Faroe Islands businesses are among the most innovative in the Nordic region, according to new figures from Statistics Faroe Islands (Hagstova Føroya). In the 2022–2024 period, 61% of Faroese enterprises covered by the Nordic comparison carried out some form of innovation, putting the archipelago alongside Sweden, Norway and Finland.
The figures show that only three percentage points separate the Faroe Islands, Sweden, Norway and Finland. Sweden also recorded 61%, followed by Norway at 60% and Finland at 58%. Denmark was considerably lower, at 48%. Comparable Icelandic data for 2022–2024 are not yet available, so the 48% shown for Iceland refers to the previous 2020–2022 period.
Faroe Islands innovation is concentrated in business processes
The broad innovation rate, however, conceals a substantial difference between types of innovation. Half of Faroese enterprises introduced new or improved business processes, compared with only 17% that innovated in products or services.
That is the lowest product and service innovation rate among the Nordic countries included in the comparison. The corresponding share was 33% in Sweden, 32% in both Norway and Finland, 25% in Denmark and 29% in Iceland, although the Icelandic figure again refers to the earlier survey period.
Hagstova defines business process innovation broadly. It can include new or significantly improved methods for production, logistics, data processing or communication. Product and service innovation, by contrast, requires a company to offer something new or significantly improved compared with what it previously provided.
The pattern is not unique to the Faroe Islands. Process innovation is more common than product and service innovation throughout the Nordic comparison, but the difference is particularly wide among Faroese businesses.
Technology and aquaculture record high innovation rates
The statistics cover Faroese companies with at least ten employees and are based on a survey conducted according to international innovation standards used by Eurostat and the Oslo Manual.
Some sectors perform particularly strongly. According to Hagstova, all companies in the information and communication sector included in the survey reported innovation activity. The rate was 80% in aquaculture, while around half of companies in the fishing industry were considered innovative.
An enterprise can qualify as innovative in several ways. These include introducing products, services or processes, carrying out or purchasing research and development, or having innovation projects that were still under way or had been postponed during the survey period.
Investment fell despite the high innovation rate
The strong position in the Nordic comparison comes alongside a decline in spending. Faroese businesses invested DKK 748 million (about €100 million) in research, development and innovation in 2024, according to Hagstova. That was DKK 147 million (about €19.7 million) less than in 2022.
Most of the fall came from research and development expenditure, which decreased by DKK 105 million, or around €14.1 million. Sales generated by new or significantly improved products and services also declined, falling by DKK 323 million (about €43.3 million) compared with 2022.
The figures therefore present a mixed picture. The Faroe Islands have a high proportion of businesses engaged in innovation, especially through changes to internal processes, and rank close to the Nordic leaders despite the small size of their economy. At the same time, lower investment and weaker sales from new products suggest that maintaining that position will depend not only on how many companies innovate, but also on how much they are able to invest in developing and bringing new products and services to market.
