‫‪Republic of‬‬

‫‪Finland‬‬
‫מיכה קמלמן‪ ,‬יניב ממן‪ ,‬אילן וינר‪ ,‬מורן סופר‪ ,‬יונית עדרי ומיכל סוקוליש‬
 Finland: Geo- & Demography
• Total area: 337 Km^2 = 17 x Israel OR 1/50 x Russia
– 10% is water
– 69% forest
– 8% agriculture
– 13% other
• Population: 5.5 Million
• Population density 17 person/km^2
• Life expectancy
Born
Dead
(M: 81, F: 83)
 Finland: Economy & Finance
• Currency Euro (EUR)
• Member of: EU (‘95), WTO, OECD
• Ease of Doing Business Rank 13th Finnish euro coins
• GDP: $187B, ($35.3K per capita), 3.1 % growth

WW Country Israel Hungary Finland Ireland

Position
Rank 51 56 57 58
$ 217 190 187 172

:GDP Source Split :Occupation Split

[1] CIA World Fact Book

[2] World Bank
 *

Foreign trade: Destinations

2010: Import & Export dependence on:
• Russia
• Germany
• Sweden
• China
•Limited risk diversification

[1] National board of Customs

– Statistical unit
 *

Foreign trade: Balance

Recent 5 years:
•Growth in financial activity (consumption)
•Export surplus reducing!

[1] National board of Customs

– Statistical unit
 *

Foreign trade: Products

Recent 5 years:
•Risk well diversified!
•Forestry and Chemicals beat Electricals
•Metals & machinery is major

[1] National board of Customs

– Statistical unit
 *

Foreign Direct Investment (FDI)

•Finland weaker than neighbors and similar size economies
•Attractive for FDI during Sub-prime
•Apparent FDI growth trend
Diamond Model – Factor conditions
• Largest engineer output of OECD (public education)
• Vast communication networks (fibers-optics, broadband &
cellular)
• 92% of population have a mobile phone
• More than 20 intl’ airports & 100 domestic airfields
• 1st of 18 OECD countries in technology patents registered in
2003.
 Diamond Model – Demand conditions
• A strong domestic market.
• Per capita income is higher than the
EU average.
• Low unemployment.
 Diamond Model – Related Industries
• Spatial proximity of industries facilitates
information exchange and strengthen
competitions.
• Industries cluster geographically by branches
• A strong metal processing and metal engineering
sectors.
• IT & communications cluster (Mainly Nokia)
involves and pushes satellite companies to
innovation. Become second pillar of the economy
• Business services and the healthcare cluster are
service clusters, whose relative importance is
increasing.
Diamond Model –Strategy, Structure & Rivalry
• Government promotes progressive biz
environment
• Focus on Ease of doing business. Simple
and quick procedures to open a business.
• Government policy promotes FDI
• Equal attitude towards foreign / domestic
entrepreneurs. Anyone is open to acquire
a Finnish firm.
 Country Competitiveness
• Key vectors driving the Finnish country
competitiveness:
• Innovation: 3.5% of GDT spent on R&D (highest
in OECD)
• National infrastructure: education, transport,
health care and communications build a strong
industrial economy.
• Government structure: Simple, & supportive
creates the comfortable business environment
 Country Competitiveness
• Finland is strongly competitive in manufacturing:
– Wood
– Metals
– Engineering
– Telecommunications
– Electronics industries
 The standard Heckscher-Ohlin model
Country will export the commodity that uses relatively intensively its relatively
abundant factor of production
Abundant resource Related export
Woods; 69% of Finland's area Wood export contributes 24%
is forest of the GDP
Knowledge intensive labor Innovation driven products
(cell phone, electronics)
•Long coasts Maritime Cruiser
•historical dependence on sea
trade
•knowledge intensive
workforce
•metal-working skills

Cold, northern climate High-end furs (mink, fox)

 Key Policy recommendations
• Maintain diversification, minimize exposure to
risky cell-phone industry to the GDP.
• Social reform Policy-Mitigate an aging population
and Increase long - term productivity.
• Competitiveness depends on skilled workforce.
Long- term strategies need to target the
increment of this advantage.
• Increase the retirement age to promote
productivity!
• Shrink public spending
• Further attract FDI
 Conclusion
• Finland has built a strong economy over the
past 5 decades.
• New entrants to world arena (BRIC) threat
Finnish competitiveness
BACKUP
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