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Economy of Finland
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Economy of Finland
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 its service sector, which contributes 72.7% to the country's gross domestic product (GDP); followed by manufacturing and refining at 31.4%; and the primary sector at 2.9%. Among OECD nations, Finland has a highly efficient and strong social security system; social expenditure stood at roughly 29% of GDP.
Finland's key economic sector is manufacturing. The largest industries are electronics (21.6% - very old data), machinery, vehicles and other engineered metal products (21.1%), forest industry (13.1%), and chemicals (10.9%). 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 Helsinki metropolitan 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.
Finland is highly integrated in the global economy, and international trade represents a third of the GDP. Trade with the European Union represents 60% 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. Finland has been ranked seventh in the Global Innovation Index of 2023, making it the seventh most innovative country down from 2nd in 2018.
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 killed around 15% of the country's population. Until the 1930s, the Finnish economy was predominantly agrarian and, as late as the 1950s, more than half the population and 40% of output were still in the primary sector.[citation needed]
While nationalization committees were set up in France and the United Kingdom, Finland avoided nationalizations. Finnish industry recovered quickly after the Second World War. By the end of 1946, industrial output had surpassed pre-war numbers. In the immediate post-war period of 1946 to 1951, Finnish industry continued to grow rapidly. Many factors contributed to the rapid industrial growth. War reparations were largely paid in manufactured products. The devaluation of currency in 1945 and 1949, which made the US dollar rise by 70% against the Finnish markka, and thus boosted exports to the West. This helped with rebuilding the country and increased demand for Finnish industrial products. In 1951, the Korean War boosted Finnish exports. Finland practiced an active exchange rate policy. Devaluation was used several times to raise the competitiveness of the Finnish 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, starting 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. These events compelled Finnish 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 by 39% against the Finnish markka.
The international economy was stable in the 1960s. This trend can be seen in Finland as well, where steady growth of industrial output could be seen throughout the decade.
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Economy of Finland
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 its service sector, which contributes 72.7% to the country's gross domestic product (GDP); followed by manufacturing and refining at 31.4%; and the primary sector at 2.9%. Among OECD nations, Finland has a highly efficient and strong social security system; social expenditure stood at roughly 29% of GDP.
Finland's key economic sector is manufacturing. The largest industries are electronics (21.6% - very old data), machinery, vehicles and other engineered metal products (21.1%), forest industry (13.1%), and chemicals (10.9%). 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 Helsinki metropolitan 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.
Finland is highly integrated in the global economy, and international trade represents a third of the GDP. Trade with the European Union represents 60% 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. Finland has been ranked seventh in the Global Innovation Index of 2023, making it the seventh most innovative country down from 2nd in 2018.
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 killed around 15% of the country's population. Until the 1930s, the Finnish economy was predominantly agrarian and, as late as the 1950s, more than half the population and 40% of output were still in the primary sector.[citation needed]
While nationalization committees were set up in France and the United Kingdom, Finland avoided nationalizations. Finnish industry recovered quickly after the Second World War. By the end of 1946, industrial output had surpassed pre-war numbers. In the immediate post-war period of 1946 to 1951, Finnish industry continued to grow rapidly. Many factors contributed to the rapid industrial growth. War reparations were largely paid in manufactured products. The devaluation of currency in 1945 and 1949, which made the US dollar rise by 70% against the Finnish markka, and thus boosted exports to the West. This helped with rebuilding the country and increased demand for Finnish industrial products. In 1951, the Korean War boosted Finnish exports. Finland practiced an active exchange rate policy. Devaluation was used several times to raise the competitiveness of the Finnish 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, starting 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. These events compelled Finnish 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 by 39% against the Finnish markka.
The international economy was stable in the 1960s. This trend can be seen in Finland as well, where steady growth of industrial output could be seen throughout the decade.
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