Finland’s economy is undeniably one of the best performers in the global market. With a highly industrialized economy, Finland holds an economic freedom score of 74.1. This score ranks the country, according to the 2018 Index, as the 26th freest economy. Finland’s is a multi-sector economy with many diverse industries including agriculture, manufacturing, refining, and services. The service sector is the largest in the economy accounting for about 73%.
The electronics industry in Finland is one of the country’s most important economic drivers. The electronics industry has seen dramatic changes over the years. It is one of the world’s most volatile areas of business, and it is this volatility that has attributed to Finland’s aggressiveness in the design and production of various electronics. Today’s Finnish electronic industry can trace its roots back to the 19th century at the inception of electrical engineering, and this was predominantly around the design and production of electric motors and generators. Gottfried Stromberg was one of the leaders in this technological advancement. This organization is now part of the Swedish-Swiss electronics powerhouse, ABB Group.
The growth of the electronics industry can be attributed to the huge investment in research and development (R&D). Data published by UNESCO Institute for statistics in 2016 put Finland among the biggest spenders regarding R&D with an expenditure of about 3.2% of GDP. The liberalization of the global markets has dramatically accelerated this growth. Nokia was probably one of the most notable Finnish players in the electronics industry. There are however many other Finnish companies that have achieved significant success in fields such as medical technology, industrial automation, as well as meteorological tech, and these include the companies like Vaisala and Instru.
Finland differs from other automobile manufacturing countries such as Germany and Japan in that the focus is on industrial machinery. The motor industry is predominantly composed of manufacturers of forest machines, tractors, trucks, military vehicles, and buses. Finland is also renowned for having a robust shipbuilding industry. Some of the world’s largest and highly reputed cruise ships have been built in Finland. There are at least eight shipyards across the country, and they employ close to 20,000 people. Altogether, the manufacturing industry employs about 400,000.
Similar to the growth of the electronics industry, Finland’s motor industry (and particularly shipbuilding) has seen significant growth thanks to heavy investment in R&D. Government support also accounts for much of the growth. Valmet and Wartsila are some of the most notable companies in this industry. Wartsila alone holds a stunning 47% market share and is the producer of the largest diesel engines in the world. 90% of the produce from the shipping industry is exported.
This industry traces its roots back to 17th century Finland with tar making being an outstanding business at the time. Presently, the chemical industry produces a wide range of products that are used by other industrial sectors particularly in agriculture and forestry. The biggest players in this industry are producers of plastics, paints, pharmaceuticals, petrochemicals, oil products, chemicals, and biotech products. Neste Oil is the largest and most profitable company in the chemical industry. Finland’s chemical industry supplies roughly 25% of the country’s industrial production and exports. Chemical industry alone accounts for about 34,000 direct employment.
Forestry in Finland, at the moment, is responsible for about a fifth of Finland’s exports. Forest products for years have been significant export items in Finland. The growth and diversification of the Finnish economy have seen a decline in these exports. In the 1970s the pulp and paper industry was responsible for about 50% of all exports from Finland. Despite the reduction in forest product exports, pulp and paper remain a critical industry with more than 50 sites countrywide. Additionally, some of the largest international corporations in the business of pulp and paper are headquartered in Finland. UPM and Stora Enso are examples of such corporations. Their global output has been estimated to be more than 10 million tons. The forest industry is responsible for about 15% of jobs in Finland.
Hydroelectric power produces about 16% energy supply in Finland generated by nuclear power and 26%. The consumption of energy is distributed among industries, heating, and transportation. Traditionally, Finland has been a massive importer of energy due to its lack of indigenous fossil fuels. However, this is set to change as the country completes construction on its fifth nuclear reactor. Permits for the building of the 6th and 7th reactors have been approved as well. Although there are a few uranium resources in the country, there are no commercially viable deposits that have been identified for exclusive mining to kick off.
Metal Mining Industry
The mining industry in Finland has experienced significant transformation in recent years. The discovery of copper and nickel ores in the infant years of the 20th century set the country on a venture to develop the mining industry. The government invested heavily in the prospecting, and multiple domestic players participated in extensive exploration activities. However, exploration has practically ceased, and over time the mining operations and various roles in the mining industry have been taken over by foreign organizations. Finland is however still a major exporter of copper, nickel, zinc, chromium, and steel. There is also the export of finished products including steel pipes, roofing materials, and cladding.
The Economy of Finland
In 2017 Finland had a nominal GDP of $270 billion and GDP by purchasing power parity of $240 billion, and it was ranked the 41st county in the world by nominal GDP. In 2014 GDP per capita (PPP) was $40,455. In 2017, agriculture contributed 2.5% of GDP while industry contributed 16.3%, and service industry contributed 81.3%. Approximately 6% of the population lived below the poverty line. In 2017, the country exported goods worth $71.5 billion and imported goods worth $65 billion. Most of the exports were destined to Germany, Sweden, The US, China, Russia, and the UK. On the other hand, imports originated mainly from Germany, Russia, Sweden, China, the Netherlands, and France.