Finland 2nd in global competitiveness, United States 6th
Finland drops from 1st to 2nd, the U.S. drops from 2nd to 6th, but still obviously very impressive for Finland. Although it would be nice to see that 17th place rating in “Market Efficiency” go up a bit. The graph below says Finland’s three most problematic factors for doing business are tax rates, restrictive labour regulations, and tax regulations.
Rounding out the Top 16 countries: #1 Switzerland, #3 Sweden, #4 Denmark, #5 Singapore, #7 Japan, #8 Germany, #9 Netherlands, #10 UK, #11 Hong Kong #12 Norway, #13 China, #14 Iceland, #15 Israel, #16 Canada.
As has been the case in recent years, the Nordic countries hold prominent positions in the rankings this year, with Finland (2), Sweden (3), and Denmark (4) all among the top ten most competitive economies. The Nordic countries have been running budget surpluses and have lower levels of public indebtedness on average than the rest of Europe. Prudent fiscal policies have enabled governments to invest heavily in education, infrastructure and the maintenance of a broad array of social services. Finland, Denmark and Iceland have the best institutions in the world (ranked 1, 2 and 3, respectively) and, together with Sweden and Norway, hold top ten ranks for health and primary education. Finland, Denmark and Sweden also occupy the top three positions in the higher education and training pillar, where Finland’s top ranking is remarkable for its durability over time.
USA dropped from no.1. to 6th, Finland stayed 2nd.
It’s quite amazing Phil how you get elementarly things wrong all the time.
Comment by Markku — Wed, Sep 27th, 2006 @ 12:25 pm
This article from YLE says the World Economic Forum gave Finland 1st place last year…
http://www.yle.fi/news/left/id18324.html
I wrote about it last year this time…
http://www.finlandforthought.net/2005/09/28/finland-most-competitive-country-in-the-world-again/
…where did I screw up?
Comment by Phil — Wed, Sep 27th, 2006 @ 1:12 pm
I know we do good in corruption, but do we really have more revolutions/coups than corruption?
Comment by someguy — Wed, Sep 27th, 2006 @ 1:27 pm
Surveys based on public statistics can’t be realistic.
Here is just an example: Let’s consider unemployment rate in Finland. Those who study, attend some courses or do some practice work are not considered to be an unemployed persons.
If Finland will include these people in the unemployment number - this will be a catastrofic rate for Finland!!!! But funny guys found a solution to hide it:)
On the other hand competitiveness means you can do something BUT THE BIG QUESTION is whether you’ll ever do it:)))) Or someone will ever hire you to do it!
Comment by Belino — Wed, Sep 27th, 2006 @ 1:46 pm
“The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey [...] This year, over 11,000 business leaders were polled in a record 125 economies worldwide.”
Seems like a highly subjective study. First and foremost, American stature in the world has declined considerably due to its recent behaviors. One might say they exposed Americans as the self-absorbed and inward-looking bunch that they truly are. So it would make sense that opinions about the the US would turn increasingly negative—regardless of the business environment.
As for the actually business environment, I’d say it depends partly on a company’s size. Having worked in both Europe and America, I’d have to say that America is by far a better place for small and medium-sized companies—especially entrepreneurial ventures. In Finland, if initial start-up costs don’t sink you, then the high income taxes will provide a significant disincentive to future growth and the hiring of people. America wins hands down.
In terms of large/global business though, I think the EU/Finland has some advantages over America. Europe’s education system produces leaders capable of operating in an international arena; America’s does not. Instead, America’s educational system gears students for working in the domestic market. But since America’s domestic economy is large—almost as large as Europe’s, but far more developed and homogeneous—it’s not really necessary to *think globally.* And I’m sure this fact also affects opinions in these types of surveys.
Comment by Kristian (in Espoo) — Wed, Sep 27th, 2006 @ 1:52 pm
Europe’s education system produces leaders capable of operating in an international arena; America’s does not.
American corporations seem to do quite well worldwide.
Comment by Phil — Wed, Sep 27th, 2006 @ 2:07 pm
Well, I’m confused now. Somebody has screwed up, as WEF states in numerous places in that 2006-2007 report that Finland was second 2005-2006 and USA first.
http://www.weforum.org/pdf/Global_Competitiveness_Reports/Reports/gcr_2006/gcr2006_summary.pdf
Now I remember (when you showed the link) that Finland was first 05-06, but WEF has just erased previous reports away from their pages, and makes headlines “Switzerland overtakes USA as no.1., Finland stays second”.
Go and figure that out…
Comment by Markku — Wed, Sep 27th, 2006 @ 2:40 pm
#4 I don’t see your point.
Those who work, get student benefit (student leave?) and low-rate bank loan, annual fees for the 2nd and 3rd degree students is only 60-80 euros a year, Plus there is 50% discount on this and that. The bank loan system for students is rather normal everywhere in Europe. There’s nothing hidden. I’m a student, yet I don’t consider myself unemployed.
Comment by Boyle — Wed, Sep 27th, 2006 @ 2:42 pm
American corporations seem to do quite well worldwide.
It’s true, but consider that America has had a 50-year headstart. Until 15-years-ago, Europe was still bracing itself against the old CCCP. It affected everything from internal business structures (modeled hierarchically to mirror the military) to cooperation between other European nations (significanly reduced due to inter-Eruope import taxes and perhaps some WW2 sentiments). Plus, 15-years-ago, eastern Asia, India and Russia weren’t open like today. Back then, America had the advantage of being *the* global economic player in the world. Today, that’s not so.
I think the US has lost lots of goodwill and prestige in many places. Who knows though, with a new administration, America could recover some its lost foreign policy ground. But new business habbits and alliances will be formed in the meantime. Whether Europe will take advantage of this window of oportunity, remains to be seen. I think it has a good chance though.
Comment by Kristian (in Espoo) — Wed, Sep 27th, 2006 @ 2:43 pm
Phil is correct, as is Markku. The issue seems to lie with the WEF, who were perfectly happy to put out a press release on Sept 28 2005 listing Finland as number 1, but now are claiming they have only moved sideways at #2. They (the WEF) seem to be having trouble making their mind up.
2005:
http://www.weforum.org/en/media/Latest%20Press%20Releases/LatestPressReleasesSearch/PRESSRELEASES182
2006:
http://www.weforum.org/en/media/Latest%20Press%20Releases/LatestPressReleasesSearch/GCRpressrelease06
Comment by Anon — Wed, Sep 27th, 2006 @ 2:54 pm
Belino,
Unemployment figures from Statistics Finland are according to the ILO international standards and Eurostat requests and are comparable internationally within the EU (=done in same way in all the EU countries). Figures from Ministry of Labour are based on the people registered as unemployed at Työvoimatoimisto.
More info:
http://www.stat.fi/ajk/tiedotteet/v2006/tiedote_057_2006-09-19_en.html
http://www.stat.fi/til/tyti/tyti_2005-05-27_men_002.html
Comment by Regular visitor — Wed, Sep 27th, 2006 @ 3:21 pm
WEF changed the way the rank was counted;
This year the WEF has changed its methodology to give more weight to human capital and social factors that weigh on business in a way that its chief economist, Augusto Lopez-Claros, says reflects the global economy’s evolution since the index was first conceived in 2001. (Link: Forbes)
Similary, last year USA would have been second on the old scale, but first one the new scale.
Comment by iJusten — Wed, Sep 27th, 2006 @ 3:30 pm
Thanks, Justen. Pity it had to be from Forbes and not the WEF itself that such a clarification came out. Their own reporting was sadly lacking in that department. But it helps to explain why the 2005 figures have magically vanished from their website: they don’t think they are relevant any more.
Comment by Anon — Wed, Sep 27th, 2006 @ 3:48 pm
but still obviously very impressive for Finland.
No, no, Phil, a bit consistency, please. Is the Finnish state this welfare failure you keep whining about, or isn’t it? Have Finland managed to do things right or not?
The right, libertarian or general right-wing, way to approach the results is, of course, to point out that they can’t be right, don’t you agree?
Comment by tomia — Wed, Sep 27th, 2006 @ 3:55 pm
“The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey […]”
I add another detail. Do you know what is the weight of the combination? 1/3 for the hard data (objective and measurable data) and 2/3 (66%!!!!) for the opinions!!! So much?!? Opinions should be given a very small percentage as it is very subjective and dependant on the country culture!
This partly explains the excellent result of Finland, where all the state brain-washed people answered that they are extremely satisfied with the state service and so on. You can find also other unrealistic comparisons, such as the same macroeconomy index for Austria and Botswana… How can it be?
I wonder what would be the ranking taking into account the hard data only.
Comment by Mikko — Wed, Sep 27th, 2006 @ 4:17 pm
First and foremost, American stature in the world has declined considerably due to its recent behaviors.
But USA was second/first in 2005. What has happened since then to turn opinions about the country increasingly negative? The recent attempts by their government to make torture a legal interrogation technique and remove legal protections from terrorism suspects are probably too recent to be counted here, for example.
The right, libertarian or general right-wing, way to approach the results is, of course, to point out that they can’t be right, don’t you agree?
Depends on what segment of the right we’re talking about. If we consider the Finnish mainstream right, they have little reason to question the findings. They can take this as an indicator that the Viinanen-Niinistö line is working and note that they are advocating reform of what the study calls Finland’s “most problematic factors for doing business” (tax rates, labour regulations, tax regulations).
Comment by a lamb with no guiding light — Wed, Sep 27th, 2006 @ 4:43 pm
@15, well why not ? Maybe Austria is an inefficient as Botswana in thr macroeconomic level
Comment by bill — Wed, Sep 27th, 2006 @ 6:02 pm
@17, how can you believe that a rich european country such as Austria can be graded the same as a third world country? Do you want other strange examples? Here you are:
France and Tunisia have comparable levels in quality of institutions. Do you believe that? I do not.
Austria and Venezuela have the same health level. Do you believe that? I do not.
Italy and Azerbaijan have comparable level of infrastructure. Do you believe that? I do not.
Costarica scores much more than Germany in health and and primary education. Do you believe that? I do not.
Just check the table, results are absurd. I think everything is due to the big weight (66%) of opinions. It screws up everything.
Comment by Mikko — Wed, Sep 27th, 2006 @ 6:14 pm
All I have to say is that the Italian infrastructure is pretty fu**ed-up and likely as bad if not worse than Azerbaijan.
Comment by bill — Wed, Sep 27th, 2006 @ 8:59 pm
The US was first last year and Finland was second. I even remember it. Two year ago Finland was first and on another index, Finland was first last year.
As to why the US fell, it is because the criteria changed to take into account international issues. The US has problems with budget and trade deficits and extremely high indebtedness both personal and public - which explain its fall.
In my view it’s even better that Finland manages to come at the top of two different indices (last years and this years). It seems whatever criteria they choose, Finland looks good.
Comment by finnsense — Wed, Sep 27th, 2006 @ 9:15 pm
Good for Finland.
But for Kristian to state that these statistics “expose” ALL AMERICANS as the “self-absorbed and inward-looking bunch that they are” is absurd! Kristian, you’ve lost credibility points, big time.
The USA does incredibly well in foreign markets. I mean, culturally, American music, video, movies, etc. dominate the global sphere.
I suppose American financing of the UN and the Peace Corps are nothing but imperialistic nonsense, considering we’re all so self-absorbed. Also, the millions of dollars we give to African AIDS relief, UNICEF, ad infinitum - hey, just a bunch of selfish Americans, right?
Sheesh.
Comment by AmeriikanEnkeli — Thu, Sep 28th, 2006 @ 12:34 am
“exposed Americans as the self-absorbed and inward-looking bunch that they truly are.”
So right. After we left Somolia (On Clintons watch), they killed 1 Million Muslims in 100 days. Now in Darfur, another 1 Million are in the process of being killed.
And guess what that inward-looking bunch turned down those jobs for you to fill!
Comment by winter — Thu, Sep 28th, 2006 @ 1:52 am
Amerikanenkeli,
Your argument that the US is not inward looking because the US does “incredibly well” in foreign markets doesn’t make sense. Firstly, having powerful exports is no bar to being inward looking. Indeed part of the reason Americans are so ignorant of the rest of the world (in general) is because culturally they have no outside influences.
Secondly, for its size the US doesn’t do very well at all in foreign markets. Entertainment is a large industry but it’s not very big in the context of the global economy and it is pretty much the only industry in which the US dominates.
All this said, none of this has any relevance regarding why the US fell down the rankings. That was because of economic mismanagement.
Comment by finnsense — Thu, Sep 28th, 2006 @ 8:52 am
@19, uhm… It seems you are expert in that field… What happened? Did you get a puncture in the highway between Milan and Florence?
Anyway, I think I expressed my point in clear way. If you look at the rankings for each single thing, it is not logic how rich european countries can be graded in a similar way as third world countries.
I just picked up few examples taking France, Germany, Italy and Austria. You can make others by yourself.
Comment by Mikko — Thu, Sep 28th, 2006 @ 11:24 am
But for Kristian to state that these statistics “expose†ALL AMERICANS as the “self-absorbed and inward-looking bunch that they are†is absurd!
Now I didn’t write “ALL AMERICANS.” Those are your words
The USA does incredibly well in foreign markets. I mean, culturally, American music, video, movies, etc. dominate the global sphere.
Yeah, dominate… And how many Americans are interested in movies from other countries?
I’m pretty sure it’s safe to say that Americans can only relate to storylines written and acted specifically for them. Gaining true insights into other cultures through movies and such isn’t really important for Americans—not even for many highly educated Americans.
…American financing of the UN…
It’s a political organization and it serves America’s needs; otherwise it wouldn’t get funding. And in terms of other world relief efforts, if I’m not mistaken, the US provides the least amount of funding per-capita, when compared with other modern countries. America does have significant private efforts though—church organizations in many cases.
But my point about America being seen as self-absorbed stems from mindless support for massive bombing campaigns on faraway peasant countries and the sheep-like naiveté of the US population to believe in the war-rhetoric of it’s leaders. It became very clear to everyone that Americans are only concerned for their own interests—at least under the current administration. That’s what exposed Americans.
There are other reasons too. America is looking more and more 3rd-worldish these days, with its human rights abuses and prisons—both domestic prisons and Guantanamo—etc. I believe that these things ‘color’ opinions that are offered in these types of surveys.
Comment by Kristian (in Espoo) — Thu, Sep 28th, 2006 @ 2:19 pm
Belino accused the Finnish officials of bending statistics. Someone already explained how the unemployement statistic are counted, so I won’t go into that.
I can think of an example of twisting the statistics for you:
Approximated mexican workers’ remittances to their families back in Mexico are counted in development funding statistics USA reported to the World Bank. That’s a player’s move: all the while the illegal immigrants are being chased, they are also counted for aiding their underdeveloped country so that there would be less need for USA governament to budget money for development.
Comment by Suviko — Thu, Sep 28th, 2006 @ 4:15 pm
“massive bombing campaigns on faraway peasant countries ”
you forgot the old EU talking point, they did it for the OIL???????
Slipping.
Comment by winter — Thu, Sep 28th, 2006 @ 7:25 pm
Kristian, I’m really surprised that someone as seemingly educated as yourself can make such, well, ludicrous assumptions about Americans. Even I, an educated Finnish-American, rarely make such sweeping generalizations about other cultures. But then that’s also perhaps because people who grow up here tend to be more sensitive to such things. Go figure.
“How many Americans are interested in movies from other countries?”
Quite a few. Admittedly, it’s a self-selected, educated group, but many foreign films do quite well here.
“Americans can only relate to storylines written and acted for them.Gaining true insights into other cultures through movies and such isn’t really important for Americans–”
My immediate family, many of whom live in Helsinki, NEVER assume that a movie will give them a true insight into anything. Wow. I’m surprised that you think this way. If I want a true insight, I’ll go to a good book. And as for storylines written and acted, it seems to me that most people, regardless of background, go to movies with plotlines and characters that they can relate to. You haven’t gone to many films about black lesbians, have you? And yet how many white guy action films have you seen? Get it?
I could go on and on. The UN hardly serves America’s needs, look at Hugo Chavez, who essentially spit on America, and yet we fund the organization. But you think America finances the UN because, well… it serves our needs to have people metaphorically spit on our soil. Hell, we must be masochists.
Kristian, I respect your right to speak your mind and often you say thoughtful things. But your overwhelmingly simplistic categorizations of Americans tells me that you don’t really know us very well.
And by the way, have you checked Bush’s poll numbers lately? They’re pathetically low. For the record, most of us don’t like him. But you call us “sheep.”
I’m done.
Comment by AmeriikanEnkeli — Fri, Sep 29th, 2006 @ 12:53 am
Finns in overall aren’t THAT interested in quirky indie movies - it’s a sign of smething that small arthouse theaters are shutting down. We shouldn’t feel so much more cultivated.
Even educated and usually smart & calm people get provocated to make whooping generalizations. It’s a pity when it happens, but the discussion culture here is schizophrenic - some carefully trying to base their arguments on documented sources, some are speaking from their experience and some are just trolling and throwing more water on the stones. :I
I read this blog and I watch movies to get more insight into other cultures. There’s no one single documentary or fictional movie with “the true insight” into something in it. Information is always subjective.
I believe in art’s power to help people reach each other. But it can isolate us from each other just aswell. If everybody just cultivate their own little subculture’s tastes, we don’t have anything in common to talk about.
That’s in a funny way what Hollywood movies or tv series like C.S.I. or Desperate Housewives are good for - something you can easily start a conversation from, ‘cos people are bound to have an opinion of them (even if they haven’t seen them).
It’s 4.06 so I guess I could finally go home and sleep and stop spam-spam-spamming here for today.
Comment by Suviko — Fri, Sep 29th, 2006 @ 4:20 am
Mikko, to put it short: You don’t understand what those studies are about.
Comment by Markku — Fri, Sep 29th, 2006 @ 11:03 am
Again the Finns start masturbating. The Finns receive the survey sheets and fill the whole pages “I am happy in Finland. The service is perfect. There is no corruption. Government is efficient. Health care is perfect. Education is excellent.” and return the sheet. Then they enjoy the result in spite of corrupt business, slow service, ineffcient goverment, the one month quete to smell a physician’s perfume, and incredibly unimaginative education.
This is the world of perfect Matrix!
Comment by funny — Fri, Sep 29th, 2006 @ 12:21 pm
#31
You ain’t even funny with that troll.
Comment by Suviko — Fri, Sep 29th, 2006 @ 1:45 pm
No suviko he is serious. Yes I agree with you funny finns are nothing more than *dirty little corrupt asians* as you put it. Who don’t even wan’t to admit it.
go grow some pubic hair funny. F*cking ignorant racist
Comment by Anonymous — Fri, Sep 29th, 2006 @ 2:17 pm
@30, I guess you are the one who is going to explain me what they are about then. Do you mind to illuminate me instead than simply saying that I do not understand?
Thanks for the constructive chat.
Comment by Mikko — Fri, Sep 29th, 2006 @ 3:31 pm
AmeriikanEnkeli:
Kristian, I’m really surprised that someone as seemingly educated as yourself can make such, well, ludicrous assumptions about Americans.
Thanks, but whether they are ludicrous or not, this is what people of the world think these days.
Even I, an educated Finnish-American, rarely make such sweeping generalizations about other cultures.
Well, maybe you should. Each culture has its own unique qualities. America’s happens to be self-righteousness. Even if not every American possesses those qualities—and I know many who don’t—that’s the political image being projected throughout the world.
And as for storylines written and acted, it seems to me that most people, regardless of background, go to movies with plotlines and characters that they can relate to.
Exactly. My point is that it tends to be very narrowly defined for most Americans. It’s a manifestation of that center-of-the-universe complex, I guess
You haven’t gone to many films about black lesbians, have you?
I saw The Crying Game. Isn’t Boy George a black lesbian?
I could go on and on. The UN hardly serves America’s needs, look at Hugo Chavez, who essentially spit on America, and yet we fund the organization. But you think America finances the UN because, well… it serves our needs to have people metaphorically spit on our soil. Hell, we must be masochists.
It’s no secret that Venezuela is the 5th-largest oil exporter in the world. If I’m not mistaken, it supplies the US with over 50% of it’s oil. Generally, being in the UN gives America political leverage in dealings with key players like Venezuela. So, until America no longer needs such leverage to manage its dependencies, I’m sure it will continue to ‘participate’ in the UN…..and let itself be spit on…..metaphorically of course.
By the way, I find it kind of humorous how 3rd-World-Chavez now supplies America’s poor with free oil
Comment by Kristian (in Espoo) — Fri, Sep 29th, 2006 @ 3:55 pm
Are these competitiveness surveys really so meaningful? According to the graph Phil posted Finland’s PPP is below the OECD average and has been for 15 years. The average standard of living in Finland isn’t exceptionally high.
How will Finland fare if there is a global economic slowdown (which looks increasingly likely)? Surely these things matter more than some competitiveness survey.
Comment by XL — Fri, Sep 29th, 2006 @ 11:22 pm
“How will Finland fare if there is a global economic slowdown (which looks increasingly likely)?”
Since the EU economy is tied to how the USA does, can we say; It will do as well as the US does?
Comment by winter — Sat, Sep 30th, 2006 @ 8:25 am
I read a lot of people whinging about the preceived lack of knowledge Americans have about Europe. I really wonder why Americans would want to know more about a place that seems to have so little positive to say about their country.
Or is it just the people on this bulletin board that likes to make sweeping generalisations?
Comment by Anonymous — Sat, Sep 30th, 2006 @ 9:19 am
Mikko, why don’t you study what’s on the WEF forum research? It would take too much time explaining in detail, but lets put it in this way: It’s *not* about development level or about how rich nations are, but combined indicator of various important factors, which have great influence of how a nation will be able to develop in the future in a balanced and sustainable way.
It’s not about you not believing on, say about high level of Italian and French institutions. Those assesments are made people who really know about it. Secondly, that study measures qualitative factors, and you say they should only measure quantitative, hard facts.
I hope I don’t hurt your feelings when I say again that you don’t get that study.
Comment by Markku — Sat, Sep 30th, 2006 @ 9:00 pm
“How will Finland fare if there is a global economic slowdown (which looks increasingly likely)? Surely these things matter more than some competitiveness survey. ”
Ignore winter’s post. The correct answer is that it will fare better than almost anywhere else. Finland is not heavily dependent on the US. Its markets for almost all its exports are widely spread throughout Europe, Russia and Asia. That’s not to say it won’t suffer. Economists are divided on whether there can be a decoupling of the US and world economies due to globalisation. If there can and Germany and France continue to do well as well as Russia and China, Finland could still post healthy growth. If Europe is dipped back into the doldrums, Chinese and Indian growth are halved to 5% and energy prices fall further, it could be worse.
Comment by finnsense — Sat, Sep 30th, 2006 @ 11:11 pm
If there can and Germany and France continue to do well as well as Russia and China, Finland could still post healthy growth.
Germany’s been suffering for many years now—much of it still due to reunification. It can only go upwards…although that recent VAT tax hike doesn’t really help matters.
I also predict that eastern European countries will prosper. I’m sure they’ll go through normal economic cycles, but there should be an upward trend overall. Economics is as much psychological as quantitative, and young people in those areas have been yearning for the good life. They call it the Wild East, where anything is possible.
As for Finland, we have extremely high taxes and, therefore, our domestic economy is underdeveloped and probably can’t stand on its own. If the world economy dips, then we’ll feel it. Good thing we drink a lot. It helps to ease the disappointment.
Comment by Kristian (in Espoo) — Sun, Oct 1st, 2006 @ 4:00 am
There’s allways two sides of a coin. Huge thing to think about: At what cost success on those measurements have been achieved?
But I suppose that’s off topic here.
Comment by Markku — Sun, Oct 1st, 2006 @ 11:43 am
Editorial in HS about the global competitivness survey, titled “Liiat kehut eivät kelpaa”.
Comment by Suviko — Sun, Oct 1st, 2006 @ 2:05 pm
“As for Finland, we have extremely high taxes and, therefore, our domestic economy is underdeveloped and probably can’t stand on its own.”
What you wrote was quite reasonable up to this point. Since when have high taxes ever lead to an economy being “underdeveloped” and thus “not being able to stand on its own”. It may surprise you to know that a greater percentage of the populaton of Sweden and Finland work than in the US. So in what way is it underdeveloped?
Of course it can’t stand on its own because it is integrated into the world economy. Not one country in the world can survive without any exports at all. Or what do you mean by stand on its own?
Comment by finnsense — Sun, Oct 1st, 2006 @ 3:58 pm
#44
finnsense—Perhaps I should expound on that a bit….
Essentially, our tax system is structured to suit mainly large corporations. Most large corporations operate in foreign markets. Domestically oriented businesses must live-off the economic stimulus that those large internationals provide. Of course, that’s nothing unusual these days; it’s the case in many countries.
However, due to our high income tax rates, we’ve created a demand constraint that prevents economies of scale from developing in our domestic economy. In-turn, that necessitates our domestically-oriented businesses to:
1). Overcharge for goods and services;
2). Resist growth and hiring; and
3). Reduce product offering.
Notice that all three-points are self-perpetuating and circular; that is, each affects the other two. Any stimulus to counter the downward tendency comes from revenue generated by large international corps. If the international market becomes weak, then the domestic market will be directly affected and provide us with very little economic buffer.
Comment by Kristian (in Espoo) — Sun, Oct 1st, 2006 @ 5:09 pm
“If the international market becomes weak, then the domestic market will be directly affected and provide us with very little economic buffer.”
I agree: the Finnish economy is more sensitive to global changes because the domestic market is weak.
Does the high rating in “competitiveness” mean something real in terms of making the economy better, i.e. more resistent in difficult times? Not a lot from the look of things.
Comment by XL — Sun, Oct 1st, 2006 @ 9:04 pm
Good try, Kristian. However, don’t stop studing quite yet.
Comment by Markku — Mon, Oct 2nd, 2006 @ 12:02 am
“that study measures qualitative factors, and you say they should only measure quantitative, hard facts.”
Markku, I disagree with the way the ranking is made because it is too much related to the what people say in the interviews. It is too much subjective.
You say it is made by “people who really know about it”. This does not mean that I cannot find the result a bit “strange”. I think I have this right, even in my state of ignorance, right?
For example, the study tells me that Barbados is more competitive than China in the future. Answer honestly, don’t you find this result weird?
Of course, after these things (there are many) I start to doubt also about the results as a whole. Is it really so bad to point out these weird inconsistencies?
I thought it would have been a good discussion point.
Comment by Mikko — Mon, Oct 2nd, 2006 @ 12:29 pm
Does the high rating in “competitiveness†mean something real in terms of making the economy better, i.e. more resistent in difficult times?
There’s lots of cheap, high-tech labor out there these days. Unless we have some special advantage over places like Bangalor, then my guess is that money will flow in that direction in a global slowdown—obviously, it’s cheaper there. Despite that, I don’t think we’ll be doomed though.
But, I do think our one-sided approach is a weakness—as it has been for at least 50-years. We had our large industries, such as wood & paper and electronics, and everyone sort-of lived-off the transfer payments they generated. When the Soviets (a major source of contracts) collapsed, so did our economy. If I remember correctly, we had about 20% unemployment. We had very little domestic economy on which to fall-back.
Aside from being a weakness, an underdeveloped domestic economy results in a lower standard of living. For example, people in Finland always drove around in crappy cars and lived in small houses. We’re doing better now, but the lifestyle in Finland still doesn’t match that of countries like Germany or the US, for example—and this is despite Germany’s relatively weak economy.
Comment by Kristian (in Espoo) — Mon, Oct 2nd, 2006 @ 4:12 pm
Mikko, so you really think you know better than, say large number of business leaders who do have businesses in those countries, who live in those countries, professors on this field, harward business school experts, etc.? Without reading the study?
Wow, you must be some superman!
Kristian, the study clearly states that taxes are not bad for economy per se, but decicive factor is that money is used.
Comment by Markku — Mon, Oct 2nd, 2006 @ 5:03 pm
Ps. I don’t find the results weird at all, some points are just interesting.
But obviously Mikko and Kristian could provide us a less weird study. :-0
Comment by Markku — Mon, Oct 2nd, 2006 @ 5:06 pm
Markku, I complain about the interview methods because different people of different countries have different way of assessing the same thing.
I think that a entrepreuner in Italy may complain because the three-lane highway between Milan and Turin is congested and, instead, a entrepreuner in Barbados would say that the two-way road his track uses for its business is good. This is just an example to explain the point of view.
When the experts evaluate statistics they judge them using a single point of view. If you ask opinions to different people, they answers using THEIR point of view. Do you know what I mean?
By the way, you keep me answering in generic way saying that the people who wrote the study are experts, that the study is about economy competitiveness and so on.
Instead, I did to you some practical examples taken from the ranking (China, Germany, Austria, Tunisia and so on) and you are not answering to them.
P.S. nothing personal, this is just a conversation!
Comment by Mikko — Mon, Oct 2nd, 2006 @ 5:24 pm
When the experts evaluate statistics they judge them using a single point of view. If you ask opinions to different people, they answers using THEIR point of view. Do you know what I mean?
Well, I know what you mean. There are many points in this survey that are valid, like judging countries based on the competency of their respective governments and legal systems. But then they get also get into social issues, like “whether women are treated equally in the workforce.”
I’m not arguing whether they should or shouldn’t be treated equally, but only that it doesn’t affect global competitiveness. So, in that way, I think you are exactly right: Subjective studies such as this are designed to espouse a certain viewpoint—perhaps even a political viewpoint.
Regardless, if we’re competitive globally, then that’s a good thing. Generally, our tax system favors internationals. But what a large international company needs is very different from what a smaller domestic one needs.
A big company comes here with lots of capital to invest. And it can purchase equipment and supplies from abroad. But small companies usually need to raise private capital here, which isn’t so easy considering the high income tax rates. They are also more dependent on local suppliers, who are more likely to overcharge to cover their own tax burden.
So, international competitiveness isn’t everything. Naturally it helps a great deal, but it doesn’t automatically ensure a strong domestic economy. I think we’re living proof of that. Try pricing a new business venture here. You’ll see what I mean.
Comment by Kristian (in Espoo) — Tue, Oct 3rd, 2006 @ 8:54 pm
I’m not arguing whether women should or shouldn’t be treated equally, but only that it doesn’t affect global competitiveness. So, in that way, I think you are exactly right: Subjective studies such as this are designed to espouse a certain viewpointâ€â€perhaps even a political viewpoint.
Women’s participation in the labor market and their treatment there affects competitiveness very much, although the effect is much more dramatic in poor countries than in a place like Finland where women are treated equally (mostly).
This is clearly one of the objective facts the study deals with. It’s not like the people who did the rankings just studied whatever correlations happened to come to mind, but things that according to other studies and theories do have an effect on the competitiveness. In other words, they are not morons. That is not to say that the methodology would be perfect, far from it, but they are clearly working hard to make it better.
And by the way, according to EUROSTAT the real income in Finland is higher than in Germany, for example. According to OECD the (total) income-tax rate in Finland is much lower than in Germany. Starting a new firm here is easier than in most other countries - also capitalwise because of, among other things, subsidies. No wonder there are so many small and mid-sized firms in Finland. The size of the domestic market is not particularly small for a country of Finland’s size (the smaller a country the smaller the the size, naturally). And so on.
A few hard facts, please, instead of a “personal point of view”.
Comment by tomia — Wed, Oct 4th, 2006 @ 1:51 pm
Tomia, “And by the way, according to EUROSTAT the real income in Finland is higher than in Germany, for example. ”
Do you want point out with this something about standards of living? In Germany they are higher as the purchasing power is higher. Take also into account that Germany statistics include also the east poorer part of Germany.
“According to OECD the (total) income-tax rate in Finland is much lower than in Germany.”
Companies have been heavily taxed after the Germany reunification. However, this affected less the ordinary people. Few examples are VAT on food (7% in Germany, 22% in Finland, why do I have to pay taxes when I buy milk?!?).
Let’s not even talk about taxes on cars, I got depressed when I see the cars in Germany and the ones in Finland.
“No wonder there are so many small and mid-sized firms in Finland.”
This is not true. The finnish economy is mainly made by big companies. Countries who have a much higher portion of small-medium size companies (
Comment by Dario — Wed, Oct 4th, 2006 @ 6:16 pm
@55 continues,
(
Comment by Dario — Wed, Oct 4th, 2006 @ 6:18 pm
@55 continues,
(less than 15-50 people) are France and Italy. In North-East Italy, there is an average of one company every two families (small companies of course, but it is still amazing); that’s why they are so rich over there…
“The size of the domestic market is not particularly small for a country of Finland’s size (the smaller a country the smaller the the size, naturally).”
The size of market is very small and the level of competitiveness between different players is so low compared to Sweden for example, which in this sense is much more “European”. That’s why life in Finland is so expensive, food or second hand car’s, for example.
An amazing source of statistics is EUROSTAT at: http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1090,30070682,1090_33076576&_dad=portal&_schema=PORTAL
No “personal point of views”.
Tomia, no offense, but you look exactly as those brain-washed finns that thinks the Finland is the best, wherever, whatever, bla bla bla… Finland is performing very good in this period due to its merits (many) and the current cycle of economy but this does not mean that one should be blind on the problems.
Only 15 years ago, Finnish economy was in a deep crisis and other countries were performing much better. It is the pain of economic cycles that affect in different way countries with different economic structures.
Let’s just hope that EU as a whole may limit these problems…
Comment by Dario — Wed, Oct 4th, 2006 @ 6:18 pm
Dario, no offense but you sound exactly like one of those brain-washed right wingers who think that Finland’s success is a freak accident. The difference between you and me is that I happen to know what I’m talking about while you obviously don’t (see the “corrections” you made above, none of them hitting the target - yeah, take Sweden as an example, LOL).
Finland’s economy has had its share of problems over the years - and still does, but mostly not those the ignorant “right wingers” believe they are. I just don’t understand what purpose this quite common spreading of false information serves - unless the idea is to mislead people. That’s a silly strategy. Although the “extreme right” (not Kokoomus for the most part, that is) can fool some of you some of the time, in the long run people will realise that it’s just propaganda. Why not concentrate on real problems? Hey, there aren’t too few of them.
Comment by tomia — Wed, Oct 4th, 2006 @ 8:59 pm
Women’s participation in the labor market and their treatment there affects competitiveness very much
I respect your point, but we’ll have to disagree on that one. I see it as purely political.
It’s not like the people who did the rankings just studied whatever correlations happened to come to mind, but things that according to other studies and theories do have an effect on the competitiveness. In other words, they are not morons.
I too doubt they are morons. But, I do believe there are interwoven political motivations.
And by the way, according to EUROSTAT the real income in Finland is higher than in Germany, for example.
Like Dario mentioned, you gotta count the 17-million people in eastern Germany. Very high unemployment there, and those who work earn less than people here.
But, despite this, the purchasing power among employed people in eastern Germany is better than that of Finland. Nicer homes, cars, recreation, etc.
Starting a new firm here is easier than in most other countries - also capitalwise because of, among other things, subsidies.
Sure, the government takes it away, via high taxes, and then gives it back to you as a subsidy. By the way, I’m not even aware of any ’subsidies’ for small businesses in Finland. Not saying they don’t exist; I just don’t know of any.
No wonder there are so many small and mid-sized firms in Finland. The size of the domestic market is not particularly small for a country of Finland’s size (the smaller a country the smaller the the size, naturally). And so on.
As Dario stated: High prices and no competition.
But one thing that’s good here in Finland is the legal climate. Also, the whole process of starting a business is better here than in Germany—startup costs are way more expensive, depending on the field, but the experience is more pleasant overall.
Comment by Kristian (in Espoo) — Thu, Oct 5th, 2006 @ 12:35 am
Tomia, I do not think that Finland success is a freaky accident. Finland is a rich European country.
What I do not like is the Finns attitude in general, that is the habit of praising Finland in any case and not looking at the problems.
I would like not to read every week articles such as the ones of Olli Kivinen in HS where he says: “We produced a society which is the best in the world”.
I would like not to read every week articles such as the one by Pauliina Pulkkinen (still on HS) that writes “We’re Finland, we’re number 1″.
Just go back in the archive, periodically there is an article praising to Finland. The “propaganda” as you call it is on the side of people who keep saying that Finland outperforms in every field.
I would like a bit of humbleness and self-criticism in identifying the problems of Finland and talking about them. I do not see any of this.
I do not see people complaining for the unemployment higher than the EU average (Source: EUROSTAT, check the link I posted previously).
I do not see people complaining for the unreasonable higher cost of life compared to Europe (Source: EUROSTAT, 20% higher than EU 15).
I do not see people complaining for the lower salaries than EU average, let’s not even talk about the comparison with Germany. Source: EUROSTAT, http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=Yearlies_new_population&root=Yearlies_new_population/C/C4/C43/dbb12560
Where is all this? Why people never complain? The only active problem discussion is about alcohol and rising taxes.
Comment by Dario — Thu, Oct 5th, 2006 @ 11:34 am
I respect your point, but we’ll have to disagree on that one. I see it as purely political.
Huh? So, giving a girl an option of taking a job instead of remaining in her traditional role as a “baby-making machine” has no positive effect on the economical growth? Come on, show me one study that accepts such a view. “As a conclusion it can be argued that if girls continue marrying at the age of 14, give birth to 10 children, struggle through their lives in order to keep them alive and die at 40 without ever having economical independence, the boost to economy is enormous.” Well, perhaps in a study by Taleban mullahs.
Why not read a book like Jeffrey Sachs’ “The End of Poverty”? He is AFAIK one of the main charachters behind the WEF rankings, too. And the book even has a foreword by Bono.
Or why not find out why organizations like the World Bank or the United Nations concentrate on helping women to achieve economical independence (and thus a decent lives for their two to three children, education among aother things). No, it’s not because they’ve been taken over by political feminist movements.
In a country like Finland the benefits of equal labor-market opportunities are not as obvious, but they should be clear enough even here.
Comment by tomia — Thu, Oct 5th, 2006 @ 1:22 pm
@61. Come on! Kristian was comparing Germany and Finland, where equal opprtunies are granted to all. He wasn’t for sure comparing Finland and a third world country.
In my opinion, in Finland there oppotunities as equal as in any other western cultural nation.
And I’m afraid that I have to agree with Kristian and Dario all over the discussion: they really bring facts, you just talk “emotionally”.
Nobody has hinted here that women should marry at 14 and give birth to 10 children, or put the question into the political field (right wingers, and even ignorant, as you call them).
Comment by Simo — Thu, Oct 5th, 2006 @ 2:18 pm
Where is all this?
It’s in the news and special reports in HS, for example. It’s full “bad” news, the same way as everywhere. Bad news are good news, as we all know. Every now and then somebody like Kivinen comes upon the idea of reminding that the overall picture isn’t all that gloomy.
For some reason certain people find this extremely irritating, as if only bad news and negative reporting would be acceptable. Finland is after all this little social democratic dystopia (or ultra capitalistic depending on the world view) where nothing can be well, or if is, it must be because of external reasons or by chance. This view is in all honesty even more unrealistic than the opposite, Finland as the numero uno in all respects (although I doubt if anyone really thinks that way).
Why people never complain? The only active problem discussion is about alcohol and rising taxes.
Taxes haven’t been rising for years.
And people do complain, of course. They just complain less than would be appropriate according to certain somewhat extreme views both from the left and the right. But what can you do? Right or wrong, the Finns just happen to be on average about the most content people on earth - or at least they claim to be. (Yes, this too has been studied.)
As for Finland’s performance:
-unemployment is well below the EU average.
-the real income in Finland is higher than in Germany according to the EUROSTAT and the OECD (the only link you gave was pretty meaningless because it compared what is paid in cash directly to the employee)
Yeah, it’s fair to point out that there are certain historical reasons why Germany has fallen below Finland. Then again in the same vein, I’m sure that you agree that Finland’s history has to be taken into account as well. How much was it that the GDP dropped after the collapse of the Soviet Union. 20%?
By the way, I brought Germany up just because Kristian sees it as a some kind of a model for Finland, it seems. I find it somewhat strange; Finland has, after all, lately outperformed Germany in almost every respect.
Comment by tomia — Thu, Oct 5th, 2006 @ 3:11 pm
And I’m afraid that I have to agree with Kristian and Dario all over the discussion: they really bring facts.
Unfortunately they just happen to be incorrect or not relevant
There just happen to be more firms in Finland than in most OECD countries, for example. What can I do? Call it a lie?
, you just talk “emotionallyâ€Â
Well, then I’m doing this the wrong way, it seems. I could have pointed to the appropriate statistics in every case … but why bother? I’m not going to change anybody’s mind. People like you just “know” how things are, no need to study anything - the same way you chose to skip what I really wrote about the women in the labor market. Why read something that you “know” is false in advance.
Comment by tomia — Thu, Oct 5th, 2006 @ 3:33 pm
Tomia, “Where is all this? It’s in the news and special reports in HS, for example.”. If you have any link, please send it to me, even if it is in Finnish.
“-unemployment is well below the EU average.”
Well below??? False. Finland 8.4%, EU-15 7.9%. Here is the link to EUROSTAT: http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_EMPLOI&root=STRIND_EMPLOI/emploi/em071
“-the real income in Finland is higher than in Germany according to the EUROSTAT and the OECD (the only link you gave was pretty meaningless because it compared what is paid in cash directly to the employee)”
You talk about “real income”? You mean the one who takes into account the purchasing power? Well, in Germany there is more competition, so prices are lower.Source: EUROSTAT, http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=Yearlies_new_economy&root=Yearlies_new_economy/B/B2/B21/er011
The link I gave you is about gross salaries and I believe is pretty important… Much more than the GDP per capita, as that include also the contribution of companies, it is not the average salary of ordinary people.
Please, paste the links to the OECD statistics you have.
Comment by Dario — Thu, Oct 5th, 2006 @ 3:52 pm
“I could have pointed to the appropriate statistics in every case … but why bother? I’m not going to change anybody’s mind. People like you just “know†how things are, no need to study anything - ”
I could write the same statement against you!
And the statistics I am giving you are official and important. It is you that choose to ignore them as they show my point.
“the same way you chose to skip what I really wrote about the women in the labor market. Why read something that you “know†is false in advance.”
I did not raise the issue about women.
Comment by Dario — Thu, Oct 5th, 2006 @ 4:00 pm
The discussion seems to be degenrated into tomia who says Finland is the best place in the world and Dario and others who say that Finland is the worst place.
This is not the point. Finland is a great place where to live, I am sure nobody will deny it, but it is normal that in some aspects other nations are better than Finland (and Finland is better than many other nations in others).
My wish is that finnish people do not enjoy and relax on the good conditions of economy right now and always push for better. It is blind to say that Finland is best everywhere, because this is not true, as it could not be for any nation: no place exists, which is the best in everything.
Let’s just work hard to improve even more looking from where is better than here: for example, how could we get in Finland salaries as high as in Germany and prices as low as in Germany?
Comment by Simo — Thu, Oct 5th, 2006 @ 4:16 pm
Simo, you got the point and it is exactly what I wanted to say in my comment #60. I love Finland and I live here, but it seems that I as a foreigner notice things that Finns do not see or prefer not to see.
Comment by Dario — Thu, Oct 5th, 2006 @ 4:30 pm
I would like a bit of humbleness and self-criticism in identifying the problems of Finland and talking about them. I do not see any of this.
Exactly. That’s also my point in all of this.
We get fed all these ‘positive’ reports, from various politically-motivated organizations around the world, about how well our country is doing, so our tendency is to believe them and even extrapolate by assuming we are great in every respect. That’s arrogance. And it doesn’t lead to anything positive.
When a farmer in the outskirts of Kuopio needs to send a ’scout’ to Germany for the purpose of buying a used Passat for 10K, and then he pays another 10K at the Finnish border—and it’s still cheaper than if he’d have bought it from a local car dealer—then that’s a problem!
The former East German—who is supposed to be ‘poor’—owns two nice cars for the price a ‘wealthy’ Finn pays for one mediocre car. I can make the same comparison regarding homes.
Again, my point isn’t to denigrate Finland. If we truly are competitive, globally, that’s fine. But, let’s keep ourselves in perspective.
Comment by Kristian (in Espoo) — Thu, Oct 5th, 2006 @ 4:38 pm
The discussion seems to be degenrated into tomia who says Finland is the best place in the world
Where on earth have I said anything like that? This is ridiculous. I just tried to point out that people don’t know what they are talking about, the same kind of mistakes constatnly appear when these things are discussed. Perhaps they rely on out-dated data (unemployment) or a gut feeling (Finland can’t have more firms than most OECD countries) or a misunderstanding of what PPP corrected GDP figures mean or whatever.
I’m very familiar with the criticism regarding the WEF study. It has been pretty poor at predicting future performance. I agree. Although I know that they have been working hard for years to make it better. Nobody knows how well it, as it is today, will pass this only test that really matters. The WEF and Harvard would be stupid not to try and make it pass the test. Read what Sachs, for example, has to write and what he has done and then we perhaps can have a decent discussion on political motivations or the methods.
it is normal that in some aspects other nations are better than Finland (and Finland is better than many other nations in others).
No shit, I’m impressed, how did you figure that out? Just kidding. Of course Finland is bla bla and other countries bla bla. How on earth could it be otherwise?
This truly is ridiculous.
Comment by tomia — Fri, Oct 6th, 2006 @ 12:02 am
@70
Now you should lower your tones. You offend people with your tone of I’m God I know everything you’re a zero and/or ridicolous. We can have a decent discussion perhaps after you learn a bit of education and you answer to what other people say.
Nobody contested the data on number of firms of Finland, compared to other OECD countries, and the statistics on unemployment are fresh, so not outdated.
We all are still waiting on an explanation why in Germany there are salary in the averagy 30% higher than Finland, lower prices of end user goods like food (not mention VAT on food 8% or something against 22%) and why in Finland the car are the oldest, in the averaege, of the other european union countries (read on a finnish newspaper once).
Comment by SImo — Fri, Oct 6th, 2006 @ 4:40 pm
Tomia,
1) “Perhaps they rely on out-dated data (unemployment)”
I think you are not able to read tables. I paste again the EUROSTAT link on unemployment.
Finland 8.4%, EU-15 7.9%. Year: 2005 (of course data for 2006 are not yet available). Here is the link to EUROSTAT: http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_EMPLOI&root=STRIND_EMPLOI/emploi/em071
2) “or a gut feeling (Finland can’t have more firms than most OECD countries)”
If you have this data, please paste the link. I do not have them. Before, I said that Finland has much less entrepreuners than other eurpoean countries. Here is the SOURCE: http://stats.oecd.org/WBOS/default.aspx?DatasetCode=CSP5
Select Finland and Italy for example.
Finland Self-employment rate:12.9%
Italy Self-emplyment rate: 27.5%.
Year:2003, the most recent available on this subject.
If you have other data, paste them.
3) “a misunderstanding of what PPP corrected GDP figures mean or whatever.”
I know perfectly what the corrected GDP figures are. It is YOU that were not specific in your previous statement, where you were talking about “real income”. I asked you what you meant by “real”, corrected according to purchasing power and so on. If you have that statistics, please paste the link.
I gave you the EUROSTAT link on gross salaries for industry, which is EXTREMELY important. Here the link again, you can compare the data for Germany (40954) and Finland (31988), around 30% less:
http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=Yearlies_new_population&root=Yearlies_new_population/C/C4/C43/dbb12560
You said about it:
“the only link you gave was pretty meaningless because it compared what is paid in cash directly to the employee)”
Why meaningless? because it is in cash (how else it should be, in alcohol)? Because it goes against what you said?
I am the only one providing hard facts and links here. I CHALLENGE YOU to answer to all these 3 points.
Comment by Dario — Fri, Oct 6th, 2006 @ 5:39 pm
Kindly send me all the necessary informations and documents so that i can come and attend youth conference in FINLAND,,
Comment by ONIFADE OLALEKAN DAVID — Mon, Nov 6th, 2006 @ 8:15 pm