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
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 30.8.2013 2
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 www.gapminder.org 30.8.2013 3
History and international comparison
Production Volume Development in Finland Annual GDP Growth in Constant Prices 25% 20% 15% 10% 1809 1917 Autonomous Grand Duchy of Finland (Russia) 1917-18 Finnish Civil war 1939 1945 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) 1989 1991 Fall of the USSR 5% 0% -5% 1899 1917 Russification Urbanization Emigration IT bubble -10% -15% -20% 1900 1905 1917 Republic of Finland 1581 1808 Grand Principality of Finland (Sweden) 1910 1915 1920 1925 1929 ~ 1939 The Great Depression 1930 1935 1940 1952 Last war reparations paid to the USSR (Total reparations were 4,8 Bill. in 2009 Euros) 1945 1950 1955 1960 1965 1970 1975 Real GDP growth Average (1900-2011) 1980 1985 1990 s Depression 1990 1995 Finland joins the EU 1995 2000 2005 2010 2015 Source: Statistics Finland, Various historical sources 30.8.2013 5
Changes in the Production Structure Production structure in Finland and the US 70% Share of GDP 60% 50% 40% 30% 20% 10% 0% 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 US, Agriculture US, Total industry FIN, Agriculture FIN, Total industry Source: Statistics Finland, Bureau of Economic Analysis 30.8.2013 6
Changes in the Production Structure in Finland 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Primary production Secondary production Services 30.8.2013 7
Production Volume Development Real GDP Index 4 000 1900 = 100 3 500 3 000 2 500 2 000 1 500 1 000 500 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Finland USA Source: Statistics Finland, Bureau of Economic Analasys, IMF 30.8.2013 8
GDP and GDP per Capita in 2012 GDP, Billion USD in current prices Rank Country 2012 1 United States 15 684,8 2 China 8 227,0 3 Japan 5 964,0......... 36 Philippines 250,4 37 Finland 250,1 38 Greece 249,2......... 182 Marshall Islands 0,18 183 Kiribati 0,17 184 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 2012 1 Qatar 102 211 2 Luxembourg 79 785 3 Singapore 60 410......... 6 Hong Kong 51 494 7 United States 49 922 8 UAE 49 011......... 21 UK 36 941 22 Finland 36 395 23 Japan 36 266......... 182 Burundi 625 183 Zimbabwe 558 184 Congo, DR 369 Source: IMF / World Economic Outlook April 2013 30.8.2013 9
International Rankings Economy Year Finland USA China Out of # Globalization Index 2013 16 34 73 207 Index of Economic Freedom 2013 16 10 136 177 The Global Enabling Trade Report 2012 6 23 56 132 The World Competitiveness Scoreboard 2013 20 1 21 60 Global Competitiveness Report 2012-13 3 7 29 144 Economist Digital economy rankings 2010 4 3 56 70 Standard of Life Year Finland USA China Out of # Children's Index Rank 2012 19 31 78 170 Environmental Performance Index 2012 19 49 116 132 Global Peace Index 2012 9 88 89 158 Mother's Index Rank 2012 6 25 58 170 Women's Index Rank 2012 6 19 57 170 Worldwide Press Freedom Index 2011-12 1 47 174 179 Corruption Perceptions Index 2011 2 24 75 183 Economist Index of Democracy 2011 9 19 141 167 Human Development Index (inequality-adjusted HDI) 2011 11 23 70 139 Legatum Prosperity Index 2011 7 10 52 110 Life expectancy at birth (CIA) 2011 28 34 79 191 The Global Gender Gap Report 2011 3 17 61 135 World Audit - Corruption Rank 2011 2 18 56 150 World Audit - Democracy Rank 2011 1 15 121 150 World Audit - Press Freedom Rank 2011 1 10 139 150 Newsweek's Worlds Best Countries 2010 1 11 59 100 Happy Planet Index 2009 70 105 60 151 Programme for International Student Assessment (PISA) 2009 3/6/2 16/35/23 1-30/1-12/1-18 57 UN Gini - Income equality 2009 7 77 93 142 Economist Quality-of-life index 2005 12 13 60 111 Source: Various 30.8.2013 10
Income Distribution and Poverty Share of population with below 40 per cent of the current median income 30 % 25 20 15 10 5 0 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 30.8.2013 11
Manufacturing Labour Costs in 2010 Average labour cost per hour in manufacturing industry 45 40 EUR/h 35 30 25 20 15 10 5 0 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 30.8.2013 12
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 % 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 EU27 Czech Republic Germany France Hungary Poland Finland Sweden UK Russia USA China Japan South Korea Israel Source: Eurostat, OECD 30.8.2013 13