Finland Times

 

File picture of Professor Sixten Korkman. Photo Str - Lehtikuva.

An expert assessment of three professors has revealed that Finland has not recovered from the industrial collapse that began in 2008 and led to the loss of a significant part of the country’s economic base.

 

The professors’ assessment of the nature of Finland’s economic crisis and the prerequisites for growth, presented to the Economic Council, also stated that the structural crisis in the industries sector was widely reflected in Finland’s economy and its prospects, according to a government press release on Tuesday.

 

Professors Bengt Holmström from MIT, and Sixten Korkman and Matti Pohjola from the Aalto University wrote the memorandum on Finland’s economic crisis. 

 

According to the professors, the present crisis was very different from the recession of the 1990s. It, in some respects, was even more difficult because productivity had stopped growing and there was a shortage of ideas to improve the situation – the “recipe” for growth has been lost. Achieving new growth would require time and exceptional efforts.

 

The assessment can be summed up as follows: the success of the Nokia-led ICT cluster maintained favourable, even deceptively favourable, economic growth in Finland for a long time. The budget surpluses were large and unemployment was on a downward path.

 

As is now apparent, these conditions created a setting in which wages rose and public spending grew faster than was desirable in terms of sustainable development.

 

With the collapse of the electronics industry, exports and output declined sharply. At the same time contraction in the paper industry continued and metals processing suffered low market prices. All these were reflected in a deterioration of industrial profitability.