Economic Survey of Finland 2004

 

Published on 5 October 2004

Executive summary

An Economic Survey is published every 1½-2 years for each OECD country. Read more about how Surveys are prepared

The OECD assessment and recommendations on the main economic challenges faced by Finland are available by clicking on each chapter heading below. Chapter 1 identifies the challenges for which the subsequent chapters provide in-depth analysis and policy recommendations.

 










 

Chapter 1.  Recent performance and key challenges
Over the last decade, the growth performance of the Finnish economy has been among the most impressive in the OECD. However, a number of key challenges need to be addressed to sustain strong growth and to make progress in closing the income gap with  the best performing OECD countries. i) Broaden and enhance growth potential, as the future growth contribution from ICT production is unlikely to be as strong as over the late 1990s. ii) Raise the employment rate, in order to mitigate the adverse effect of rapid ageing on living standards. iii) Ensure the sustainability of public finances, by pursuing efficiency gains in the public sector and encouraging private service provision to create room for reducing the high tax burden further. This chapter sets the scene for these key challenges for which specific recommendations are provided in chapter 2-4 of this Survey.

Chapter 2.  Product market competition and economic performance
Since the deep recession of the early 1990s growth has been strong and productivity gains were among the highest in the OECD. However, the difference between the outstanding productivity performance of Finnish world market leaders, such as Nokia, and the development in protected domestic sectors also points to a lack of competition. This chapter first analyses the strength of competitive pressures and assesses the competition policy framework. Subsequently, it analyses the widespread public ownership, network industries, and areas where better regulation can be expected to have particularly large impacts, highlighting the role of public procurement. The chapter concludes with estimates of the possible macroeconomic effects of regulatory reforms.

Chapter 3.  Raising the employment rate
A major aim of the government is to raise the employment rate from 67½ per cent in 2003 to about 70 per cent in 2007 and 75 per cent in 2011. Achieving this target is important to mitigate the shock to both living standards and fiscal sustainability from rapid ageing. International benchmarking suggests the greatest scope for doing so is by raising the employment rate of younger and older workers as well as by tackling the broader problem of mismatch. This chapter evaluates the measures that have been taken in each of these areas and considers what further measures would help to reach the target. The chapter also considers the best way to implement tax cuts on labour, as well as the contribution from active labour markets policies.

Chapter 4.  Fiscal priorities ahead of ageing
Growth in public spending has been vigorous and pressure for raising spending is likely to continue to be strong, especially due to ageing. At the same time, the tax burden is high, especially on labour. Ensuring the sustainability of public finances over the long term, while maintaining the essential parts of the welfare society will only be possible by i) raising the effectiveness of public spending, ii) reforming the financing of municipalities to encourage better control of spending and limit future rises in municipal income taxation and iii) rebalancing the mix between public and private provision and funding of services. This chapter discusses ways in which progress could be made on such a policy agenda.

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A printer-friendly Policy Brief  (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.

To access the full version of the OECD Economic Survey of Finland:

  • Readers at subscribing institutions can go to SourceOECD, our online library.
  • Non-subscribers can purchase the PDF e-book and/or printed book at our Online Bookshop.
  • Government officials can go to  subscribe 's Publication Locator.
  • Accredited journalists can go to their password-protected website .

For further information please contact the Finland Desk at the OECD Economics Department at webmaster@oecd.org. The OECD Secretariat's report was prepared by David Turner, Jens Lundsgaard, Jens Hoj and Michael Wise under the supervision of Peter Hoeller.

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