According to recent research, Finland’s economic growth rates are among the lowest in the world. Finland ranked 151st in terms of growth rates in 2020. Over the period from 2008 to 2019, only seven of the world’s 141 countries grew slower than Finland. How does this situation affect Finnish businesses and their innovation?
From this article you will learn:
- What the current situation of the Finnish economy is
- How Finland can ensure its development
- How the situation affects Finnish businesses and what they can do to secure their innovation and growth
What is the current situation of Finnish innovation?
Johnny Åkerholm, a renowned Finnish economist, has recently gained traction in the public eye when he shared his findings about the state of Finland’s economic growth. In the article published on Vasabladet.fi, Åkerholm stated that the current investments give little hope that Finland will catch up with other countries when it comes to economic development. The question is, what has caused such a phenomenon in the first place?
Not so long ago, the Finnish Ministry of Finance has issued a report which has questioned the country’s ability to remain a welfare state. Despite the skew that was caused by such an indication, the Ministry’s concern about the country’s ability to generate the resources required by the Nordic welfare state is highly justified. Now, the ongoing question is how to ensure that the negative development is broken.
“You have to de facto search with lights and lanterns to find countries that had a worse development during the period 2008-2019.”, wrote Åkerholm.
He continued: “In the EU, only the economies of Greece and Italy have had lower growth. Globally, the situation is no better: Finland ranks 134th in a group of 141 countries. The lag is 10-17 percent in comparison with the other Nordic countries.”.
What is required for Finland to close this growth gap? In the article, Åkerholm mentioned two possible scenarios.
How can Finland ensure its development?
Proposed solutions include improving employment rate and speeding up the development of labor productivity. Nevertheless, those approaches appear to be challenges as well.
Better productivity requires investments to streamline processes and a transfer of resources to areas with a higher degree of refinement. However, the investments of Finnish companies amount only to 12 percent of the GDP. In comparison, the numbers in Sweden add up to almost 20 percent of the Swedish GDP.
According to Åkerholm, Finland has to invest in the knowledge-based areas. The growth difference in relation to Sweden is largely due to the fact that the Swedes have been much more successful in the mentioned areas. As a result, investments in research and education are required. Moreover, the educated must stay and make their investments in Finland.
How does the situation affect Finnish businesses? What can they do to secure their innovation and growth?
Investment is the key to success of the Finnish organizations. However, determining the correct digitalization investments continues to be a challenging task.
We have been digitalizing Finnish businesses for over 12 years. Thanks to that experience, we gained the necessary insights that we use in order to help companies make the right digitalization investments. As a result, our special consulting offering, Business Value Assessment, came to life.
Business Value Assessment examines the most valuable investments for the businesses. It can focus on increasing revenue, reducing costs, increasing efficiency of the organizations or making the customers more satisfied with the offerings. The right investment is not always the most obvious one. The best way to determine where to invest is to utilise a third party business value assessment process.