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Commentary by Erkki
Hellsten, Director, the Confederation of Finnish Industry
and Employers:
Finnish competitiveness
The unrelenting march of globalization during recent decades
has been one reason for the increase and wide range of national
and international comparisons of competitiveness. In some
comparisons hard, measurable facts are given more emphasis,
while in others qualitative factors based on images form the
most important basis for comparison.
Finland's ranking in international comparisons has improved
considerably since the recession in the early 90s. Contributing
to this have been good luck and good policy. The main factors
that contributed to Finland's rise were the following: 1)
devaluations that eliminated the overvaluation of the Finnish
mark 2) budget cuts in the public sector 3) a radical overhaul
of the corporate tax system 4) a strong growth in investment
in research and development 5) successful corporate-strategy
choices 6) the economic upturn that began in the early 90s
in western countries. All these factors together created a
positive competitiveness environment that Finland exploited
to good effect.
When Finland was at the trough of the recession in 1993,
IMD, the well-known international institute that measures
competitiveness, ranked Finland in 25th position among the
countries of the world. Finland rose slowly from this position,
but then it jumped quickly into the leading group of countries.
In 2002 only the United States, which is looked on as being
the world's most competitive country, was ahead of Finland.
IMD felt that Finland's particular strengths were the economic
policy, companies' innovative thinking and the good resource-base
for corporate activity.
Another well-known international organization that measures
competitiveness, the World Economic Forum, has been carrying
measurements of competitiveness since the middle of the 90s.
In this survey, too, Finland's comparatively modest position
at the outset then jumped to number one in 2000, when the
competitiveness potential was examined over the medium/long
term. Finland kept this position in 2001. Last year WEF's
index that measures present competitiveness lifted Finland
into first position.
Finland's excellent placing in international competitiveness
comparisons gives a picture of Finland's competitiveness that
points in the right direction but is somewhat exaggerated.
This is because soft qualitative indicators have been given
extremely strong emphasis in the surveys. If Finland's competitive
position is looked at with hard indicators, such as the gross
domestic product/head, Finland would probably be in the 7
to 12 best countries.
One purpose of the various measurements of competitiveness
is to give weaker countries examples of how competitiveness
can be improved by taking a model from successful countries'
ways of maintaining and improving their competitiveness. It
is not a question of a zero-sum game in which some win and
others lose. The significance of cooperation as something
that improves competitiveness was clearly brought out when
in 2000 the European Union set an extremely ambitious target
at Lisbon to become the world's most competitive region in
2010. Within the framework of its own resources Finland will
be closely involved in implementing this target.
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