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Finland FOREIGN ECONOMIC RELATIONS
International economic relations--especially foreign
trade--
have been vital for Finland throughout the twentieth
century, but
never have they been more so than during the 1980s. The
country
was self-sufficient in staple foods, and domestic supplies
covered about 70 percent of the value of the raw materials
used
by industry. However, imports of petroleum, minerals, and
other
products were crucial for both the agricultural and the
industrial sectors. From the end of World War II until the
late
1970s, the development of modern infrastructure and new
industries required substantial capital imports. Sound
foreign
economic relations made it possible to exchange exports
for
needed imports and to service the large foreign debt. A
policy of
removing obstacles to the mobility of commodities,
services, and
factors of production facilitated economic modernization.
Business leaders and government policy makers devised
innovative strategies to manage economic relations. Close
economic ties to the Soviet Union grew out of the postwar
settlement under which Finland agreed to pay reparations
and to
maintain a form of neutrality that would preclude threats
to
Soviet security
(see The Effects of the War
, ch. 1;
Foreign Relations
, ch. 4). Except for agriculture, which remained
strictly protected, postwar commercial policy sought to
link
Finland's economy with the economics of the Nordic area
and of
Western Europe as closely as possible without aggravating
Soviet
fears that such economic ties would undermine loyalty to
the
East. Thus, since 1957 Finland had pursued trade
liberalization
and had established industrial free-trade agreements with
both
West European and East European countries. Spurred by
these
liberal policies, exports and imports had each grown to
account
for roughly one-quarter of GDP by the mid-1980s. By the
late
1980s, Finnish industrial and service firms were going
beyond
trade to internationalize production by attracting foreign
partners for their domestic operations and by acquiring
foreign
firms. Most observers believed that Finnish firms needed
to
follow an international tack not only to protect export
shares
but also to maintain their positions in domestic markets.
Data as of December 1988
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