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Nordics in Global Crisis

Nordics in Global Crisis

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Published by Stefano Ambrosini
Nordics in Global Crisis
Nordics in Global Crisis

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Published by: Stefano Ambrosini on Mar 15, 2014
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While all countries have been affected, some were obviously hit
harder than others when the crisis broke out. Some of the dif-
ferences are brought out by table 12.1, which shows the direct
contributions of exports and investment to the growth of GDP in
2009. Not surprisingly, the negative effect of exports was particularly
pronounced for small countries, with Finland suffering the strong-
est decline. However, one needs to bear in mind that there are
often close links between exports and imports and these links have
been strengthened further by outsourcing parts of the production
process across national borders. This suggests that it may be more
useful to look at net exports. In this case as well, Finland suffered
a particularly large negative effect, as did Germany.1

The decline
of exports in Sweden was much smaller, which raises the question
of the effects of the simultaneous depreciation of the Swedish
currency. As discussed in chapter 8 above, however, the bigger
decline in Finland is probably due to differences in the structure
of exports rather than effects of competitiveness (which normally
take time to materialize).
Looking at total private investment, the contribution was nega-
tive in all countries and particularly big in countries experiencing
domestic financial market developments feeding a housing bubble,
associated with high leverage of households. This has been the
case particularly in Iceland, Ireland and Spain, with significant
contributions of residential investment in all these countries. Fin-
land, Germany and Japan stand out as countries having suffered
significantly from shocks to both net exports and private invest-
ment though mainly from non-residential investment.
Given that shocks with harmful effects will always occur, the
real issue is how to reduce vulnerability or help the economy to
withstand shocks at as low a cost as possible (to be discussed next)
and how to improve resilience or enhance the capacity of the
economy to recover from crises (to be discussed subsequently).

Exports declined eve-
rywhere, particular-
ly in small and open

Private investment
also declined every-

Vulnerability and Resilience · 247

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