The Republic of Finland

The Republic of Finland

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Alibek Zhakhin, Byambatsogt Temuujin

ECONOMY

Finland has a highly industrialized mixed economy with a per capita output equal to that of other European economies such as France, Germany, Belgium or the UK. The largest sector of the economy is services at 66%, followed by manufacturing and refining at 31%.Primary production is 2.9%. With respect to foreign trade, the key economic sector is manufacturing. The largest industries areelectronics (22%), machinery, vehicles and other engineered metal products (21.1%), forest industry (13%) and chemicals (11%).

The latest data about Finland’s GDP is the amount of $256,8billion. That number means $35,617 per capita, which is desirable for the majority of the earth.

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Although, this is a nice figure, in the last fiscal period, the growth of the economy was -1.4%, which is not showing a good direction, but in the previous years the situation was different, for instance in 2011, there was a 2.7% growth, which probably means, that it is a fluctuation within a long term growth.

The unemployment rate of the country was 8.1% according to the latest data. Compared to other European countries, this is also a good number. Compared to Hungary, the division of the labour force is similar, but also shows some differences. While in Hungary the industry takes 28% of the working population, and agriculture stands on the 3.4% of the labour force, in Finland, the numbers are a bit different.

( http://www.indexmundi.com )

There is slightly more people working in the agriculture, but 12.5 less in percent within the industry. That shows the welfare status as well in a way, because most of the working force is in the service factor.

The consumption of the GDP is also showing the same situation, where the services are the taking the most energy of the economy.

( http://www.indexmundi.com )

The inflation in Finland was 2.2% in the last fiscal period. That absolutely fulfils the requirement of 1-3% of the optimal depreciation of the money.  

In a 2004 OECD comparison, high-technology manufacturing in Finland is ranked as the second largest after Ireland. Knowledge-intensive services have also ranked the smallest and slow-growth sectors – especially agriculture and low-technology manufacturing – second largest after Ireland.

Overall short-term outlook was good and GDP growth has been above many strongEU members. Finland has the 4th largest knowledge economy in Europe, behind Sweden, Denmark and the UK.

Finland is highly integrated in the global economy, and international trade is a third of GDP. The European Union makes 60 percent of the total trade. The largest trade flows are with Germany, Russia, Sweden, the United Kingdom, the United States,Netherlands and China. Trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters, except for agriculture.

Finland, is a top performer in economic freedom in both Europe and the world, abides successfully a dynamic and flexible economy. However, over the past five years, its strong growth in economic freedom has ended, with declines in business freedom, monetary freedom, and control of government spending like significant improvements in labour freedom. Economic growth has also stagnated.

The respect of law is an important point in the business life in Finland, which is an endangered virtue in the world nowadays. Corruption is not a significant problem in Finland, ranked as second out of 177 countries surveyed in Transparency International’s 2013 Corruption Perceptions Index. Contractual agreements are strictly honoured. The quality of the judiciary is generally high. Finland follows many international agreements that aim to protect intellectual property.

The government is controlling the economy with limited interjections. Finland’s top individual income tax rate is 31.8 percent, and its top corporate tax rate has been reduced from 24.5 percent to 20 percent. Other taxes include a 28 percent flat tax on capital income and a value-added tax. The total tax burden equals 44.1 percent of domestic income, and government spending is equivalent to 56.7 percent of domestic output. Public debt equals 57 percent of GDP. These figures are creating a good atmosphere for high living standards and successful companies.

The overall regulatory framework is transparent and competitive. To launch a business, minimum capital is required but takes only three procedures. Bankruptcy procedures are modern and efficient. Labour regulations are relatively strict, and the non-salary cost of employing a worker is high. Monetary stability has been well maintained, but the government subsidies several renewable energy usage projects.

The market can be called open, because EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. The Finnish government generally treats foreign and domestic investors equally. The financial sector, market-driven and competitive, offers a wide range of financing options. Supervision of banking is wise, and regulations are largely consistent with international norms. Credit is allocated on market terms.

All-in-all, Finland’s economy is looking healthy and efficient, but there is a slight downturn in the last periods. This can be the result of many things, but the overall performance is still doing well. To mention some additional data, the GNS of the country is also decreased in the last years, while there is no major problem, if this tendency can be stopped.

( http://www.indexmundi.com )

The climate is enjoyable for the population in the terms of finance, according to the numbers mentioned, or having a look at the GDP consumption by the aspect of end use.