Finland/Economy

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Finland has a highly industrialized, largely free-market economy, based on abundant forest resources, capital investments, and technology. Traditionally, Finland has been a net importer of capital to finance industrial growth. In the 1980s, Finland's economic growth rate was one of the highest of industrialized countries, with per capita output roughly that of the United Kingdom, France, Germany, and Italy.

Finland's key economic sector is manufacturing - principally the wood, metals, engineering, telecommunications, and electronics industries. Trade is important, with exports equaling more than one-third of GDP. Except for timber and several minerals, Finland depends on imports of raw materials, energy, and some components for manufactured goods. Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic products. Forestry, an important export earner, provides a secondary occupation for the rural population.

In 1991, Finland fell into a deep recession caused by economic overheating, depressed foreign markets, and the dismantling of the barter system between Finland and the former Soviet Union. The same year, Finland devalued the markka to promote export competitiveness. This helped stabilize the economy; the recession bottomed out in 1993, with continued growth through 1995. Unemployment continues to be a problem for Finland, and in late 1996 it was around 19%.

Exports of goods contribute more than 20% of Finland's GDP; combined exports of goods and services amount to at least 25% of GDP. Exports and imports of goods equal about 40% of GDP. Timber and metalworking are Finland's main industries, but other industries produce manufactured goods ranging from electronics to motor vehicles. Finnish-designed consumer products such as textiles, porcelain, and glassware are world-famous.

Except for timber and several minerals, Finland depends on imported raw materials, energy, and some components for its manufactured products. Farms tend to be small, but sizable timber stands are harvested for supplementary income in winter. The country's main agricultural products are dairy, meat, and grains. Finland's EU accession has accelerated the process of restructuring and downsizing of this sector.

An extensive social welfare system, constituting about one-fifth of the national income, includes a variety of pension and assistance programs and a comprehensive health insurance program. Although free education through the university level also is available, only about one child in four receives a higher education in the highly competitive system. In the mid-1970s, the educational system was reformed with the goal of equalizing educational opportunities. Beginning at age seven, all Finnish children are required to attend a "basic school" of nine grade levels. After this, they may elect to continue along an academic (lukio) or vocational (ammat-tikoulu) line. But most pursue vocational studies, since the number of openings in higher educational institutions is less than the demand.

Finland generally welcomes foreign investment. Areas of particular interest for investors are specialized high-tech companies and investments that take advantage of Finland's position as a gateway to Russia and the Baltic countries.

Finland is experiencing rapidly increasing integration with Western Europe: Finland was one of the 11 countries joining the euro monetary system (EMU) on 1 January 1999.

GDP: purchasing power parity - $108.6 billion (1999 est.)

GDP - real growth rate: 3.5% (1999 est.)

GDP - per capita: purchasing power parity - $21,000 (1999 est.)

GDP - composition by sector:
agriculture: 5%
industry: 32%
services: 63% (1997)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 4.2%
highest 10%: 21.6% (1991)

Inflation rate (consumer prices): 1% (1999 est.)

Labor force: 2.533 million

Labor force - by occupation: public services 32%, industry 22%, commerce 14%, finance, insurance, and business services 10%, agriculture and forestry 8%, transport and communications 8%, construction 6%

Unemployment rate: 10% (1999 est.)

Budget:
revenues: $41 billion
expenditures: $41 billion, including capital expenditures of $NA (1997 est.)

Industries: metal products, shipbuilding, pulp and paper, copper refining, foodstuffs, chemicals, textiles, clothing

Industrial production growth rate: 4.8% (1999)

Electricity - production: 75.299 billion kWh (1998)

Electricity - production by source:
fossil fuel: 41.62%
hydro: 19.59%
nuclear: 27.59%
other: 11.2% (1998)

Electricity - consumption: 79.278 billion kWh (1998)

Electricity - exports: 300 million kWh (1998)

Electricity - imports: 9.55 billion kWh (1998)

Agriculture - products: cereals, sugar beets, potatoes; dairy cattle; fish

Exports: $43 billion (f.o.b., 1998)

Exports - commodities: machinery and equipment, chemicals, metals; timber, paper, and pulp

Exports - partners: EU 56% (Germany 12%, UK 9%, Sweden 9%, France 5%), US 7%, Russia 6%, Japan (1998)

Imports: $30.7 billion (f.o.b., 1998)

Imports - commodities: foodstuffs, petroleum and petroleum products, chemicals, transport equipment, iron and steel, machinery, textile yarn and fabrics, fodder grains

Imports - partners: EU 60% (Germany 15%, Sweden 12%, UK 7%), US 8%, Russia 7%, Japan 6% (1998)

Debt - external: $30 billion (December 1993)

Economic aid - donor: ODA, $379 million (1997)

Currency: 1 markka (FMk) or Finmark = 100 pennia

Exchange rates: euros per US$1 - 0.9867 (January 2000), 0.9386 (1999); markkaa (FMk) per US$1 - 5.3441 (1998), 5.1914 (1997), 4.5936 (1996), 4.3667 (1995)
note: on 1 January 1999, the EU introduced a common currency that is now being used by financial institutions in some member countries at a fixed rate of 5.94573 markkaa per euro; the euro will replace the local currency in consenting countries for all transactions in 2002

Fiscal year: calendar year