaboration will be essential for bolstering North Savo’s economic resilience. Active utilisation of EU structural funds and strategic alliances with other eastern and southeastern border regions can help maximise external funding and align shared regional development goals. Regional actors should also promote initiatives that encourage local companies to integrate comprehensive security perspectives into their business strategies, enhancing their long-term resilience.
Finally, institutional mechanisms should be formalised to ensure meaningful youth participation in strategic planning processes. Integrating the perspectives and aspirations of young residents into policy decisions will help foster inclusive and future-oriented regional governance. This recommendation builds on findings from the diagnosis presented in Part I, which identified significant data and participation gaps in reflecting youth-specific needs in regional planning. Although positive examples such as the “Young Future Makers of North Savo” and the forthcoming Eastern Finland Youth Scoreboard exist, they are largely project-based and lack continuity. To address this, North Savo could formalise a regional Youth Advisory Council linked to the Regional Council, ensure permanent representation of youth in development planning bodies, and support participatory budgeting or innovation labs targeting youth involvement. These mechanisms would help bridge the distance often felt between youth and public institutions, as noted in the stakeholder interviews conducted under the framework of the project.
Proposal for Action Plan
The proposed action plan for North Savo (Table 11.4) sets out concrete measures to enhance the region’s economic diversification, labour market resilience, infrastructure, environmental sustainability, security, and governance. North Savo’s strengths in health technology, bioeconomy, and education provide a strong base for innovation and growth, while challenges remain linked to demographic change, labour shortages, and the region’s location along the closed Finnish–Russian border.
The plan identifies targeted actions across six themes. Under economic resilience and diversification, the focus is on developing bio- and clean energy industries, data economy and cybersecurity applications, and tourism investment, supported by a potential SEZ pilot. Labour market and skills development includes modular training, apprenticeships, mobility support, and tailored measures for graduates and micro-entrepreneurs. Infrastructure and connectivity prioritises TEN-T rail and road upgrades, broadband and 5G/6G pilots, airport connectivity, and improvements to low-traffic roads vital for primary production and exports. Environmental sustainability actions involve renewable energy pilots, sustainable forestry, biodiversity integration into zoning, and SME wood innovation. Security and readiness highlights cross-agency preparedness, cyber resilience, GPS disruption measures, and community participation in planning and training. Finally, multi-level governance actions reinforce North Savo’s role in joint regional strategies, cross-border co‑operation, and engagement with national and EU institutions.
Table 11.4. Proposed action plan for North Savo
Copy link to Table 11.4. Proposed action plan for North Savo|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Conduct resource mapping of forestry, biomass, data economy, and industrial by-products; organise investor and R&D matchmaking events in bioeconomy, health technology, ICT, and clean energy; pilot wood-based, biogas, and hydrogen products; support logistics and commercialisation pathways (EU pilots, Business Finland calls); establish a regional biogas co‑ordination platform linking farmers, municipalities, and energy firms; scale RDI capacity (e.g. DigiCenterNS, Business Center Pohjois-Savo) in pharma, digitalisation, and renewable energy; promote international tourism growth through accessibility improvements and investment campaigns; support SME access to finance2; prepare SEZ pilot proposal (bioeconomy, health tech, clean energy) co‑ordinated with national SEZ framework. |
Regional Council of North Savo; Kuopio City; municipalities; University of Eastern Finland; Savonia UAS; DigiCenterNS; Business Finland; chambers of commerce; SMEs; Ministry of Economic Affairs and Employment; Ministry of Transport and Communications; Finnish Forest Centre; financial institutions. |
ERDF; Horizon Europe; Business Finland; Ministry of Economic Affairs and Employment; Interreg; private co-investment; national transport budget; targeted EU funding mechanism (if established). |
2026–2031; sufficient to launch pilots, scale RDI, and deliver infrastructure upgrades. |
Number of SEZ or biogas proposals; RDI investment volume; patents/commercialisation outcomes; transport and airport projects advanced; private investment mobilised; number of international tourism initiatives. |
|
Labour market and skills development |
Expand Talent Hub Eastern Finland to retain international students and graduates; facilitate employer–education roundtables to define sectoral skill needs; co-develop modular training with VET and HEIs in forestry, food, tourism, bioeconomy, ICT, and health; launch apprenticeships and mentoring in shortage sectors; pilot relocation/housing grants in rural municipalities; expand the osaamistili pilot to short-term workers and micro-entrepreneurs; introduce wage-subsidy or student loan support models for hiring recent graduates. |
Employment areas; University of Eastern Finland; Savonia UAS; vocational providers; municipalities; employers and associations; Ministry of Education and Culture; Ministry of Economic Affairs and Employment. |
ESF+; Erasmus+; Ministry of Education and Culture; Ministry of Economic Affairs and Employment; employer co-financing (apprenticeships, relocation support); national continuous learning programme; targeted EU funding mechanism (if established). |
2026–2029; allows time for pilots, scaling, and institutionalisation. |
Graduate retention rates; apprenticeships created; employer satisfaction; uptake of osaamistili; youth employment supported via subsidy/loan schemes. |
|
Infrastructure and connectivity |
Advocate and prepare proposals for roads 5 and 9, Savo railway upgrades, and links to coastal/northern corridors; develop proposals for Kuopio airport expansion serving tourism and export firms; improve low-traffic rural roads for agriculture and processing; expand broadband and 5G coverage; establish digital hubs in Kuopio; integrate infrastructure planning with SEZ proposals. |
Regional Council of North Savo; municipalities; Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; Kuopio Airport and operators; Economic Development Centre; telecoms; Business Finland. |
CEF; ERDF (transport, digitalisation); Business Finland (5G pilots); national transport budget; municipal co-funding; targeted EU funding mechanism (if established). |
2026–2032; long planning/permitting phases for transport; digital upgrades earlier. |
Km of upgraded roads/rail; improved airport traffic; rural road improvements; broadband/5G coverage %; digital hubs established. |
|
Environmental sustainability |
Support SME pilots in bioenergy, wind, solar, and hydrogen; advocate for grid reinforcement (incl. storage) to enable green industrial investment; facilitate farm-scale and co‑operative biogas projects, linked to agriculture; promote organic farming and profitability-enhancing measures; train and certify SMEs in sustainable forestry and circular economy; integrate biodiversity areas into municipal land-use. |
Regional Council of North Savo; municipalities; University of Eastern Finland; Savonia UAS; Ministry of the Environment; Ministry of Agriculture and Forestry; energy companies; forestry and farming SMEs; environmental NGOs. |
ERDF (green transition); LIFE; RDP; Innovation Fund; Business Finland; national climate/environment funds; targeted EU funding mechanism (if established). |
2026–2030; renewable and agricultural pilots require staged rollout. |
Installed renewable capacity; biogas projects launched; hectares under biodiversity zoning; organic farming share; SMEs trained/certified. |
|
Security and readiness |
Build on Kuopio’s Centre of Excellence for Comprehensive Security3; strengthen cyber and early warning systems; pilot healthcare and logistics preparedness projects; conduct cross-agency simulation exercises with municipalities and industry; align with NATO/EU security initiatives; promote dual-use testbeds (cyber, drones); involve NGOs and community actors in preparedness planning. |
Regional Council of North Savo; Kuopio City; Wellbeing Services County; Ministry of the Interior; Ministry of Defence; NESA; Finnish Border Guard; Cybersecurity Centre (Traficom); NGOs and volunteers; University of Eastern Finland. |
Ministry of the Interior; Ministry of Defence; NESA; EU Civil Protection Mechanism; Horizon Europe (Cluster 3); NATO resilience funds; municipal co-funding; targeted EU funding mechanism (if established). |
2026–2029; sufficient to integrate cluster, launch pilots, and align with NATO/EU. |
Number of preparedness workshops; cross-agency drills; cyber pilots launched; healthcare/logistics readiness indicators; civil society participation. |
|
Multi-level governance |
Join the 8-region co‑ordination platform and contribute to joint strategy; use EU structural funds and cross-regional projects (Interreg); ensure formal youth participation via Youth Advisory Council linked to the Regional Council; provide participatory budgeting and innovation labs for youth; promote integration of security perspectives into business strategies. |
Regional Council of North Savo; municipalities; Ministry of Economic Affairs and Employment; Ministry for Foreign Affairs; youth councils; local businesses; EU programme authorities. |
Interreg; EU Technical Support Instrument (TSI); ERDF (capacity building); ESF+ (youth participation); municipal co-funding; Structural Funds Technical Assistance (TA). |
2026–2029; allows time to institutionalise youth mechanisms and joint projects. |
Number of joint regional/EU projects; youth participation in planning; youth advisory structures established; number of businesses adopting security/resilience strategies. |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
2. Support for SME access to finance could take different forms, depending on regional and national priorities. Examples include providing advisory services for SMEs on funding instruments (e.g. EU programmes, national innovation and investment funds), facilitating matchmaking with financial institutions and investors, and supporting SME participation in EU or national competitive funding calls.
3. Kuopio is developing a Centre of Excellence for Comprehensive Security, intended as a regional expert body that unites research, training, coordination, and innovation efforts in the field of security and resilience (covering climate, energy, water, critical infrastructure).
Recommendations for North Karelia
Copy link to Recommendations for North KareliaEconomic resilience and diversification
North Karelia should accelerate investment in the bioeconomy and circular economy to strengthen industrial resilience and support sustainable growth. With forestry and renewable energy as regional strengths, enhanced use of local bioresources is vital to address disruptions from the closure of the Russian border and loss of timber imports. Co‑ordinated efforts to promote industrial-scale bioeconomy projects - such as biorefineries and bio-based construction material initiatives around Joensuu - can help diversify the economy. Simultaneously, SMEs should be encouraged to engage more actively in innovation and circular economy practices to increase resilience to future shocks. Regional actors should facilitate and co‑ordinate targeted investments, advocate for national and EU incentives, and promote partnerships supporting innovation.
To enhance economic diversification and competitiveness, North Karelia should foster stronger collaboration between universities and industry. Despite the strong presence of the University of Eastern Finland and Karelia University of Applied Sciences, regional R&D expenditure remains low. Strengthening co‑operation between these institutions and local industries - particularly in ICT, renewable energy, forestry, and materials sciences - will help stimulate innovation. This could be achieved by establishing regional innovation ecosystems such as digital innovation hubs and technology parks, building on institutions like Joensuu Science Park and university-led pilot platforms, will further support diversification and the emergence of new industries.
Diversifying export markets and strengthening regional supply chains are critical to reducing North Karelia’s economic vulnerability. The region historically depended heavily on exports to Russia, so improving access to Nordic, EU, and broader international markets is a priority. To support this shift, regional actors should co‑ordinate support for businesses seeking new markets and advocate for national investment in transport infrastructure, particularly regional roads and railways. Improved logistics capacity is essential to facilitate trade diversification and ensure long-term economic security.
Labour market and skills development
Attracting and retaining skilled domestic and international talent is essential to counter North Karelia’s demographic challenges, including a declining and ageing population and outmigration of youth. Regional stakeholders should implement targeted programmes, such as relocation grants and housing support, to attract skilled workers. Enhancing services for international students, immigrants, and Ukrainian refugees - through integration support, language training, and employment services - can also help meet urgent labour market needs. For example, Germany has created a multi-level strategy to address workforce shortages while supporting the long-term integration of newcomers (Box 11.6).
Improving vocational education and training systems will be key to addressing skill mismatches in growing or understaffed sectors. Training programmes should be tailored to key regional industries such as forestry, renewable energy, tourism, and healthcare. Partnerships between vocational institutions and local employers should be deepened, and flexible delivery models - such as digital and remote learning - should be expanded to ensure access across rural areas. Norway’s model of digitally enabled vocational education and training (VET) system offers valuable lessons for Finnish eastern and southeastern border regions facing similar geographic and demographic challenges (Box 11.6).
Box 11.6. Addressing labour shortages through migration and flexible learning: insights from Germany and Norway
Copy link to Box 11.6. Addressing labour shortages through migration and flexible learning: insights from Germany and NorwayGermany’s skilled worker immigration and regional relocation incentives
Germany provides an example of how regions can play a strong supporting role in labour attraction and integration, even within a nationally centralised migration system. The Skilled Immigration Act (Fachkräfteeinwanderungsgesetz), adopted at the federal level in 2020 and expanded in 2023, has opened up streamlined pathways for non-EU workers with both academic and vocational qualifications. It facilitates faster recognition of foreign skills, supports migration for qualification recognition, and simplifies recruitment for employers.
While the legislative framework is entirely national, several German federal states (Länder) and municipalities have proactively developed complementary measures to attract and retain skilled migrants. These include relocation grants, regional recruitment campaigns, job-matching platforms, and robust integration services, such as language training, housing support, and administrative assistance. Regions such as Saxony-Anhalt and Thuringia, for instance, have taken steps to encourage newcomers to settle in smaller towns and rural areas facing demographic decline.
Although subnational governments cannot legislate migration policy, their role in implementing and supporting national migration frameworks is critical - particularly in aligning migrant attraction with local labour market needs.
Norway: digital distance learning in vocational education
Norway has developed a flexible and decentralised model for delivering vocational education and training (VET) to address the needs of remote and sparsely populated regions. Recognising that physical access to training centres can be a barrier to participation, particularly in the north and in rural inland areas, Norwegian authorities have invested significantly in digital and hybrid learning models.
Through national and county-level collaboration, vocational programmes are increasingly delivered via online platforms, often supported by regional learning centres (studiesentre) that provide local facilities, tutoring support, and access to practical training when needed. This model enables learners in small communities to participate in relevant training programmes without having to relocate, thus promoting inclusivity and access to lifelong learning.
In addition, digital tools are used to strengthen partnerships between training institutions and employers, allowing local businesses to co-develop tailored curricula and provide on-site practical learning opportunities. Sectors such as health and social care, energy, construction, and tourism have particularly benefited from this flexible approach.
Infrastructure and connectivity
North Karelia’s connectivity should be significantly enhanced through national investment in strategic infrastructure projects. While recognising the national government’s lead role in funding, the region should actively advocate for timely implementation of transport improvements highlighted in Finland’s 2025–2032 investment programme. These include upgrades to the Karelian railway line (Joensuu–Kitee–Imatra), national roads numbers 6 and 9, and Road 23, as well as critical bridge renovations to address regional geographical constraints. Regional stakeholders must also co‑ordinate advocacy to maintain and improve air service connectivity between Joensuu and Helsinki.
Expanding digital infrastructure is also vital for supporting the economic transition and enabling innovation. Unequal access to high-speed broadband, particularly in rural municipalities, restricts opportunities for digital entrepreneurship and remote work. Regional actors should co‑ordinate and advocate for increased investment in broadband and 5G networks, especially in border areas, and support the development of digital innovation hubs to foster entrepreneurship and resilience.
Environmental sustainability
Increasing renewable energy production is critical to enhancing sustainability and reducing dependence on external energy sources. North Karelia has considerable potential in wind, solar, hydrogen, and bioenergy, but progress is constrained by limited grid capacity, Defence Forces’ requirements, and land-use restrictions. Regional efforts should co‑ordinate renewable energy initiatives and advocate for national grid upgrades. In parallel, regional land-use planning should support the creation of renewable energy zones and flexible policies that allow renewable projects to progress while preserving carbon sinks and supporting climate goals.
Security and readiness
Given its location along the eastern border, North Karelia should reinforce its preparedness for both economic and security-related disruptions. Regional actors should co‑ordinate the development of a comprehensive security and crisis preparedness framework that brings together municipalities, emergency services, businesses, and neighbouring eastern and southeastern regions. This framework should include strengthened cybersecurity infrastructure and training to improve the resilience of critical services and industries.
Multi-level governance
North Karelia should enhance its engagement in Nordic and EU co‑operation frameworks to secure strategic funding and advance cross-border collaboration. With the end of Finnish-Russian co‑operation, alternative partnerships through programmes like Interreg Aurora offer new opportunities to develop initiatives in infrastructure, innovation, renewable energy, and demographic renewal. Regional actors should actively participate in EU structural funds targeting the green transition, digitalisation, and infrastructure.
To address persistent structural challenges, North Karelia should also proactively advocate for national and EU-level funding mechanisms tailored to the region’s unique demographic and economic context. Promoting innovative funding tools for projects that support resilience, sustainability, and regional development will help secure a more balanced territorial policy.
Finally, formalised institutional frameworks should be created to strengthen youth participation in regional strategic planning. Ensuring that young people have a meaningful voice will make regional policy more responsive to the needs and aspirations of future generations.
Proposal for Action Plan
The proposed action plan for North Karelia (Table 11.5) builds on the region’s long-standing strengths in the bioeconomy, forestry, and higher education, while addressing the challenges linked to demographic change, connectivity, and security. The proposed actions place particular emphasis on innovation in wood-based bioproducts and circular economy solutions, the emerging hydrogen economy, and the development of a digital border security living lab in Joensuu. They also focus on strengthening labour market resilience, especially by creating new training pathways in co‑operation with employers, and by improving access to education and employment for youth and migrants.
Infrastructure priorities concentrate on rail and road upgrades, maintaining air connectivity, and expanding broadband and 5G access, while environmental sustainability measures integrate ecological corridors and industrial-scale renewable energy projects. The plan also highlights the importance of updating regional preparedness systems, including cyber and food security, with active participation from civil society and volunteer groups. Finally, the proposed North Karelia’s action plan underlines the need for strong multi-level governance, ensuring active contributions to EU and Nordic co‑operation platforms, and involving youth in strategic planning.
Table 11.5. Proposed action plan for North Karelia
Copy link to Table 11.5. Proposed action plan for North Karelia|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Launch pilot projects in advanced wood-based bioproducts and circular economy (e.g. bio-based composites, waste-to-energy, carbon capture from biogenic CO2); enable hydrogen economy pilots that integrate renewable hydrogen with biogenic CO2 capture, focusing on value-added applications (fuels, chemicals, materials) rather than raw export; prepare and market a portfolio of green industrial sites in Joensuu and rural municipalities; organise annual investor dialogues targeting bioeconomy, forest tech, healthtech, and hydrogen; co-organise applied R&D programmes with UEF, Karelia UAS, and SMEs; strengthen the bioeconomy cluster through incubators, scale-up support, and SEZ pilot preparation in alignment with the national framework; develop a Digital Border Security Living Lab in Joensuu with Business Joensuu as testbed for dual-use solutions. |
Regional Council of North Karelia; Business Joensuu; City of Joensuu; other municipalities; Karelia University of Applied Sciences; University of Eastern Finland; Finnish Forest Centre; Natural Resources Institute Finland (Luke); Joensuu Business Joensuu; local SMEs in wood-based industries and circular economy; Ministry of Economic Affairs and Employment; Business Finland; ELY Centre North Karelia (Economic Development Centres, from 2026) |
Business Finland; ELY Centre North Karelia (Economic Development Centres, from 2026); Ministry of Economic Affairs and Employment; EU Regional and Innovation Funds (e.g. ERDF); Horizon Europe; local or national SEZ funding instruments (if established); targeted EU funding mechanism (if established) |
2026–2029; allows for co‑ordination of investment pipelines, incubation of cluster initiatives, and alignment with national SEZ or bioeconomy strategies |
Number of green industry projects launched; volume of bioeconomy investment; new partnership agreements; number of hydrogen/bioeconomy pilots launched; patents/commercialisation outcomes; number of industrial-scale renewable projects started; investment in digital border security testbed |
|
Labour market and skills development |
Conduct annual skills mapping with employers in healthtech, ICT, green energy, and forestry; co-develop modular VET and university training with local firms; pilot dual-learning and apprenticeships with North Karelia Employment areas and Riveria; expand language and vocational training for youth and migrants; pilot transport and digital mobility subsidies to support rural student access; develop targeted support schemes for migrant integration and employment. |
Regional Council of North Karelia; regional Economic Development Centre; vocational education providers (e.g. Riveria); Karelia University of Applied Sciences; University of Eastern Finland; local employers and industry associations; North Karelia Wellbeing Services County; Ministry of Education and Culture; Ministry of Economic Affairs and Employment; youth organisations; organisations supporting migrants |
Ministry of Education and Culture; Ministry of Economic Affairs and Employment; regional Economic Development Centre; ELY Centre North Karelia (Economic Development Centres, from 2026); European Social Fund+ (ESF+); Digital Europe Programme; Wellbeing Services County of North Karelia; targeted EU funding mechanism (if established) |
2026–2029; aligned with VET reform cycles, EU ESF+ programming, and public employment service funding frameworks |
Number of new VET pathways aligned with key sectors; youth employment rates; regional mobility uptake; graduate retention rates; number of apprenticeships created; migrant employment rates; employer satisfaction scores |
|
Infrastructure and connectivity |
Prepare feasibility studies and lobbying packages for Joensuu–Imatra, Joensuu–Pieksämäki, and Joensuu–Kontiomäki rail upgrades, and VT6 improvements; advocate for maintaining and expanding Joensuu airport connectivity; pilot demand-responsive bus systems in rural municipalities; prepare broadband/5G corridor investment cases with telecoms; launch last-mile logistics pilots with SMEs to connect remote areas to Joensuu hub. |
Regional Council of North Karelia; municipalities in North Karelia; Centre for Economic Development, Transport and the Environment (ELY Centre) North Karelia; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; regional transport operators; telecom companies; Business Finland |
Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; Business Finland; EU Connecting Europe Facility (CEF); EU Recovery and Resilience Facility (RRF); European Regional Development Fund (ERDF); targeted EU funding mechanism (if established) |
2026–2030; matches national infrastructure planning cycles and EU funding calls for broadband and transport |
Length of upgraded infrastructure; broadband coverage; public transport accessibility improvements; number of TEN-T/CEF proposals submitted; % rural households with 1 Gbps broadband; km of rail upgraded; number of mobility pilots launched |
|
Environmental sustainability |
Update municipal zoning plans to integrate green infrastructure and ecological corridors; promote sustainable forestry practices and designate areas for sustainable forestry use; enable industrial-scale renewable energy production (bioenergy, solar, wind) on sites already identified in the regional land-use plan; develop circular economy hubs in co‑operation with municipalities and enterprises (e.g. waste-to-material platforms, high value-added recycling). |
Regional Council of North Karelia; municipalities; Finnish Environment Institute (SYKE); Metsähallitus; forest owners’ associations; renewable energy companies; local circular economy networks; Ministry of the Environment; Ministry of Agriculture and Forestry; ELY Centre North Karelia (Economic Development Centres, from 2026); environmental NGOs |
ELY Centre North Karelia (Economic Development Centres, from 2026); Ministry of the Environment; Ministry of Agriculture and Forestry; EU LIFE Programme and Horizon Europe (pilots on forest-based carbon capture and advanced bio-based products); Just Transition Fund (if eligible); ERDF; private sector co-financing (e.g. from renewable energy and forestry companies); targeted EU funding mechanism (if established) |
2026–2029; enables sequencing of zoning updates, permitting, and co-financed environmental investment plans under national and EU green frameworks |
Hectares of ecological corridors and green infrastructure designated in zoning plans; area of forest certified under sustainable forestry schemes; number of industrial-scale renewable energy projects launched; volume of high value-added bioeconomy products developed (e.g. commercial pilots, patents); number of circular economy hubs or projects established; tonnes of CO2 reduced or captured through pilots. |
|
Security and readiness |
Update regional preparedness plans including cyber, food, and health security; establish formal protocols for border emergency co‑ordination with the Finnish Border Guard; organise annual joint simulation exercises (cyber, cross-border rescue, supply chain disruption); ensure participation of NGOs, volunteer groups, and civil society actors in training; pilot dual-use digital security solutions through the Joensuu Living Lab initiative. |
Regional Council of North Karelia; municipalities; North Karelia Wellbeing Services County; Finnish Border Guard; Ministry of the Interior; Ministry of Defence; rescue and emergency services in the region; National Emergency Supply Agency |
Ministry of the Interior; Ministry of Defence; National Emergency Supply Agency (NESA); EU Civil Protection Mechanism (rescEU); EU Internal Security Fund (ISF); municipal and regional co-funding; targeted EU funding mechanism (if established) |
2026–2028; supports rollout of regional contingency planning and integration into national security and resilience protocols |
Number of co‑ordination protocols; emergency exercise participation rates; stakeholder satisfaction with response planning; number of joint drills with NGOs/civil society; % coverage of updated preparedness protocols; digital border security pilots launched |
|
Multi-level governance |
Join and actively contribute to the eight-region co‑ordination platform; broaden participation in EU and national co‑operation instruments (e.g. Interreg Aurora, Interreg Europe, Interreg NEXT CBC, AKKE, and EU eastern border platforms); host annual stakeholder roundtables in Joensuu to align local and EU funding priorities; establish thematic working groups (bioeconomy, innovation, security); and hold strategic planning workshops with youth councils. |
Regional Council of North Karelia; municipalities; Interreg Aurora programme authorities; Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; youth councils and youth organisations; regional councils of other eastern border regions; Business Joensuu; local civil society organisations; ELY Centre North Karelia (Economic Development Centres, from 2026) |
Interreg Aurora; Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; DG REGIO (EU Territorial Co‑operation funds); Council of Europe; Nordic Council of Ministers; EU programme technical assistance funds |
2026–2029; synchronised with Interreg Aurora and other cross-border co‑operation frameworks; enables multi-year stakeholder alignment and EU project development |
Number of cross-border initiatives; EU funding secured through joint platforms; stakeholder engagement scores; youth representation in planning; number of joint Interreg and AKKE proposals submitted; youth participation rate in planning; degree of alignment with 8-region strategy; number of stakeholder roundtables and workshops organized; thematic working groups established |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
Recommendations for South Karelia
Copy link to Recommendations for South KareliaEconomic resilience and diversification
South Karelia should accelerate its transition to green and circular economy sectors to reinforce industrial resilience and sustainability. Historically reliant on forestry and metal industries with strong ties to Russia, the region has faced substantial economic disruption due to sanctions and the cessation of cross-border trade. To address these challenges, South Karelia should leverage its growing strengths in renewable energy and biomaterials - areas strongly supported by LUT University’s expanding research infrastructure. Regional actors should co‑ordinate efforts to facilitate investments in hydrogen economy projects and biomaterials research, actively promote circular economy initiatives such as biogenic carbon capture, and market the region as a hub for sustainable industry. Showcasing key investments, like Ovako’s green steel plant in Imatra, will strengthen South Karelia’s visibility as a destination for green industrial investment. Supporting the transformation of the tourism sector - particularly Lake Saimaa-based tourism - will also contribute to a broader and more resilient economic base.
Enhancing innovation and research collaboration between universities and businesses is critical for diversifying the regional economy. Despite the presence of LUT and LAB Universities, South Karelia has historically had limited R&D investment. Strengthening partnerships in clean energy, environmental technology, ICT, and cybersecurity will unlock new economic potential. Regional co‑ordination should support joint R&D initiatives, the development of digital innovation hubs, and stronger commercialisation of academic research.
Labour market and skills development
Targeted integration efforts are needed to attract and retain skilled labour amid demographic decline and outmigration. South Karelia should facilitate comprehensive integration services for international workers and students - including language training, employment support, and cultural services. National and regional incentives, such as student loan repayment schemes, can help retain graduates from LUT and LAB Universities. Closer co‑ordination between educational institutions and employers is also essential to ensure workforce development aligns with emerging sectoral needs.
To build long-term resilience, vocational education must be preserved and adapted to regional economic needs. South Karelia should seek to mitigate the impact of national funding cuts and ensure continued programme availability in sectors like clean energy, forestry, tourism, and advanced manufacturing. Tailoring curricula to local industry demand and investing in digital and hybrid training solutions will improve access across rural areas.
Infrastructure and connectivity
South Karelia’s economic connectivity depends on timely and strategic investments in transport and digital infrastructure. The closure of the Saimaa Canal and eastern trade routes has intensified pressure on the region’s railway and road networks. Regional actors should advocate at the national level for the Luumäki-Joutseno double-track railway upgrade and ensure continued investment in Lappeenranta Airport connectivity.
At the same time, geopolitical tensions have exposed vulnerabilities in digital infrastructure near the eastern border. South Karelia should co‑ordinate regional advocacy for broadband and 5G network expansion in border municipalities and lead initiatives to improve the resilience and reliability of regional telecommunications infrastructure - closely aligning these efforts with broader security objectives.
Environmental sustainability
South Karelia has the potential to lead in renewable energy, particularly in hydrogen and biomaterials. Supported by LUT University’s research activities, the region should co‑ordinate strategies and advocate for national and EU investment in renewable energy infrastructure and innovation. Infrastructure planning should also support expanded electric vehicle charging and biogas station networks to enhance sustainable mobility.
Biodiversity protection and sustainable forestry are important to environmental resilience. With increased logging pressure following reduced timber imports, South Karelia should strengthen biodiversity safeguards through regional land-use planning and promote sustainable agricultural and forestry practices. Regional co‑operation should also support innovations that increase the value-added utilisation of forestry by-products.
Security and readiness
As a NATO and EU frontline region, South Karelia should bolster its comprehensive security and crisis preparedness capabilities. Regional actors should co‑ordinate closely with the other seven eastern and southeastern border regions to develop integrated security frameworks. These frameworks should include collaboration with municipalities, businesses, universities, and civil society. Particular focus should be given to strengthening regional cybersecurity infrastructure, risk assessment capabilities, and civil defence preparedness. Community participation in preparedness and resilience-building should also be promoted through awareness and co‑operation initiatives.
To this end, several international examples demonstrate how resilient civil society preparedness can be effectively developed. For example, the South Korean model shows that community-based resilience frameworks - when supported by training, governance structures, and cultural legitimacy - can serve as a powerful complement to national security strategies. For Finland’s eastern and southeastern border regions, a similar model of local volunteer networks and community engagement could significantly enhance regional security and societal resilience (Box 11.7).
Furthermore, Estonia’s cybersecurity model demonstrates how regions can play an active role in national cyber defence through decentralised planning, volunteer mobilisation, and strong community engagement. For Finland’s eastern and southeastern border regions, Estonia’s approach offers valuable lessons in building both digital and societal resilience against hybrid threats (Box 11.7).
Box 11.7. Civil society at the core of regional resilience: lessons from South Korea and Estonia
Copy link to Box 11.7. Civil society at the core of regional resilience: lessons from South Korea and EstoniaSouth Korea: community-based disaster resilience through neighbourhood volunteer teams
South Korea offers a valuable example of how civil society can be actively engaged in building resilience to crises, particularly in regions facing persistent security threats. One of the key components of the country’s preparedness strategy is the establishment of Community Volunteer Disaster Prevention Teams, which operate as neighbourhood-level resilience councils. These teams are made up of local volunteers who are trained to assist in emergency situations and to support public authorities in disaster preparedness and response.
While the national government provides training for team leaders, the responsibility for community outreach and implementation lies primarily with local governments. The teams are embedded within the broader structure of the Local Headquarters for Disaster and Safety Management, ensuring close co‑ordination between national policy and local execution. Their activities include disseminating early warnings, supporting evacuation procedures, conducting community-level risk assessments, delivering first aid, and assisting vulnerable populations such as the elderly or people with disabilities.
Importantly, South Korea’s approach integrates traditional communal values - such as Phom-A-Si, a cultural practice centred on mutual aid and co‑operation - which help to strengthen trust, social cohesion, and collective responsibility. These cultural foundations are harnessed to enhance the effectiveness of civil defence efforts and promote sustained citizen participation.
Estonia: Building regional cybersecurity through civil society and technical networks
Estonia has developed a decentralised and resilient cybersecurity system in response to the 2007 cyberattacks. A key feature is the Cyber Defence Unit of the Estonian Defence League - a volunteer-based organisation involving IT professionals, students, civil servants, and academics. These volunteers are often locally based, providing technical expertise to municipalities and supporting both national and regional cybersecurity efforts.
The country’s approach is rooted in broad collaboration between public authorities, local governments, universities, and the private sector. Regional and municipal actors are supported to maintain their own cybersecurity protocols and participate in national training and response exercises, ensuring that preparedness is not centralised but widely shared.
Estonia also invests in public education and digital trust, with citizens actively engaged through awareness campaigns, school curricula, and access to secure e-services. This whole-of-society approach promotes a strong sense of shared responsibility for digital resilience.
Estonia’s model shows how regions can contribute meaningfully to national cybersecurity through local capacity-building, volunteer mobilisation, and public engagement - offering a valuable example for regions like South Karelia seeking to strengthen readiness against hybrid threats.
Multi-level governance
To offset the loss of Russian cross-border co‑operation, South Karelia should deepen EU and Nordic partnerships. Active participation in new EU-funded initiatives - such as targeted Interreg programmes -will be essential to access resources and reinforce cross-border collaboration. Regional actors should also increase their presence in EU decision-making and strategic networks to ensure that South Karelia’s challenges and priorities are recognised in funding and policy frameworks.
Advocacy for tailored national and EU funding is essential to address the structural development disparities faced by South Karelia. Regional efforts should promote the use of innovative fiscal tools - such as targeted incentives and special economic zones - to stimulate investment and economic renewal. Finally, institutional frameworks should be formalised to ensure that young people are engaged in strategic planning processes, helping shape inclusive and future-oriented regional policies.
Proposal for Action Plan
The proposed action plan for South Karelia (Table 11.6) sets out a package of targeted measures to strengthen the region’s resilience, competitiveness, and long-term development capacity. South Karelia faces many of the same challenges as other eastern border regions, including the impacts of the Finnish‑Russian border closure, demographic pressures, and structural economic change. At the same time, it benefits from strong assets such as LUT University, its industrial base, and cross-border transport infrastructure, which provide a foundation for renewal and diversification.
The proposed action plan translates these opportunities and challenges into concrete actions across six thematic areas: economic resilience and diversification, labour market and skills development, infrastructure and connectivity, environmental sustainability, security and readiness, and multi-level governance. Each action identifies responsible actors, required resources, indicative timelines, and measurable indicators to facilitate implementation and monitoring.
Table 11.6. Proposed action plan for South Karelia
Copy link to Table 11.6. Proposed action plan for South Karelia|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Organise sector-specific investor roundtables (hydrogen, biomaterials); launch circular economy pilot sites with SMEs; support commercialisation pathways for carbon capture projects with LUT (e.g. spin-offs, EU pilot funding applications); establish joint industry–university R&D labs; prepare SEZ pilot proposal aligned with national actors. |
Regional Council of South Karelia; LUT University; City of Lappeenranta; chambers of commerce; Business Finland; South Karelia business and innovation agencies; technology SMEs and industrial firms; Ministry of Economic Affairs and Employment; Finnish Forest Centre |
Business Finland; Ministry of Economic Affairs and Employment; ERDF; Horizon Europe; Interreg Europe; Sitra; targeted EU funding mechanism (if established) |
2026–2030; aligns with EU innovation programming cycles and industrial pilot development timelines |
Green industrial investments; number of R&D projects; partnerships with universities; circular economy pilots launched; number of SEZ proposals submitted; private investment leveraged |
|
Labour market and skills development |
Pilot mentoring and onboarding schemes for international graduates; co-design short modular training programmes with employers in key sectors; conduct regional skill gap analysis in emerging industries; secure sustainable funding for VET centres in areas of demographic decline. |
South Karelia Employment areas; vocational education institutions (e.g. Sampo); LUT University; employers and employer associations; municipalities; Ministry of Education and Culture; Ministry of Economic Affairs and Employment |
Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Employment areas; ESF+; Erasmus+; national continuous learning programme; targeted EU funding mechanism (if established) |
2026–2029; allows time for regional capacity-building, curriculum development, and institutional partnerships |
Number of international graduates retained; VET programme coverage; job placement rates; employer satisfaction with training relevance |
|
Infrastructure and connectivity |
Commission feasibility and lobbying package for Luumäki–Joutseno rail upgrade; prepare airport connectivity proposals with operators and Business Finland; conduct broadband blind spot mapping in border municipalities; pilot secure digital infrastructure upgrades (5G/AI) in critical service sites; support development of inland waterway transport to strengthen security of supply and meet business logistics needs. |
Regional Council of South Karelia; municipalities; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; ELY Centre for Southeast Finland; airport and airline operators; telecom and broadband providers; Business Finland; local ports and logistics operators. |
Ministry of Transport and Communications; Finnish Transport Infrastructure Agency; CEF; ERDF (digitalisation); Business Finland (5G/AI pilots); national security-of-supply funding; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2030; required for planning, lobbying, and implementing connectivity upgrades |
Km of TEN-T rail/road upgraded; improved broadband access (% households with 1 Gbps); number of secure digital pilots launched; improved digital resilience indicators; number of inland waterway projects and tonnage of goods transported |
|
Environmental sustainability |
Draft regional hydrogen roadmap linked to national strategy; identify and co-invest in EV charging and biogas station locations with private operators; integrate habitat corridors and biodiversity areas into municipal zoning; pilot wood innovation trials in forestry SMEs. |
Regional Council of South Karelia; LUT University; municipal planning departments; EV/biogas operators; environmental NGOs and agencies; Ministry of the Environment; Ministry of Agriculture and Forestry; forestry SMEs; Business Finland |
Ministry of the Environment; Ministry of Agriculture and Forestry; ERDF (green transition); LIFE; RDP; EU Innovation Fund; national climate/environment funds; energy agency grants; targeted EU funding mechanism (if established) |
2026–2030; matches timelines for hydrogen planning and green innovation trials |
Hydrogen roadmap adopted; number of new renewable energy sites; biodiversity indicators; number of SME wood innovation pilots launched; number of new EV changing and biogas stations |
|
Security and readiness |
Strengthen the existing cross-agency security co‑ordination group by expanding its mandate to cyber and preparedness; pilot community preparedness workshops with municipalities and civic groups; upgrade municipal emergency alert systems; co-develop cybersecurity training with LUT and national authorities. |
Regional Council of South Karelia; Wellbeing Services County; municipalities; emergency services; Ministry of the Interior; National Emergency Supply Agency; LUT; Ministry of Defence; Finnish Border Guard; Cybersecurity Centre of Finland (Traficom) |
Ministry of the Interior; Ministry of Defence; National Emergency Supply Agency; EU Civil Protection Mechanism; ERDF (resilience); NATO resilience funds (if applicable); targeted EU funding mechanism (if established) |
2026–2028; timeframe sufficient to integrate cyber and preparedness tasks, roll out workshops, and upgrade systems |
Preparedness framework updated; number of community workshops; % coverage of upgraded alert systems; number of cyber training sessions held |
|
Multi-level governance |
Join cross-regional co‑ordination platforms with other eastern border regions; apply to relevant Interreg, Interreg NEXT CBC, or EU co‑operation programmes accessible to South Karelia; host youth planning dialogues with municipal councils; prepare joint funding proposals with Eastern Finland regions; explore Nordic and Baltic partnerships. |
Regional Council of South Karelia; municipalities; Ministry of Economic Affairs and Employment; Ministry for Foreign Affairs; regional councils of Eastern Finland; EU programme authorities (Interreg, Interreg NEXT CBC); youth councils and civic groups; municipal youth representatives |
Interreg (relevant programmes); Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; EU Technical Support Instrument (TSI); ERDF (capacity building); ESF+ (youth participation); municipal co-funding; |
2026–2029; sufficient to operationalise co‑ordination platforms and align with EU project cycles |
EU project participation; youth engagement metrics; number of joint funding proposals; new cross-regional or regional initiatives piloted |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
Recommendations for South Savo
Copy link to Recommendations for South SavoEconomic resilience and diversification
South Savo should enhance its bioeconomy and sustainable agriculture sectors to strengthen economic resilience and promote long-term sustainability. With a strong base in agriculture, forestry, and food industries, as well as emerging blue bioeconomy initiatives, the region has faced significant challenges due to the loss of Russian imports and the closure of the Saimaa Canal. To address these disruptions, South Savo should prioritise innovation and the expansion of value-added processing of agricultural, forestry, and water-related resources. Regional co‑ordination should focus on targeted investments in food innovation, forestry-based biomaterials, and water circular economy solutions. Collaboration between agricultural producers, businesses, and research institutions will be essential to develop robust green, yellow, and blue bioeconomy value chains2.
To diversify the economy further, South Savo should promote innovation and entrepreneurship through regional business clusters and strengthened RDI collaboration. Despite strong educational institutions such as XAMK, private-sector innovation and RDI infrastructure remain underdeveloped. Regional actors should support the development of innovation hubs, facilitate SME participation in joint RDI initiatives, and expand networks that support commercialisation and internationalisation of local innovations ‑ especially in sustainable agriculture, forestry technologies, and digital solutions.
South Savo should also enhance the diversity and year-round attractiveness of its tourism sector, a historically important but vulnerable part of the regional economy. With the loss of Russian visitors, there is a need to develop new international markets and sustainable tourism products focused on nature, wellness, and cultural assets. Regional efforts should support strategic investment in eco‑tourism, promote international marketing to attract Nordic, Central European, and Asian visitors, and encourage businesses to develop year-round tourism offerings.
Labour market and skills development
Addressing South Savo’s demographic and labour market challenges will require targeted attraction and retention of skilled workers. Labour shortages, compounded by ageing and outmigration, risk undermining economic growth. Regional initiatives should include advocating for national incentives, providing comprehensive integration support for international workers, and co‑ordinating retention strategies for graduates, particularly from institutions like XAMK.
Vocational education should be strengthened and aligned more closely with industry needs to ensure workforce readiness. Regional co‑ordination should focus on aligning training with key sectors such as tourism, bioeconomy, healthcare, and digital services. Expanding work-based learning opportunities and investing in digital and flexible training formats will improve skills availability across South Savo, particularly in rural municipalities.
Infrastructure and connectivity
Improving connectivity is essential for South Savo’s long-term economic prospects. The region should actively advocate for timely national investments in key transport infrastructure projects, including upgrades to road VT5, the Savonlinna–Parikkala railway, and the maintenance of the Saimaa waterways. Sustaining air connectivity through Savonlinna and Mikkeli airports is also important for tourism and accessibility.
At the same time, digital infrastructure should be strengthened, especially in rural and peripheral areas. Broadband and mobile coverage remain uneven, limiting remote work potential and digital innovation. South Savo should co‑ordinate efforts to accelerate broadband and 5G deployment and support digital hubs that attract remote professionals and digital entrepreneurs.
Environmental sustainability
South Savo’s abundant natural resources - forests and agricultural biomass - position it well to lead in renewable energy and bio-based economy initiatives. Regional actors should co‑ordinate investments in bioenergy, solar, and biogas production, and support hydrogen-based transport fuel projects (see also Box 11.8). Advocacy for national grid upgrades will also be necessary to accommodate expanded renewable energy capacity.
Sustainable forestry and agriculture practices must also be prioritised. Promoting organic and climate-smart farming, innovative forestry management, and biodiversity conservation will improve the region’s environmental resilience while supporting food production and ecosystem health. Regional initiatives could include, for instance, support for farmer-led soil carbon monitoring programmes, such as those piloted by eAgronom in Finland (eAgronom Ltd, 2025[20]) or under the EU-funded AgriCapture project (AgriCapture, 2025[21]), and biodiversity audits in partnership with landowners, building on practices used by Forest Management Associations in Finland (Suomen metsäkeskus, 2025[22]). Advisory services to expand organic certification and reduce chemical inputs could be modelled for example on the long-standing work of ProAgria across Finnish regions (Pro Agria, 2025[23]). These practices should be supported through co‑ordinated planning, co‑operation between municipalities and producers’ associations.
Box 11.8. Green hydrogen: Europe’s path to a sustainable energy future
Copy link to Box 11.8. Green hydrogen: Europe’s path to a sustainable energy futureGreen hydrogen - produced via electrolysis powered by renewable electricity - is a cornerstone of the EU’s decarbonisation strategy. Under the REPowerEU plan, the EU aims to produce and import 10 million tonnes of renewable hydrogen annually by 2030. Yet hydrogen currently accounts for less than 2% of the EU’s energy mix, with 96% derived from fossil fuels. Meeting the 2030 target will require a 250-fold increase in electrolyser capacity and €170–240 billion in investment, including 20–40 large-scale projects across Europe.
Regions with abundant renewable resources - such as wind, solar, forest biomass, and biogas - are well-positioned to lead this transformation. Areas with low population density and land availability may also benefit from more flexible siting and permitting conditions. All eight of Finland’s eastern and south-eastern border regions possess region-specific assets that could support the development of a green hydrogen economy.
An interesting example is the Green Hydrogen Valley in Asturias, Spain, where the transformation of a former coal-fired power plant into a green hydrogen production hub demonstrates how existing infrastructure can be repurposed to drive energy transition. The Asturias project, led by EDP, uses electrolysis powered by renewable energy and is expected to cut emissions by 99.98% compared to the original coal operations. It combines environmental goals with economic regeneration by creating local jobs and integrating hydrogen into industrial supply chains. Its success has been recognised by the European Commission as a Project of Common Interest.
For regions like South Savo, the path to green hydrogen will differ in form but not in potential. South Savo’s strengths lie in its bioenergy, solar, and biogas production capacity, which could serve as renewable inputs for distributed or mid-scale electrolysis. Coupled with opportunities in district heating, sustainable mobility, and industrial decarbonisation, green hydrogen can become a driver of regional resilience and economic diversification.
This transition also holds major economic promise. It can generate jobs across the hydrogen value chain - from production and storage to transport and end-use - and attract investment into clean technologies and sustainable industries. However, success will depend on overcoming critical challenges, including infrastructure gaps, technology costs, and regional skills shortages. Co‑ordinated planning, workforce development, and supply chain resilience are essential.
Strong political and regulatory support is equally vital. Clear, long-term policy frameworks that de-risk investment and promote environmental safeguards will be critical to unlocking private sector participation. Cross-sector collaboration - between governments, industry, higher education, and local communities - will determine which regions emerge as competitive hydrogen producers. The transition timeline and economic outcomes will vary based on each region’s renewable resource profile, energy infrastructure, and industrial demand base.
Security and readiness
Given South Savo’s proximity to the Russian border, enhancing regional preparedness is a critical priority. The region should collaborate with other eastern and southeastern border areas to develop a comprehensive security and crisis response framework. This should include strengthened cybersecurity, protection of critical infrastructure, civil society engagement, and emergency response capabilities. Public-private-academic collaboration will be essential to building a resilient and secure region.
Multi-level governance
To enhance economic resilience and strategic positioning, South Savo should deepen co‑operation with EU and Nordic partners. With traditional Russian cross-border co‑operation no longer viable, participation in programmes such as Interreg and regional Nordic networks will help secure resources, knowledge exchange, and new market opportunities. Active participation in EU structural funds - particularly for infrastructure, bioeconomy, and digitalization - should be prioritised.
South Savo should also advocate for tailored national and EU funding allocations that address its unique challenges. Regional actors should co‑ordinate with neighbouring regions to propose innovative fiscal tools and targeted incentives that support investment and address demographic and economic disparities.
Finally, institutional mechanisms should be established to formalise youth participation in regional strategy development, ensuring that younger generations’ perspectives and aspirations are integrated into long-term planning. To address this, South Savo could establish a regional Youth Advisory Council linked to the Regional Council, ensure permanent youth representation in development planning bodies, and support participatory budgeting or innovation labs that promote youth involvement.
Proposal for Action Plan
The proposed action plan for South Savo (Table 11.7) sets out concrete measures to strengthen the region’s resilience and long-term sustainability. Building on its strong base in agriculture, forestry, food industries, and emerging blue bioeconomy, the plan prioritises innovation in value-added bio-based products, sustainable farming, and water circular economy solutions. To address demographic pressures, targeted actions aim to attract and retain skilled workers, improve graduate retention, and align vocational training with key sectors such as tourism, healthcare, and digital services. Strategic investments in transport corridors, Saimaa waterways, airports, and broadband are combined with initiatives to expand renewable energy, promote sustainable forestry and organic farming, and enhance biodiversity. The proposed plan also advances regional security through stronger preparedness and civil society engagement, while emphasising EU and Nordic co‑operation, tailored national funding for border regions, and youth participation in strategic planning.
Table 11.7. Proposed action plan for South Savo
Copy link to Table 11.7. Proposed action plan for South Savo|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Support investment and new business ventures in agri-food and forest product processing facilities; launch SME–university partnership calls with XAMK, Mikkeli University Consortium (MUC), and local VETs (Samiedu, Esedu); pilot RDI initiatives in circular water use (biofiltration, wastewater reuse); strengthen food, blue economy (BEM), and digital information clusters; support South Savo Defence Cluster develop dual-use and security-related technology pilots; promote tourism pilots with seasonal diversification and eco-tourism packages in co‑operation with Visit Finland and businesses. |
Regional Council of South Savo; XAMK; MUC; Samiedu; Esedu; Savo Defence; local SMEs; municipal business services; Business Finland; food/blue economy clusters; defence cluster partners; Natural Resources Institute Finland (LUKE); Ministry of Economic Affairs and Employment; regional development agencies. |
Business Finland; Ministry of Economic Affairs and Employment; ERDF; Horizon Europe; RDP; Interreg Europe; EAFRD; LUKE innovation funding; tourism development grants; private sector co-investment; capital funds; targeted EU funding mechanism (if established) |
2026–2030; aligned with EU and national SME/RDI cycles, allowing time for cluster-building, pilots, and commercialisation. |
Number of RDI partnerships; investment in bio/blue/food sectors; number of SMEs in defence cluster; change in eco-tourism overnight stays. |
|
Labour market and skills development |
Develop regional talent platform linking employers with HEI/VET; launch internship-to-hiring schemes for XAMK graduates; co-create curricula in tourism, bioeconomy, care, and defence-tech sectors with VET providers; expand remote-access and work-based learning modules in rural areas; promote alumni networks and graduate retention and attraction incentives; pilot skills-account schemes for micro-entrepreneurs and workers in short-term jobs. |
Regional Council; XAMK; Samiedu; Esedu; local employers and associations; Employment Areas; municipalities; Ministry of Education and Culture; Ministry of Economic Affairs and Employment. |
Ministry of Education and Culture; Ministry of Economic Affairs and Employment; ESF+; Erasmus+; national continuous learning centre; employer co-financing; targeted EU funding mechanism (if established) |
2026–2029; timeframe for piloting new curricula, graduate retention schemes, and evaluation. |
Graduate retention rate; number of internships/apprenticeships; uptake of skills-account pilots; participation in remote/digital learning; adult participation in continuous learning |
|
Infrastructure and connectivity |
Advocate for VT5 and Savonlinna–Parikkala VT14 road and railway upgrades; ensure maintenance of lower road network to support agri-food and forestry supply chains; strengthen air connectivity at Savonlinna and Mikkeli airports; expand broadband and 5G coverage through ERDF funding; pilot digital co-working hubs in small towns; support planning for east–west logistics links to coastal ports. |
Regional Council; municipalities; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; Economic Development Centres (from 2026); Traficom; regional airports; broadband providers; Business Finland. |
Ministry of Transport and Communications; FTIA; ERDF (digitalisation/transport); CEF; Business Finland (digital hubs); national broadband and transport funds; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2030; planning, lobbying, and phased implementation for roads, rail, air, and digital upgrades. |
Km of roads/rail improved; number of broadband/5G households; air route coverage from regional airports. |
|
Environmental sustainability |
Launch joint calls for investment in community bioenergy, hydrogen, and biogas projects; strengthen co‑operation on water protection in Lake Saimaa and groundwater zones2; expand organic farming advisory services; develop landowner partnerships for biodiversity monitoring; pilot carbon measurement tools with forest owners; support wetland restoration and nature-based solutions in municipal zoning. |
Regional Council; municipalities; Economic Development Centre, landowners and forest owners; LUKE; organic farming advisory bodies; energy SMEs/co‑operatives; Ministry of Environment; Ministry of Agriculture and Forestry; local union of agricultural producers and forest owners; environmental NGOs. |
Ministry of Environment; Ministry of Agriculture and Forestry; ERDF (green transition); LIFE; RDP; EU Innovation Fund; national climate/environment funds; LUKE research; bioeconomy-specific EU funds; targeted EU funding mechanism (if established) |
2026–2029; aligned with green transition cycles and long-term land-use planning. |
Renewable energy production; hectares under biodiversity audits; share of organic farms; number and size (ha) of restored wetlands; number of joint water protection projects launched (Lake Saimaa/groundwater zones) |
|
Security and readiness |
Convene regional crisis co‑ordination taskforce; assess cyber and physical vulnerabilities of infrastructure; organise annual emergency drills with municipalities, wellbeing services county, and FDF; pilot rural emergency logistics research with THL and universities; establish local forums for civil society participation in preparedness planning. |
Regional Council (co‑ordination role/funding R&D); Savo Defence; Wellbeing Services County; municipalities; Finnish Defence Forces; Ministry of Interior; NESA; THL; local emergency services; civil society organisations. |
Ministry of Interior; Ministry of Defence; NESA; ERDF (resilience); NATO resilience funds (if applicable); THL preparedness budgets; EU Civil Protection Mechanism; municipal co-funding; targeted EU funding mechanism (if established) |
2026–2028; to strengthen co‑ordination, preparedness, and integration of civil society in exercises. |
Number of drills/exercises; civil society participation rates; preparedness frameworks updated. |
|
Multi-level governance |
Join co‑ordination platforms with other eastern border regions; establish joint working group for Interreg Central Baltic (instead of Aurora); co-develop EU/national funding priorities with eastern regions; host youth planning workshops with municipal/youth councils; develop digital dashboard for tracking EU-funded project alignment. |
Regional Council; Eastern Finland regional councils; Ministry of Economic Affairs and Employment; Ministry of Finance; municipal youth councils; youth organisations; digital service providers. |
Ministry of Economic Affairs and Employment; EU TSI; ERDF (capacity-building); ESF+ (youth); national digitalisation funds; municipal co-funding. |
2026–2029; allows time for cross-regional co‑ordination, youth pilots, and monitoring system design. |
Participation in Interreg projects; youth participation metrics; establishment of digital dashboard |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
2. The suggested collaboration could focus e.g. on joint monitoring, pollution prevention, and coordinated investment in water protection measures in Lake Saimaa and its groundwater catchment areas.
Recommendations for Kymenlaakso
Copy link to Recommendations for KymenlaaksoEconomic resilience and diversification
Kymenlaakso should accelerate its transition to a green and circular economy to strengthen industrial resilience in response to economic disruptions caused by the closure of the Russian border. The region’s historical reliance on exports and logistics connected to Russia has created vulnerabilities that require strategic diversification. With established maritime logistics and industrial capacity around the Kotka-Hamina port, Kymenlaakso is well-positioned to become a national leader in green logistics, sustainable port operations, and circular industrial practices. Regional actors should promote targeted investments in green hydrogen, renewable energy, the battery industry, and large-scale circular economy projects linked to the port and logistics clusters. Showcasing initiatives like carbon-neutral maritime logistics and fostering collaboration between enterprises, research institutions such as XAMK, and industry ecosystems - including the emerging food industry cluster in Kouvola - will help build a more diversified and sustainable industrial base.
Strengthening regional innovation capacity is essential to foster economic diversification. Despite the presence of strong educational institutions, R&D activity in Kymenlaakso remains relatively modest. To boost innovation, the region should enhance co‑operation between universities (especially XAMK), regional technology hubs, and businesses. Regional efforts should focus on expanding support mechanisms for SME-led RDI projects, facilitating innovation partnerships in logistics, maritime industries, digitalisation, the battery sector in Kotka, and the food industry ecosystem in Kouvola. Support for regional digital innovation hubs - especially in Kouvola and Kotka-Hamina - could attract start-ups and digital entrepreneurs, enhancing innovation ecosystems and local job creation.
Kymenlaakso should also improve its resilience to logistics disruptions and diversify its international markets. With the loss of Russian trade routes, reinforcing regional infrastructure and developing intermodal connections is critical. Regional actors should advocate for the timely implementation of transport infrastructure projects outlined in the Kaakon Paketti - particularly rail and road upgrades around Kotka-Hamina port - and co‑ordinate logistics planning to improve access to Nordic, European, and Asian markets. Facilitating joint business networks will support collaborative approaches to international market access and strengthen economic security. Further, the recent experiences from the United Kingdom’s Freeports could provide interesting examples for Kymenlaakso (Box 11.9). The UK experience demonstrates how integrated customs, tax, and infrastructure incentives can revitalise port regions facing economic shocks and trade disruptions. Given Kymenlaakso’s strategic location around the Kotka-Hamina logistics hub, a similar approach could help attract green industrial investment, strengthen international trade connections, and support regional economic renewal.
Box 11.9. UK Freeports: Revitalising regional trade and logistics
Copy link to Box 11.9. UK Freeports: Revitalising regional trade and logisticsThe United Kingdom’s Freeports policy, launched in 2021, aims to stimulate investment, innovation, and economic growth, particularly in regions facing industrial decline or economic disruption. Freeports are designated geographic zones that benefit from a combination of customs, tax, planning, and regulatory advantages, designed to attract businesses and boost local economic development.
Each UK Freeport comprises a primary customs site (usually a port or airport) and connected tax sites, often inland industrial or logistics areas. They are supported by local partnerships involving local authorities, port operators, and business stakeholders.
Key features of UK Freeports include:
Customs and tariff benefits: Goods can be imported, manufactured, and re-exported without incurring standard tariffs or customs checks, improving trade efficiency.
Tax incentives: Businesses operating within Freeports benefit from enhanced capital allowances, reduced stamp duty, and relief from employer National Insurance contributions on new employees.
Planning flexibility: Streamlined local planning processes facilitate quicker investment in infrastructure and development.
Innovation and skills funding: Some Freeports receive targeted support for research, development, and skills initiatives to foster local capabilities.
Notable examples include:
Teesside Freeport – Focused on clean energy, advanced manufacturing, and offshore wind.
East Midlands Freeport – Leveraging airport and rail infrastructure for logistics and advanced manufacturing.
Solent Freeport – Capitalising on Southampton’s port for green maritime technologies.
While still early in implementation, UK Freeports are expected to generate tens of thousands of jobs and billions in regional investment. Their integrated model of customs, tax, and infrastructure support provides a potentially relevant information for regions like Kymenlaakso, particularly around the Kotka-Hamina logistics hub.
Source: (Department for Levelling Up, 2025[26]; Webb, Jozepa and Ares, 2023[27]; Teesside Freeport, 2025[28]; Solent Freeport, 2025[29]; East Midlands Freeport, 2025[30])
Labor market and skills development
To address demographic challenges and labour shortages, Kymenlaakso should adopt targeted strategies to attract and retain skilled workers. The region should co‑ordinate regional strategies to improve integration services and advocate for national incentive programmes such as relocation support and student loan repayment schemes. Strengthening partnerships between educational institutions and industry - especially through XAMK - will ensure that workforce skills align with emerging economic needs in logistics, healthcare, ICT, and industry.
Improving vocational education and training will support regional economic transition. Vocational programmes should reflect the evolving needs of sectors such as logistics, maritime operations, renewable energy, and digital services. Regional co‑ordination should support curriculum alignment, expand apprenticeship opportunities, and promote digital and remote learning formats to improve access across rural areas.
Infrastructure and connectivity
Regional advocacy for strategic transport infrastructure is vital to Kymenlaakso’s economic future. Although funding decisions are made nationally, the region should proactively support key infrastructure projects highlighted in the Kaakon Paketti and the national investment programme. Priorities include electrification and double-tracking of railways and road improvements around Kotka-Hamina and Kouvola. Continued investment in airport connectivity will also support business and tourism accessibility.
Improving digital infrastructure is equally important. Broadband and 5G access remain inconsistent in parts of Kymenlaakso, limiting digital innovation and the potential for remote work. Regional actors should co‑ordinate advocacy and investment efforts to expand digital connectivity, and support regional digital hubs in Kouvola, Kotka, and Hamina to boost innovation and entrepreneurship.
Environmental sustainability
Scaling up renewable energy and circular economy initiatives will position Kymenlaakso as a leader in sustainable development. The region has strong potential in green hydrogen, solar energy, and bioenergy, particularly in its logistics and industrial hubs. Regional efforts should co‑ordinate renewable energy and circular economy investments, promote cross-sector partnerships - including with institutions like XAMK and LUT University - and advocate for national and EU support.
Sustainable resource management is also crucial. The region’s natural resources, especially forests, should be managed responsibly. Promoting sustainable forestry, biodiversity protection, and circular forestry projects could ensure the long-term viability of local resources and contribute to broader climate goals. For example, forest owners and local businesses could be supported to adopt continuous-cover forestry and biodiversity-friendly harvesting practices, as piloted in Southern Finland and promoted by Finland’s Forest Biodiversity Programme (METSO) (Finnish Government, 2025[31]). The region could also implement voluntary conservation contracts with landowners through mechanisms like the Marketta pilot scheme (Finnish Government, 2025[32]). To advance circular forestry, industrial actors in Kymenlaakso could develop value-added wood products from side streams and residues - such as wood-based textiles, biochar, or packaging, following the example of South Karelia’s Greenreality Network (City of Lappeenranta, 2025[33]) or North Savo’s bioproduct development platforms (Bio and Circular Cluster, 2025[34]). These efforts could be facilitated through partnerships with LUT University and XAMK, leveraging their expertise in bio-based innovation and circular economy systems.
Security and readiness
Kymenlaakso’s strategic location near the Russian border underscores the need for enhanced regional security preparedness. Regional actors should work with neighbouring border regions to establish comprehensive crisis preparedness frameworks. These should engage public authorities, businesses, and educational institutions in co‑ordinated planning and include investment in cybersecurity and protection of critical infrastructure such as logistics and energy assets.
Multi-level governance
In the absence of Russian cross-border co‑operation, Kymenlaakso should actively pursue EU and Nordic partnerships. Participating in targeted EU and Nordic funding programmes - particularly those focused on logistics innovation, digitalisation, and the green transition - will bring new resources and strategic partnerships to the region. Strengthening regional collaboration within European frameworks will also help advance shared projects and policy goals.
To support long-term development, the region should advocate for national and EU funding that reflects its unique demographic and structural challenges. Regional co‑ordination with other border regions will be essential to promote innovative fiscal tools and attract strategic investments. Lastly, institutional mechanisms should be formalised to ensure youth participation in strategic planning, helping shape policies that are inclusive and future oriented.
Proposal for Action Plan
The proposed action plan (Table 11.8) for Kymenlaakso focuses on strengthening resilience and renewal after the closure of the Finnish–Russian border. With the Kotka–Hamina port as a key logistics hub, the region has strong industrial capacity but also significant exposure to trade disruptions. Kymenlaakso is well positioned to lead in green logistics, renewable energy, circular industry, and dual-use innovation, while tackling demographic and labour market challenges.
The proposed plan identifies concrete actions across six themes: boosting SME capacity to benefit from defence procurement and new markets, advancing skills and talent attraction in logistics and digital sectors, advocating for strategic transport and digital investments, co‑ordinating renewable energy and circular projects, reinforcing security and crisis preparedness, and strengthening EU and Nordic co‑operation.
Table 11.8. Proposed action plan for Kymenlaakso
Copy link to Table 11.8. Proposed action plan for Kymenlaakso|
Theme1 |
Key actions |
Key actors |
Resources |
Timeline |
Potential indicators |
|---|---|---|---|---|---|
|
Economic resilience and diversification |
Support companies2 to access Finnish Defence Forces and NATO procurement opportunities, develop dual-use technologies and multipurpose products; build regional support structures to help SMEs join international supply chains. Facilitate companies’ participation in Ukrainian reconstruction markets3. Expand circular economy and green industrial projects linked to Kotka-Hamina port, including battery industry and hydrogen pilots. Promote RDI partnerships between XAMK, SMEs, and industry clusters (logistics, food, digital, maritime). Strengthen Digital Innovation Hubs in Kouvola and Kotka (e.g. DIH-Kymenlaakso). Prepare and submit SEZ/freeport pilot proposal in alignment with national framework. Organise joint export promotion and internationalisation networks for food, logistics, and maritime clusters. |
Regional Council of Kymenlaakso; municipalities; XAMK; LUT University; SMEs and large firms; Business Finland; Ministry of Economic Affairs and Employment; Finnish Defence Forces procurement units; chambers of commerce. |
ERDF; Horizon Europe; Business Finland; SEZ pilot funding; EU defence industry instruments; Sitra; private investment; targeted EU funding mechanism (if established). |
2026–2030; aligned with EU and national RDI programming cycles, SEZ pilot development, and defence procurement opportunities. |
Number of SMEs accessing defence/NATO procurement; SEZ/freeport proposals submitted; volume of private investment mobilised; number of circular/green industry pilots; RDI project volume; export diversification metrics. |
|
Labour market and skills development |
Expand vocational and higher education collaboration in logistics, maritime, renewable energy, and digital services (e.g. curricula co-designed with XAMK). Launch regional talent attraction and retention platform with profiles for logistics, ICT, healthcare, and green industry sectors; align with municipal initiatives. Promote international graduate retention through integration services, housing, and relocation support. Scale up apprenticeships and digital/remote learning programmes to improve rural access. |
Regional Council; municipalities; XAMK; vocational schools; employers; Ministry of Education and Culture; Ministry of Economic Affairs and Employment; Employment areas. |
ESF+; Erasmus+; Ministry of Education and Culture; Employment areas; employer co-financing; targeted EU funding mechanism (if established). |
2026–2029; timeframe allows piloting of new training formats and incentive schemes, with scaling and institutionalisation after evaluation. |
Graduate retention rates; number of apprenticeships in logistics and green sectors; international workers integrated; uptake of remote/digital learning. |
|
Infrastructure and connectivity |
Advocate for priority Kaakon Paketti projects: railway electrification and double-tracking, and road upgrades around Kotka-Hamina and Kouvola. Strengthen intermodal logistics connections through Kotka-Hamina port. Develop proposals for energy grid upgrades (400 kV, storage, port-adjacent energy sites). Maintain and strengthen regional air connectivity (Kotka, Kouvola). Expand broadband and 5G coverage, establish digital hubs in Kouvola, Kotka, and Hamina. Pilot maritime and logistics security testbeds (e.g. oil spill response, land-sea logistics exercises). |
Regional Council; Finnish Transport Infrastructure Agency; Ministry of Transport and Communications; Fingrid; port operators; municipalities; XAMK; Business Finland. |
CEF; ERDF; Business Finland; Fingrid; national investment programme; Interreg; targeted EU funding mechanism (if established). |
2026–2032; reflects long planning, permitting, and investment cycles for transport and energy projects; digital upgrades and DIH support can be phased earlier. |
Km of rail upgraded; number of Kaakon Paketti projects advanced; % broadband coverage; number of port/logistics testbeds; MW renewable energy grid capacity added. |
|
Environmental sustainability |
Scale up renewable energy pilots (hydrogen, bioenergy, solar) linked to port and industrial hubs. Pilot circular forestry projects (biochar, textiles, packaging) with industrial actors. Support sustainable forestry training, certification, and biodiversity-friendly practices. Promote biodiversity conservation via METSO scheme and voluntary landowner contracts. Develop a green investment pipeline, using existing project pipelines from cities and development agencies. |
Regional Council; municipalities; XAMK; LUT University; Metsähallitus; Ministry of the Environment; Ministry of Agriculture and Forestry; forestry associations; SMEs; NGOs. |
LIFE; ERDF (green transition); RDP; EU Innovation Fund; national climate funds; Sitra; targeted EU funding mechanism (if established). |
2026–2030; matches renewable energy investment and circular economy funding cycles; forestry and biodiversity initiatives require longer-term continuity. |
Renewable energy capacity installed; hectares under biodiversity protection; number of circular forestry pilots; eco-certification uptake; number of green projects in pipeline advanced. |
|
Security and readiness |
Map existing collaboration networks, identify gaps, and avoid duplication in preparedness planning. Enhance regional preparedness by strengthening the existing co‑ordination group and expanding its mandate to cyber, port, and energy infrastructure. Organise cross-agency crisis exercises, including port/oil spill response, logistics resilience, and cybersecurity simulations. Strengthen collaboration with NGOs, volunteer groups, and community actors for preparedness. Support funding proposals for dual-use testbeds in logistics and digital security. |
Regional Council; municipalities; Wellbeing Services County; emergency services; port operators; Ministry of the Interior; National Emergency Supply Agency; Finnish Border Guard; Cybersecurity Centre of Finland; NGOs and volunteer organisations. |
Ministry of the Interior; NESA; EU Civil Protection Mechanism; Horizon Europe (Cluster 3); NATO resilience funding (if applicable); targeted EU funding mechanism (if established). |
2026–2029; timeframe sufficient to strengthen cross-agency frameworks, expand cybersecurity, and conduct preparedness exercises. |
Number of joint emergency exercises; number of preparedness workshops; critical infrastructure security gaps addressed; dual-use testbeds launched. |
|
Multi-level governance |
Participate actively in EU/Nordic co‑operation (Interreg, Nordic networks) to access funding and joint projects. Advocate for tailored national and EU funding tools for border regions, including SEZ/freeport pilots. Co‑ordinate cross-border co‑operation with other Finnish border regions on infrastructure, green transition, and security. Formalise youth participation mechanisms (e.g. Youth Advisory Council linked to the Regional Council, youth inclusion in regional planning). |
Regional Council; municipalities; youth councils; Ministry for Foreign Affairs; Ministry of Economic Affairs and Employment; Nordic partners; regional councils of eastern Finland. |
Interreg (Central Baltic, Baltic Sea Region, Europe); TSI; Structural Funds TA; Erasmus+; ESF+ (youth participation); national budgets. |
2026–2028; sufficient to operationalise new co‑operation platforms, align with EU/Nordic cycles, and establish youth participation mechanisms. |
Number of EU/Nordic projects joined; volume of tailored funding accessed; youth participation metrics. |
1. Actions are presented together under each theme as a single entity when their key actors, resources, and indicators are largely shared. To distinguish multiple actions within one row, they are separated by semicolons (“;”) rather than bullet points. This ensures clarity and avoids unnecessary duplication across the table.
2. This could include providing targeted training on defence and NATO procurement procedures, advisory services on standards and certification requirements, matchmaking events with prime contractors, and financial or administrative guidance for SMEs to prepare competitive bids. Other regional support could also offer shared legal/technical expertise, export promotion assistance, and help in forming consortia to enter larger supply chains.
3. Facilitating company participation in Ukrainian reconstruction markets could involve providing information on upcoming tenders and financing instruments (e.g. EBRD, EIB, World Bank, EU funding), organising trade missions and matchmaking events with Ukrainian partners, supporting consortia of SMEs to jointly bid for projects, and offering advisory services on legal, logistical, and risk management aspects of operating in reconstruction markets.
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Notes
Copy link to Notes← 1. The indicators are designed for straightforward monitoring, while the actions themselves provide a basis upon which governments and regional stakeholders may later set appropriate numerical targets aligned with national policies, EU frameworks, and the broader 8-region strategy.
← 2. The green bioeconomy refers to forestry and biomass industries, the yellow bioeconomy to agriculture and food production, and the blue bioeconomy to water-based resources such as fisheries, aquaculture, and water circular economy solutions.