Finland is a Nordic country located in Northern Europe, and it is renowned for its beautiful natural landscapes, modern infrastructure, and high-quality education system. The economy of Finland is based on a highly developed market economy with a strong emphasis on exports. It has the fifth-largest GDP per capita in Europe and is considered one of the most competitive economies in the world.
According to cheeroutdoor, Finland’s economy is driven by its strong export sector, which accounts for nearly one-third of its GDP. The country’s main exports include machinery and equipment, electronics, chemicals, wood products, paper products, ships and boats, textiles, foodstuffs such as dairy products and fish. Finland also has a strong manufacturing sector which produces cars, telecommunications equipment, electronics and steel products. Finland’s service sector accounts for two-thirds of its GDP and includes banking services as well as telecommunications services such as mobile phones.
Finland has a well-developed welfare state that provides universal health care and free education up to university level for all citizens. It also provides generous social security benefits including unemployment benefits and child benefits which help to reduce poverty levels in the country. In addition to this, there are generous tax incentives for businesses operating in Finland in order to encourage investment into the economy.
In recent years, there have been several reforms implemented by the Finnish government to make the country more competitive globally; these include reforms to reduce red tape within businesses so that they can operate more efficiently while still complying with regulations; they have also introduced measures such as cutting corporate taxes from 24% to 20% in order to make it more attractive for foreign investment into Finland’s economy.
Overall Finland’s economy is stable due to its highly diversified export sector which helps reduce risk associated with relying on only one or two sectors for growth; this stability also helps attract foreign investors who are looking for stable markets with good returns on their investments. Furthermore due to its well-developed welfare state it has low levels of poverty compared to other countries in Europe; this allows people from these countries access better healthcare services which can help contribute positively towards economic growth over time.
Economics and business
Abbreviated as FIN by abbreviationfinder.org, Finland has a mixed economy and a high standard of living. In 1995, Finland joined the EU. In 2019, agriculture and forestry accounted for 3 percent of GDP, industry and construction for 28 percent and the services sector for 69 percent. The public sector is relatively large and contributes 20 percent to GDP and 25 percent of employment.
Following a sharp economic downturn in the first half of the 1990s, Finland’s economy had a steady growth of about 4 percent per year until 2007, when the economy ceased in the wake of the international financial crisis. Finnish GDP growth fell from 0.9 percent in 2008 to −8.2 percent in 2009 (the largest decline since Finland became independent from Russia in 1917). Exports fell 32 percent, and unemployment rose. In 2010 and 2011, the economy recovered temporarily but was again negative in 2013 and 2014.
In 2014, the country was adversely affected by EU restrictions on the Russian Federation. Finland’s exports to the Russian Federation fell by 13 percent while imports fell by 16 percent. The decline was particularly noticeable at the border trade in eastern Finland. The tourism industry also saw a decline in Russian visitors.
Business has traditionally been a more common source of income on Åland and on the west coast of the country than in the other parts of the country. 20 percent of employed persons in South Ostrobothnia are self-employed, while the share elsewhere is 12-14 percent, with the exception of the metropolitan region where the proportion is lower. However, there is a rapid structural change in the business sector, and own business is becoming more common throughout the country. In total, the number of companies in the country has increased by 40 percent over the past 15 years; The increase is mainly in companies with 1-4 employees.
Since the mid-1990s, the great dependence on the forest industry has been broken and a broader business sector has emerged where the electronics and IT sectors in particular functioned as spearheads. One weakness of this development, however, has been that growth, in particular the increase in exports, has to a large extent been dependent on a single company, the telecom giant Nokia. This became very clear in 2013 when Nokia sold its mobile phone manufacturing to Microsoft and production in Finland ceased. Exports of mobile phones were worth EUR 7 billion in 2008, while in 2014 it fell to EUR 78 million.
- Paulsourcing: Top 10 tips for doing business in Finland, covering country profile and market entry requirement.
Despite this decline, the high-tech products’ share of exports has continued to increase, but their share of total exports is around 7 percent, while the forest and chemical industry’s share of each is around 20 percent.
Companies with highest turnover
|Business||Turnover 2015 (EUR million)|
|Nokia Oyj||12 499|
|Next Oil Oyj||11 131|
|UPM-Kymmene Oyj||10 138|
|Stora Enso Oyj||10 040|
|Kesko Oyj||8 679|
|KONE Oyj||8 647|
|Keele Oyj||6 587|
|Outokumpu Oyj||6 384|
|Wärtsilä Oyj Adp||5 029|
Companies with the most employees
|Business||Number of employees in 2015|
|Nokia Oyj||56 690|
|KONE Oyj||48 469|
|Stora Enso Oyj||26 783|
|PKC Group OYj||20 770|
|UPM-Kymmene Oyj||20 246|
|Kesko Oyj||18 955|
|Wärtsilä Corporation Plc||18 565|
|Caverion Oyj||17 399|
|Huhtamaki Oyj||15 987|
|Metso Oyj||13 872|
About 8 percent of the country’s area is usable land. Agriculture, together with fishing and forestry, employs 3.4 percent of the workforce and accounts for about 3 percent of GDP.
Finland is located at the northern boundary of many plants’ distribution areas. The Gulf Stream means that the country has better cultivation conditions than other equally northern areas (Alaska and Greenland). However, the impact of the Gulf Stream is less than in the other Nordic countries, which means that the growing period is shorter than in Sweden.
The largest agricultural areas are on the western and southwestern coasts and in central Finland. Agriculture is often conducted in parallel with forestry. In southern and southwestern Finland the farmland area is on average larger than the forest area, in eastern and northern Finland the ratio is the opposite.
Until the Second World War, agriculture was the largest industry in Finland, but then its share declined rapidly. In the 1960s a great transformation took place in agriculture; productivity rose rapidly, arable land increased and overproduction became a problem. In 1969, laws were passed that gave farmers the right to compensation for land that was not cultivated. The goal was to achieve a certain transition to pig breeding and milk production. However, in the early 1970s, overproduction of pork and eggs arose. Despite various mitigation measures, overproduction continued in the 1980s.
Finland’s entry into the EU contributed to a rapid structural change. The size of the farms has increased and the number of small farms has decreased, especially this is evident in the southern part of the country. In the northern and eastern parts, agriculture and other industries are increasingly combined. Support from the EU’s regional funds can be obtained for the establishment of agricultural activities. Some common examples are machine workshops, sewing studios, farm tourism and specialty farming.
During the 2000s, interest in riding increased significantly, which is reflected in the number of horses increased by 30 percent and is now the largest since the early 1970s when the horse was still used in forestry.
Economically, Finland’s most important agricultural products are milk and meat (pigs, cattle and chicken). The most important crops are barley, oats, wheat, potatoes and sugar beets.
Bread production is almost entirely concentrated in southern Finland, as is just over half of the feed grain.
Milk production is greatest in Ostrobothnia as well as in eastern and northern Finland. Livestock management is becoming increasingly concentrated; while the number of cows has decreased, the average number of animals per herd has increased. Since the 1960s, the total number of cattle has dropped from just over 2 million to less than half. At the same time, the number of cows per farm has risen sharply.
The breeding of fur animals became increasingly common in Finland during the 1960s. Fur farm animals are highly concentrated in Ostrobothnia. Finland has been the world’s largest fox fur manufacturer. Today, the most important fur animals are mink and blue fox. Although silver fox and raccoon dogs bred for fur production.
Interest in biodynamic cultivation has increased rapidly. The proportion of land used for biodynamic cultivation increased by 25 percent in 2003–13. In fruit and berry cultivation it accounts for about 2 percent, while the proportion is slightly larger in meat, milk and egg production.
Reindeer husbandry is mainly conducted in Lapland.
About three quarters of Finland’s land area is covered by forest, mainly coniferous forest. The forest is Finland’s most important raw material. About 60 million m 3 timber is harvested annually. Growth is greater than harvesting. Most of the raw material goes to industry, while exports are insignificant.
In the past, forestry was important for employment, especially since it offered work for farmers in winter. However, the increasing need for mechanization has reduced the need for manpower in the forest, while operations have spread throughout the year. The forest areas are the largest in central and eastern Finland. More than half of the forest land is owned by private individuals, about a third of the state, while the forest industry owns forest to a lesser extent.
In Finland, fishing is practiced on a fairly small scale. A large part of the professional fishermen work part-time fishing, such as auxiliary to, for example, agriculture. In 2013, approximately 143,000 tonnes of fish were caught, while approximately 14,000 tonnes were grown. In marine areas are commercial fishing to almost 90 percent focused on herring fishing (see herring), the lakes are vendace the main catch. In the country’s approximately 170 fish farms, rainbow trout fish are mainly grown. Economically, fish farming is more important than traditional fishing. Some of the cultivated fish is exported.
In Finland, a large number of minerals are mined in some 40 mines. The majority of mining operations are in private companies, and state ownership has gradually decreased. The regulations for mineral exploitation are advantageous at the same time as the mining companies are required to show environmental considerations.
The raw materials that are produced in the largest quantity are natural gravel and crushing gravel, which for several years has amounted to approximately 85 million tonnes annually. The mining of ores for metal extraction (mainly sulfur-silica, chromium, zinc, copper, iron and steel) amounted to 20 million tonnes in 2012, while the mining of ores intended for industrial minerals (mainly apatite, talc, sulfur-silica and quartz) amounted to about 15 million tonnes. Finland is one of the major producers of chromium and wollastonite. Raw material exports were dominated in 2012 by sulfur pebbles, nickel, zinc, limestone and kaolin, while imports were dominated by crude oil, coal and iron ore as well as iron and copper.
The mining of copper has long been the most important mining industry. The copper mine shut down in Outokumpu in Karelia in the 1990s was one of the largest in Europe. In 2008, the Talvivaara mine was opened in Sotkamo municipality in Kainuu. The area contains nickel, zinc, copper, cobalt, manganese and uranium. Talvivaara’s operations contributed strongly to increasing the country’s ore exports. However, the company went bankrupt in 2014 and its continued operations are uncertain. In 2012, copper was mined in Talvivaara, Pyhäsalmi, Hitura, Kylylahti and Kevitsa. Zinc was mined in Talvivaara, Pyhäsalmi and Kylylahti, chrome in Kemi and nickel in Hitura, Talvivaara, Kylylahti and Kevitsa. Industrial minerals are mined in a number of locations.
The energy supply in Finland is based at approximately 45 percent on fossil fuels (oil, gas, coal, peat). Of these, the entire need is imported except peat, which is to some extent produced domestically. Domestic water energy, which is fully developed, and wind energy accounted for 4.5 percent of total energy supply in 2012, nuclear energy for 18 percent and renewable energy sources for 27 percent. In Finland there are four nuclear reactors, two on the island of Olkiluoto in southwestern Finland and two in Lovisain southeastern Finland. A fifth reactor is being built in Olkiluoto. It was originally commissioned in 2009 but has been significantly delayed. Another one, planned for Pyhäjoki, has been approved and plans are available for two more. Small quantities of electricity are imported from Sweden and the Russian Federation.
In 2012, industry consumed approximately 45 percent of the energy produced; above all, the forest industry is energy intensive. In addition, just over 26 percent is spent on heating and 16 percent on transport.
See also Energy supply.
Industrialization, which began in the early 1900s, gained momentum after the Second World War. Industry was then built up so that the country with industrial products could pay war damages to the Soviet Union.
The internationalization of Finnish industry started only in the 1970s, after which development has been rapid. Today, the subsidiaries of industrial companies employ more abroad than the industry employs in Finland. The Finnish production sector is characterized by a high level of wages, which leads to lower price competitiveness vis-à-vis other countries. Therefore, investments are made to increase value added and create new products in high technology areas. About one fifth of the industry’s total investment is invested in research and development.
The forest industry has traditionally been the engine of Finnish business. The paper and cellulose industry is usually located at locations located at the major estuaries, such as Kotka, Pori and Oulu. In particular, the paper industry is characterized by increased concentration to larger units. Of the larger forest companies, UPM, Stora Enso and Metsä Group can be mentioned. In 2012, the industry accounted for 13 percent of industrial workplaces and 15 percent of industry value added. 70 percent of the production value added comes from the production of cellulose, paper and board and 30 percent from sawn and planed products. The forest processing industry is strongly export-oriented; 90 percent of paper and paperboard production is exported.
The metal industry is the largest industrial industry with 35 percent of industrial jobs and 34 percent of the industry’s value added. Important products are mainly machines, such as paper machines and vehicles. This industry branch is mainly located in the southern and southwestern parts of the country. The metal industry, with the Kone, Wärtsilä, Outokumpu and Rautaruukki groups, for example, is strongly internationalized. Shipbuilding has been strong in Finland; they have built icebreakers and other specialized vessels and passenger ferries. In the 1980s, the shipbuilding industry experienced a crisis that led to sharply reduced operations. Nowadays the shipyard in Turku is owned by the German Meyer Werft, the shipyard in Helsinki by Russian USC and the shipyard in Raumo by a newly founded Finnish company.
Electricity and electronics industryand in particular, its high-tech sector progressed during the latter part of the 1980s, in parallel with the creation of technology centers, in many parts of the country. The upturn was strongly linked to Nokia, which in 2013, however, sold its mobile phone manufacturing to Microsoft. In 2013, Nokia and Nokia Siemens Networks had an estimated 10,000 employees in Finland; six years earlier, the number was three times as large. The electrical and electronics industry accounts for about 13 percent of the industry’s employment. Within it are several highly specialized companies that manufacture different types of high-tech measuring instruments. As a link to this industry, you can also see the development of digital products, where, among other things, the gaming industry has grown strongly with companies such as Rovio (Angry Birds) and Supercell, which were sold to a Japanese company in 2013.
The food industry employs about 41,000 people and accounts for 8 percent of the industry’s value added. This sector is characterized by an increasing concentration of large corporate groups. The chemical industry (4 percent of employment and 8 percent of value added) is based primarily on the processing of imported raw materials. Larger facilities are located in Helsinki and Oulu. Important employers in the chemical industry are the oil company Fortum and Kemira. Textile and leather industries(2 percent of employment and 2 percent of value added) declined sharply during the 1980s and 1990s. The reason for this was high production costs and reduced exports to the former Soviet Union. The biotechnology industry, including pharmaceuticals, diagnostics and functional foods, is growing strongly. In the industry there are around 100 companies.
Finland is a small and open market, which is heavily dependent on foreign trade. In 1961, the country signed a special agreement with EFTA and later became a full member. A cooperation agreement was signed in 1973 with SEV and a free trade agreement, the Kevsos agreement, with some smaller, socialist countries. Finland joined the EU in 1995.
57.3 percent of exports now go to EU countries and a total of 71.7 percent to European countries. Asia accounts for 13.9 percent and the United States for 8.1 percent. Finland’s most important trading partners, in 2014, were Germany, Sweden and the Russian Federation, both in exports and imports.
- COUNTRYAAH: Find major trading partners of Finland, including major exports and major imports with latest trade value and market share as well as growth rate.
Finland’s most important trading areas were for a long period Western Europe and the Soviet Union. At the beginning of the 1980s, the USSR accounted for a quarter of Finland’s exports and imports. Trade took place as a clearing trade on the basis of 5-year trade agreements, where the goods were specified. The Soviet Union’s share of Finland’s trade fell sharply during the latter part of the 1980s and the beginning of the 1990s due to the weakening economic situation in Eastern Europe. Trade with the Russian Federation accounted for 15 percent of imports in 2014 and about 8 percent of exports.
The metal industry (including the machine industry) and electricity and electronics account for 45 percent of exports and the chemical industry for 23 percent, while the forest and paper industry exports account for 20 percent. Imports comprise half of raw materials and production supplies and 10 percent of energy products. Consumer goods account for about 25 percent of exports and 11 percent of imports.
Finland had a positive trade balance since the beginning of the 1990s until 2010, after which it has been negative. However, there has been some improvement since the bottom year 2011.
Tourism and gastronomy
Finland has a well-developed tourism industry. The country has 5 million foreign visitors annually. In addition to city tourism in Helsinki and Turku, with considerable elements of business travelers, many tourists visit the country for its beautiful nature. Large parts of the country, mainly in the north and in the middle parts, consist of untouched nature. Among other things, Finland has Europe’s largest continuous lake system.
Most foreign tourists come from the rest of the Nordic countries, the Russian Federation, Germany, the Baltic States and the United States. For Swedish tourists, it is mainly the capital Helsinki and the Swedish-speaking Åland that attract, not least due to frequent and cheap ferry connections from Stockholm. Tourism also receives significant revenue from the large tourist trip to the Northern Calotte. However, winter tourism with extended winter sports resorts in the high-lying parts of Lapland is mostly aimed at domestic tourists.
Note: the capital city of Finland is Helsinki with a population of 620,700 (estimate) (2015). Other major cities include Espoo (Espoo) with a population of 265,500, Tampere (Tampere) with a population of 223,000, Vantaa (Vantaa) with a population of 210,800 (estimate) (2015).
Finland’s food culture is to some extent characterized by the former men’s powers. Sandwich tables, meatballs and pancakes are as common as in Sweden; bristles, pies and blinis are reminiscent of the Russian Federation. But the strongest influence on Finnish food production undoubtedly comes from the domestic soil, few countries are so marked by their nature and their assets. The climate, of course, comes into play, as do relatively simple living conditions that have characterized the nation for many centuries.
The fish plays a prominent role. Soups, stews, pies, pies; everything can be cooked with fish as a base. Kalakukko, “the world’s oldest canned food”, joins the fish with the meat (the word means “fish tip”): fish (usually musk, ie, onion) is wrapped in a dough, mixed with pork and baked for several hours. Even forshmak, stewed on salt herring and mutton or lamb, combine both foods. Lake, soup on the same and licorice to the blinis often occur, neon eyes as well. The mushrooms are often salted so that the supply should never be. Sienisalaatti, creamy mushroom, is a must on the sandwich table. Beef and veal, pork and sheep, everything is equally common, and in the right carjalan paisti they are united in a pot. Sausages on pureed meat (poromakkara), smoked reindeer chickens and dried reindeer meat are everyday foods, especially in the northern parts of the country. Tavastland’s somewhat more cultivation-friendly climate can be traced in, among other things. the rich flora of vegetable boxes, which are gladly served for liver or herd. The ubiquitous sour rye bread or crispbread is also characteristic, as are the dairy products; milk or sour milk for the food or porridge, yoghurt and langfil as dessert or snack. Memma, finally, is a standing ingredient on the Easter table. Rye flour and malt are mixed with pomeranian peel and baked into a pudding often served in a fist coat.