The Economy of Finland

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1 The Economy of Finland Aug 30st 2013, Finnish Ministry of Foreign Affairs Presentation for the American Fulbright Grantees Petteri Rautaporras, Economist at the Federation of Finnish Technology Industries

2 Introduction to the Economy of Finland Economic history; how did we get here? Economic development International comparisons Where are we now? Current economic situation Production structure Where are we going? Threats and possibilities Finnish technology industries

3 Wealth and Health by Gapminder.org Gapminder is a non-profit venture a modern museum on the Internet promoting sustainable global development and achievement of the United Nations Millennium Development Goals. Hans Roling, Professor of International Health at Karolinska Institutet Unveiling the beauty of statistics for a fact based world view

4 History and international comparison

5 Production Volume Development in Finland Annual GDP Growth in Constant Prices 25% 20% 15% 10% Autonomous Grand Duchy of Finland (Russia) Finnish Civil war World War II 1973 First Oil crisis Strong industrial growth 1979 Second Oil crisis 2008 Global financial crisis 2002 Finland adopted the euro (Fixed since 1999) Fall of the USSR 5% 0% -5% Russification Urbanization Emigration IT bubble -10% -15% -20% Republic of Finland Grand Principality of Finland (Sweden) ~ 1939 The Great Depression Last war reparations paid to the USSR (Total reparations were 4,8 Bill. in 2009 Euros) Real GDP growth Average ( ) s Depression Finland joins the EU Source: Statistics Finland, Various historical sources

6 Changes in the Production Structure Production structure in Finland and the US 70% Share of GDP 60% 50% 40% 30% 20% 10% 0% US, Agriculture US, Total industry FIN, Agriculture FIN, Total industry Source: Statistics Finland, Bureau of Economic Analysis

7 Changes in the Production Structure in Finland 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Primary production Secondary production Services

8 Production Volume Development Real GDP Index = Finland USA Source: Statistics Finland, Bureau of Economic Analasys, IMF

GDP and GDP per Capita in 2012 GDP, Billion USD in current prices Rank Country 2012 1 United States 15 684,8 2 China

........ 182 Marshall Islands 0,18 183 Kiribati 0,17 184 Tuvalu 0,04 Share of the world GDP (PPP) Rest of the World

79 785 3 Singapore 60 410......... 6 Hong Kong 51 494 7 United States 49 922 8 UAE 49 011.

9 GDP and GDP per Capita in 2012 GDP, Billion USD in current prices Rank Country United States ,8 2 China 8 227,0 3 Japan 5 964, Philippines 250,4 37 Finland 250,1 38 Greece 249, Marshall Islands 0, Kiribati 0, Tuvalu 0,04 Share of the world GDP (PPP) Rest of the World 66,3 % China 11,5 % USA 21,9 % Finland 0,3 % GDP (PPP) per capita, USD Rank Country Qatar Luxembourg Singapore Hong Kong United States UAE UK Finland Japan Burundi Zimbabwe Congo, DR 369 Source: IMF / World Economic Outlook April

10 International Rankings Economy Year Finland USA China Out of # Globalization Index Index of Economic Freedom The Global Enabling Trade Report The World Competitiveness Scoreboard Global Competitiveness Report Economist Digital economy rankings Standard of Life Year Finland USA China Out of # Children's Index Rank Environmental Performance Index Global Peace Index Mother's Index Rank Women's Index Rank Worldwide Press Freedom Index Corruption Perceptions Index Economist Index of Democracy Human Development Index (inequality-adjusted HDI) Legatum Prosperity Index Life expectancy at birth (CIA) The Global Gender Gap Report World Audit - Corruption Rank World Audit - Democracy Rank World Audit - Press Freedom Rank Newsweek's Worlds Best Countries Happy Planet Index Programme for International Student Assessment (PISA) /6/2 16/35/ /1-12/ UN Gini - Income equality Economist Quality-of-life index Source: Various

11 Income Distribution and Poverty Share of population with below 40 per cent of the current median income 30 % Denmark Czech Republic FINLAND Hungary Luxembourg Iceland France Ireland Austria Belgium Slovak Republic Netherlands Sweden Slovenia Germany New Zealand Norway Switzerland Greece Estonia Poland United Kingdom OECD - Average Italy Canada Portugal Australia Spain Korea Turkey Japan Chile UNITED STATES Israel Mexico After taxes and transfers Before taxes and transfers Source: OECD

12 Manufacturing Labour Costs in 2010 Average labour cost per hour in manufacturing industry EUR/h NOR CHE BLS BEL SWE DNK FRA DEU FIN NLD AUT AUS BLS IRL LUX CAD USA BLS BLS ITA JPN BLS ESP GBR GRC NZL BLS ISR BLS SGP BLS SVN CYP KOR MLT PRT ARG CZE BLS BLS SVK BRA BLS EST HUN POL TWN LTU BLS LVA MEX ROU BGR PHL BLS BLS EUR/h 41,4 40,1 39,7 36,9 34,6 34,0 33,0 31,4 31,4 31,2 30,6 29,9 29,1 26,9 26,2 25,8 24,1 21,6 21,0 16,7 15,5 15,2 14,4 13,5 13,0 12,5 11,8 10,5 9,5 9,3 7,7 7,6 7,2 6,8 6,4 6,3 5,1 5,1 4,7 4,0 2,6 1,4 Source: Eurostat, Bureau of Labour Statistics

13 Investments in Research and Development GDP share of R&D investments 5,0 % 4,5 % 4,0 % 3,5 % 3,0 % 2,5 % 2,0 % 1,5 % 1,0 % 0,5 % GDP share of R&D Israel Finland South Korea Sweden Japan USA Germany France EU27 UK China Czech Republic Russia Hungary Poland 0,0 % EU27 Czech Republic Germany France Hungary Poland Finland Sweden UK Russia USA China Japan South Korea Israel Source: Eurostat, OECD

AREA TOTALS OECD Composite Leading Indicators. OECD Total. OECD + Major 6 Non Member Countries. Major Five Asia. Major Seven.

AREA TOTALS OECD Composite Leading Indicators. OECD Total. OECD + Major 6 Non Member Countries. Major Five Asia. Major Seven. Reference series Composite leading indicators OECD Composite Leading Indicators AREA TOTALS 7-03- 19 OECD Total 19 OECD + Major 6 Non Member Countries 19 Major Seven 19 Major Five Asia 19 Euro area 19