Export to Finland 2

The economy of Finland is a highly industrialised, mixed economy with a per capita output similar to that of western European economies such as France, Germany and the United Kingdom. The largest sector of Finland’s economy is services at 72.7 percent, followed by manufacturing and refining at 31.4 percent. Primary production is 2.9 percent.

With respect to foreign trade, the key economic sector is manufacturing. The largest industries are electronics (21.6 percent – very old data) , machinery, vehicles and other engineered metal products (21.1 percent), forest industry (13.1 percent), and chemicals (10.9 percent). Finland has timber and several mineral and freshwater resources. Forestry, paper factories, and the agricultural sector (on which taxpayers spend around 2 billion euro annually) are politically sensitive to rural residents. The Greater Helsinki area generates around a third of GDP.

In a 2004 OECD comparison, high-technology manufacturing in Finland ranked second largest in the world, after Ireland. Investment was below the expected levels. The overall short-term outlook was good and GDP growth has been above many of its peers in the European Union. Finland has the 4th largest knowledge economy in Europe, behind Sweden, Denmark and the UK. The economy of Finland tops the ranking of the Global Information Technology 2014 report by the World Economic Forum for concerted output between the business sector, the scholarly production and the governmental assistance on information and communications technology.

Aviapolis, Vantaa is one of the most significant growing economic areas in Finland.

Finland is highly integrated in the global economy, and international trade represents a third of the GDP. Trade with the European Union represents 60 percent of the country’s total trade. The largest trade flows are with Germany, Russia, Sweden, the United Kingdom, the United States, the Netherlands and China. The trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters, except for agriculture. Finland is the only Nordic country to have joined the Eurozone; Denmark and Sweden have retained their traditional currencies, whereas Iceland and Norway are not members of the EU at all.

History

Being geographically distant from Western and Central Europe in relation to other Nordic countries, Finland struggled behind in terms of industrialization apart from the production of paper, which partially replaced the export of timber solely as a raw material towards the end of the nineteenth century. But as a relatively poor country, it was vulnerable to shocks to the economy such as the great famine of 1867–1868, which wiped out 15 percent of the population. Until the 1930s, the Finnish economy was predominantly agrarian and, as late as in the 1950s, more than half the population and 40 percent of output were still in the primary sector.

After World War II

Property rights were strong. While nationalization committees were set up in France and the United Kingdom, Finland avoided nationalizations. Finnish industry recovered quickly after Second World War. By the end of 1946 industrial output surpassed pre-war numbers. In the immediate post-war period of 1946 to 1951, industry continued to grow rapidly. Many factors contributed to the rapid industrial growth such as war reparations which were largely paid in manufactured products, devaluation of currency in 1945 and 1949, which made dollar rise by 70% against Finish markka and thus boosted exports to the West as well as rebuilding the country which increased demand for industrial products. In 1951, the Korean War boosted exports. Finland practiced an active exchange rate policy and devaluation was used several times to raise the competitiveness of exporting industries.

Between 1950 and 1975, Finland’s industry was at the mercy of international economic trends. The fast industrial growth in 1953-1955 was followed by a period of more moderate growth which started in 1956. The causes for the deceleration of growth were the general strike of 1956, as well as weakened export trends and easing of the strict regulation of Finland’s foreign trade in 1957, which compelled industry to compete against ever toughening international challengers. An economic recession brought industrial output down by 3.4% in 1958. Industry, however, recovered quickly during the international economic boom that followed the recession. One reason for this was the devaluation of the Finnish markka which increased the value of the US dollar up by 39% against the Finnish markka.

International economy was stable in the 1960s. This trend can be seen in Finland as well, where steady growth of industrial output throughout the decade was recorded.

After failed experiments with protectionism, Finland eased restrictions and concluded a free trade agreement with the European Community in 1973, making its markets more competitive. Finland’s industrial output declined in 1975. The decline was caused by the free trade agreement that has been made between Finland and the European Community in 1973. The agreement subjected Finnish industry to ever toughening international competition and a strong contraction duly followed in Finland’s exports to the West. In 1976 and 1977 growth of industrial output was almost zero, but in 1978 it swung back towards strong growth again. In 1978 and 1979 industrial output grew at above average rate. The stimuli for this were three devaluations of Finnish markka, which lowered value of the markka by a total of 19%. Impacts from the Oil Crisis on Finnish industry were also alleviated by Finland’s bilateral trade with the Soviet Union.

Local education markets expanded and an increasing number of Finns also went abroad to study in the United States or Western Europe, bringing back advanced skills. There was a quite common, but pragmatic-minded, credit and investment cooperation by state and corporations, though it was considered with suspicion. Support for capitalism was widespread. On the other hand, communists (Finnish People’s Democratic League) have received the most votes (23.2%) in 1958 parliamentary elections. Savings rate hovered among the world’s highest, at around 8% until the 1980s. In the beginning of the 1970s, Finland’s GDP per capita reached the level of Japan and the UK. Finland’s economic development shared many aspects with export-led Asian countries. The official policy of neutrality enabled Finland to trade both with Western and Comecon markets. Significant bilateral trade was conducted with the Soviet Union, but this did not grow into a dependence.