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Finland Industrial Policy
The state had played an important role in Finland's
industrial development, but it did not intervene directly
so much
as many other European governments. Intervention in
industry
began in the mid-nineteenth century, and it increased over
time.
Tariff policy and government procurement, the latter being
especially important during the two world wars, furthered
the
development of manufacturing. The government's influence
was
probably most important in the years after 1944, when
Finland
struggled to make reparations payments to the Soviet
Union.
Partially as a legacy of this period, the state controlled
companies that owned about 15 percent of manufacturing
capacity,
employed about 14 percent of the work force, and
contributed
about 25 percent of industrial value added. The state was
especially active in sectors requiring heavy investments,
such as
basic metals and shipbuilding. These state-owned firms,
however,
did not receive government subsidies; if unprofitable,
they
failed. Thus, while the state controlled most prices and
implemented long-term sectoral plans in agriculture,
forestry,
energy, and minerals, state-owned firms in manufacturing
remained
largely free to manage their own affairs.
In the late 1980s, Finnish industrial policy continued
to be
considerably less interventionist than the policies of
most West
European countries. The government's strategy for
industries that
were having difficulty favored rationalization and
restructuring
instead of subsidies. Industry was encouraged to step up
investments to increase productivity and to arrange
mergers with
domestic and foreign interests to increase efficiency.
Policy
makers argued that industry, as a small sector (compared
with
that of many other countries) open to private investment
but
dependent on exports, must adjust to international
conditions.
Despite this hands-off approach, the government did
subsidize
the research and development of new industrial
technologies.
Research and development expenditures had remained low
until the
1980s, reaching only slightly more than 1 percent of GNP
in 1980.
After that time, however, the government increased such
spending,
which exceeded 2 percent of GNP by the late 1980s. The
State
Technical Research Institute in Otaniemi, founded in 1942,
played
an important role in providing industry with up-to-date
information on new technologies; its maritime engineering
laboratory was one of the largest and best equipped in the
world.
In 1984 the Ministry of Trade and Industry initiated a
four-year
program of research on target technologies, including
applications of laser technology to machine engineering,
advanced
measurement techniques, and offshore construction
techniques for
arctic conditions. The government also sponsored
technology
parks, such as the one at Oulu, that provided facilities
for
cooperative research projects involving industry and local
universities. In addition, investments in technical
training
promised a continuing supply of workers able to maintain
the
quality, durability, and dependability of Finnish
industrial
goods.
Data as of December 1988
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