Finland has a highly industrialized, free-market economy with a per capita output equal to that of other western economies such as France, Germany, Sweden or the UK. The largest sector of the economy is services at 65.7 percent, followed by manufacturing and refining at 31.4 percent. Primary production is at 2.9 percent. With respect to foreign trade, the key economic sector is manufacturing. The largest industries are electronics (21.6 percent), machinery, vehicles and other engineered metal products (21.1 percent), forest industry (13.1 percent), and chemicals (10.9 percent). Finland has timber and several mineral and freshwater resources. Forestry, paper factories, and the agricultural sector (on which taxpayers spend around 2 billion euro annually) are politically sensitive to rural residents. The Greater Helsinki area generates around a third of GDP. In a 2004 OECD comparison, high-technology manufacturing in Finland ranked second largest after Ireland. Knowledge-intensive services have also ranked the smallest and slow-growth sectors – especially agriculture and low-technology manufacturing – second largest after Ireland. Investment was below expected. Overall short-term outlook was good and GDP growth has been above many EU peers. Inflation has been low, averaging 1.8 percent between 2004 and 2006.
Finland is highly integrated in the global economy, and international trade is a third of GDP. The European Union makes 60 percent of the total trade. The largest trade flows are with Germany, Russia, Sweden, United Kingdom, USA, Netherlands and China. Trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters, except for agriculture. Finland is the only Nordic country to have joined the Eurozone.
Notable companies in Finland include Nokia, the market leader in mobile telephony; Stora Enso, the largest paper manufacturer in the world; Neste Oil, an oil refining and marketing company; UPM-Kymmene, the third largest paper manufacturer in the world; Aker Finnyards, the manufacturer of the world's largest cruise ships (such as Royal Caribbean's Freedom of the Seas); Instrumentarium Imaging, the creator of the Orthopantomograph (Pan X-Ray machine) and world innovative leader of dental imaging systems and software; KONE, a manufacturer of elevators and escalators; Wärtsilä, a producer of power plants and ship engines; and Finnair, the largest Helsinki-Vantaa based international airline. Finland has sophisticated financial markets comparable to UK in efficiency. Though foreign investment is not high, the largest foreign-headquartered companies included names such as ABB, Tellabs, Carlsberg, and Siemens.
Companies that have their headquarters in Finland are quite international, and a few of the largest tend to dominate the economic statistics. Around 70-80% of the equity quoted on the Helsinki Stock Exchange is owned by foreign-registered entities. The larger companies get most of their revenue from abroad, and the majority of their employees work outside the country. Cross-shareholding and other uncompetitive practices have been abolished and there is a trend towards an Anglo-Saxon style of corporate governance. However, only around 15% of residents had invested in stock market, compared to 20% in France, and 50% in the US. As elsewhere in Western Europe, the environment is less favorable to small companies and small shareholders than in the US and UK. Hence ownership is quite concentrated.
Large Finnish companies tend to be older than in the US. Between 2000-2003, early stage venture capital investments relative to GDP were 8.5 percent against 4 percent in the EU and 11.5 in the US. Later stage investments fell to the EU median. Invest in Finland and other programs attempt to attract investment. In 2000 FDI from Finland to overseas was 20 billion euro and from overseas to Finland 7 billion euro. Acquisitions and mergers have internationalized business in Finland.
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Economy Of Finland