engleski

FINNISH MODEL OF ECONOMIC DEVELOPMENT SINCE 1990S – LESSONS AND CHALLENGES

Ever since the start of the industrialization period in the mid nineteenth century, Finland's economy was characterized by relatively unfavorable geostrategic location of the country, harsh climate, limitation of natural resources (except in the wood industry), the size of domestic market and significant restrictive influence of the state on economic flows, with a pronounced control of capital flows in international relations. In the early1990s Finland's economy was overtaken by the strongest crisis since the period of the Second World War. It was partly caused by a downward growth trend of the world economy, accompanied by a loss of significant portion of Finland's export market in the former USSR and the crisis in the wood processing industry, and partly by the internal problems related to the financial sector and inflexible industrial relations which resulted with high interest rates and the inflation of expenses. By having a thoughtful and active approach to problem solving of basic developmental problems the creators of economic policy in Finland have succeeded in the past twenty years, by implementing structural reforms in the industry and by deregulation of financial sector and international trade, as well as implementing various measures to facilitate fiscal consolidation, in order to avoid even deeper structural crisis. They also managed to create conditions for achieving stable and high rates of economic growth, decrease unemployment, increase exports mainly due to the increased international competitiveness of export-oriented Finland's economy based on high technology which is mostly a product of domestic knowledge and export of goods with a high portion of added value, and in this way ultimately increase budget surplus and wellbeing of the population, which makes Finland one of the most desirable models for all countries in transition that are still trying to find their way to achieve economic growth and development. In this article those basic ingredients of the success of Finnish model are more closely examined.

Finland; economic development; development strategy; transition

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