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Finland Foreign Trade
Trade in agricultural commodities, consumer products,
and
services had been relatively limited, but exchanges with
the
outside world were crucial for industry. Not only had the
forest
industries grown largely in response to foreign demand for
wood
and paper, but the metal-working industry had also taken
off only
under the goad of postwar reparations deliveries to the
Soviet
Union. By the mid-1980s, exports accounted for half of all
industrial output and for as much as 80 percent of the
output of
the crucial forest industries. Similarly, imports of
energy, raw
materials, and investment goods remained essential for
industrial
production. The development of export-oriented industries
had
driven Finland's postwar structural transformation,
indirectly
affecting the rest of the economy. Industrial
competitiveness
would largely determine the economy's overall health into
the
1990s.
During the postwar period, Finnish exports shifted from
lumber and other raw materials to increasingly
sophisticated
products, a change which reflected the increasing
diversification
of the country's economic structure. The forest industries
continued to dominate exports, but, while they had
accounted for
about 85 percent of total exports in 1950, they accounted
for
only 40 percent by the mid-1980s. The relative shares of
different forest exports also shifted. Sawn timber and
various
board products accounted for more than one-third of total
exports
in 1950, but by 1985 they had fallen to only 8 percent.
Exports
of pulp and paper fell more gradually during the same
period,
from 43 percent of exports to about 30 percent. Pulp and
cardboard, the main exports of the chemical
wood-processing
branch, declined in importance, while specialized paper
products
incorporating higher value added, such as packing
material,
printed paper, and coated paper, grew in importance.
Taking the place of forest products, exports of metal
products grew rapidly during the postwar period from a
little
over 4 percent of exports to about 28 percent. Here, too,
exports
of more sophisticated manufactured goods grew faster than
those
of basic products. By the late 1980s, basic metals
accounted for
about 20 percent of metal exports, ships for about 25
percent,
and machinery and equipment for about 20 percent. Advanced
products such as electronics and process-control equipment
were
gaining on conventionally engineered products. The
chemical
industry had exported relatively little until the 1970s,
but by
1985 it had grown to account for about 12 percent of
exports. By
contrast, the textile, confectionery, and leather goods
industries had peaked at over 10 percent in the late 1970s
and
early 1980s, and then they had fallen to about 6 percent
of
exports by the mid-1980s. Minor export sectors included
processed
foods, building materials, agricultural products, and
furs.
Up to the 1970s, Finland tended to export wood-based
products
to the West, and metal and engineering products to the
East. By
the mid-1980s, however, Finnish machines and
high-technology
products were also becoming competitive in Western
markets.
Finland's imports had consisted primarily of raw
materials,
energy, and capital goods for industrial production, and
in the
late 1980s these categories still accounted for roughly
twothirds of all imports. The commodity structure of imports
responded both to structural changes in domestic
production and
to shifts in world markets. Thus, the heavy purchases of
raw
materials, energy, and capital goods up until the
mid-1970s
reflected Finland's postwar industrial development, while
the
subsequent period showed the influences of unstable world
energy
prices and Finland's shifts toward high-technology
production.
Imports of investment goods climbed from about 15 percent
in 1950
to almost 30 percent in the late 1960s and early 1970s,
only to
fall again by the 1980s to about 15 percent. Foodstuffs
and raw
materials for the textile industry accounted for about
half of
all raw material imports during the 1950s, but by the
1980s
inputs for the chemical and metal-processing industries
took some
75 percent of raw material imports. World energy prices
had
strongly influenced Finnish trade because the country
needed to
import about 70 percent of its energy. After rising slowly
until
the early 1970s, the value of oil imports had jumped to
almost
one-third of that of total imports in the mid-1970s, then
had
fallen with world oil prices to about 13 percent by the
late
1980s.
Like its export markets, Finland's import sources were
concentrated in Western Europe and the Soviet Union (see
table 19, Appendix A). The country usually obtained raw
materials,
especially petroleum, from the East and purchased capital
goods
from the West.
Finnish service exports had exceeded service imports
until
the early 1980s. Up until this time, shipping and tourism
earnings had generally exceeded interest payments to
service the
national debt. In the mid-1980s, however, the balance was
reversed as the earnings of the merchant marine declined
and
Finns began to spend more on tourism abroad. Although
Finnish
businesses tried to compete in these labor-intensive
sectors, the
country's high wage levels made shipping and tourism
difficult to
export.
Like other Nordic countries, Finland's trade was
concentrated
in the Nordic area and in Europe. Unlike the others,
however,
Finland had, as its most important trading partner, the
Soviet
Union. During the postwar years, trade with the Soviets
had
expanded and contracted in response to political
developments and
market forces. During the immediate postwar period, the
Soviet
share of Finland's trade, spurred by reparations payments,
rose
to over 30 percent. However, the following two decades saw
this
share gradually decline as Finland expanded exports to
Western
Europe. A second cycle began after the 1973 oil crisis,
when
recession in Western markets cut demand for Finnish
products
while the increased value of Soviet oil deliveries to
Finland
allowed expanded exports to the East. Finnish exports to
the
Soviet Union rose sharply during the years after 1973,
only to
fall--along with world petroleum prices--by 1986.
By the late 1980s, the geographical distribution of
Finland's
trade was moving back to the pre-1973 pattern. In 1986,
for
example, although the Soviet Union continued to be
Finland's
single largest trade partner, trade with West European
countries,
which together accounted for about 61 percent of Finnish
trade,
was much more important than trade with the Soviet Union.
Finland's main trade partners in Western Europe were
Sweden,
which took the biggest share of Finnish exports, and the
Federal
Republic of Germany (West Germany), which supplied the
largest
slice of Finnish imports. East European countries other
than the
Soviet Union accounted for only slightly over 2 percent of
trade.
Non-European countries were responsible for some 19
percent of
trade. The United States, Finland's main non-European
trade
partner, accounted for over 5 percent of Finnish exports
and
imports in 1987.
As in many small European countries, the postwar trade
policy
of Finland had been to pursue free trade in industrial
products
while protecting agriculture and services. During the
1980s,
strict quotas still blocked imports of most agricultural
commodities (except for tropical products that could not
be
produced domestically), but liberalized regulations
allowed
increased imports of services, especially financial
services.
Most industrial imports and exports were free of
surcharges,
tariffs, and quotas under multilateral and bilateral
agreements
between Finland and its major trading partners
(see Regional Economic Integration
, this ch.). Health and security
concerns,
however, inspired restrictions on imports of products such
as
radioactive materials, pharmaceuticals, arms and
ammunition, live
animals, meat, seeds, and plants. With a few exceptions,
Finland
discontinued export licensing in the early 1960s. The
State
Granary, however, controlled all trade in grains, while
the
Roundwood Export Commission reviewed all lumber exports.
Data as of December 1988
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