The county of Kainuu is located in northern Finland, having 240 km of common border with Russia. It consists of nine municipalities and covers a surface of 24 452 km². The region is characterized by a very low population density: 3.4 persons per km². 95 % of the land area is forest. Most municipalities are very small – over half of them have less than 5 000 inhabitants. The regional capital is Kajaani with around 38 000 inhabitants.
Since the 1970’s, Kainuu has been losing population due to both a negative migration balance and a negative natural population development. Especially the rural population is diminishing. In addition to the decrease of young people, youth unemployed is very high. Selective out-migration leads to unbalanced sex ratio structures (83 women per 100 men in the age-group 20–29) and an aging society in the region.
In previous years the lumber industry had an important role as an employer. The largest employers in the region now are the public sector units, such as schools, vocational schools, high-schools and higher education institutions, as well as the municipalities and social and health services, now under the Joint Authority of Kainuu Region. Human capital intensive industries are located in the city of Kajaani including instrument, measurement and software technology, wireless data communications and embedded systems. In the future, welfare technology, travel and biotechnology as well as mining are expected to be the driving forces of economic development in the region. Talvivaara nickel mine in Sotkamo is among the biggest in Europe. Besides that, tourism is an important regional potential and an important part of the regional development strategy.
A declining population and the associated increase in the older age groups, declining entrepreneurial activity and employment, and the weakening municipal economies led to the initiation of a self-government experiment unique in Finland. Existing administrative and budgeting practices were not considered to provide sufficient support to the initiation of effective and sustainable industry and business development projects in the region. In order to test new types of administrative and financing structures the regional self-government experiment in Kainuu started on January 1st, 2005. Former responsibilities of the municipalities and the Finnish state like social services, health care, and education were transferred to the new democratically elected regional council.
The national policy of expertise centers started in 1995, and has been present in Kainuu as well, nowadays concentrating specialized expertise in knowledge centers such as Snowpolis, Seniorpolis, Measurepolis and Woodpolis, which build upon existing local expertise. While expertise centers and technology parks are usually located in urban locations, in Kainuu one can also find innovative approaches with such centers located in rural areas.