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Finland: Advantages and Opportunities

During the past few decades the Finnish Economy has been noted as an example of high growth associated with typical Nordic policies. The Finnish educational system has been praised when Finnish fifteen-year-olds have outperformed their peers in other OECD countries in the PISA assessments (The Programme for International Student Assessment of the OECD) in mathematics, science and reading. The World Economic Forum (WEF) ranked Finland sixth in global competitiveness in 2008-9, and third overall in innovation. With a gross domestic product of US$ 46 602 per capita in 2007, Finland was among the 15 richest countries in the world.

The image of affluent modern Finland today is different compared with the time only a few decades ago, not to mention with the situation in the more remote past. The economic growth of Finland has been outstanding, as stressed in a number of studies. The gross domestic product of Finland grew 21-fold in the period 1860-2000, whist the EU countries (EU15) gained only 11-fold growth on average. In the 1950s the Finnish economy still leaned heavily on primary production, as the agricultural population still formed almost a half of the total population.

Thus the Finnish economy has undergone a profound structural change and rapid economic growth during the past few decades. Profound change might be an overstatement since at the same time continuity can also be stressed; namely, continuity in terms of institutional structures that had their origins back in the Swedish era; continuity in terms of mind-set, especially the attitude to work and private ownership; and continuity in terms of geographical constraints that included scarcity of factors of production and Finland’s remote location far from the hubs of international economics.

From agrarian society to modern economy

The structural change of the Finnish economy can be easily traced. Whilst in the 1860s almost 80 per cent of Finns still found employment in agriculture. Industrialisation began in the 19th century, when first textile and paper mills started to operate and the traditional sawmilling industry expanded. By 2006, manufacturing and services represented nearly 47 and 51 per cent of employment, respectively.

One cannot underestimate the role played by Finnish manufacturing industry, the forest-based industries in particular. This premise is based on forests that cover three quarters of the country’s surface area, constituting 23 million hectares of forest cover. Additionally, during the 19th and 20th centuries the forest industry as a whole created a manufacturing cluster that included not only production based on wood raw material, but also machinery building (paper and sawmill machines), harvesting and transport vehicles, and consultancy.

During the latter part of the 20th century not only the manufacturing sector gained more emphasis in the Finnish economy. Services did too. An extensive welfare state was developed, with a well educated population. The state and municipalities contributed notably to the growth of the public service sector, although private services too grew significantly.

The growth of services, together with an increase in industrial employment, led to an extensive population shift from the countryside to the growing urban centres of southern Finland. Urbanisation in Finland occurred relatively late. In the early 19th century only five per cent of Finns lived in towns. In the early 20th century about a third did and by the beginning of the third millennium the figure had grown to two thirds.

A country that innovates

Finnish researchers are at the leading edge of developments in a number of fields, including forest improvement, new materials, the environment, neural networks, low-temperature physics, brain research, biotechnology, genetic technology and of course communications.

The main fields of Finnish industry are metal and engineering, forest products, and information and communications technology. Inventions and product development work have spawned numerous important and innovative new products. Areas in which Finnish engineers and companies have made a major international mark include such diverse products as mobile phones, icebreakers, cruise liners, lifts, paper machines, environment-friendly paper manufacturing processes, diesel engines, sailing yachts, compasses, fishing lures, frequency transformers, rock drills, tree harvesters, contraceptives, pipettes, and scissors and axes, together with Internet encryption systems and numerous other products of forestry, engineering, and information and communications technology.

Focus on Patents

The number of patents a company or a country can lay claim to can be used as one measure of relative innovation. Finnish individuals, research teams, and companies file around 2,000 patent applications annually, of which around 70 percent result in patents. These figures were slightly higher some years ago during the information technology boom. Per capita, this places Finland in the number four slot worldwide, after Japan, the USA and Germany.

Resources about Finland