Finnish productivity growth
by Gabriel Stein
Mon 17 Feb 2014
What the chart shows: The chart shows average four-quarter productivity growth for the periods 1991-2013 and 2007-2013 for the four large Nordic economies.
Why the chart is important: In early February, OMFIF visited the Bank of Finland for an Economists Meeting. During the full day of meetings at the bank, as well as with the Ministry of Finance and the State Treasury, one key factor of concern emerged from our hosts. This was the weakness of Finnish productivity growth, particularly relative to the other Nordic countries. At first glance, this is not immediately apparent. Since 1991, Finnish productivity growth has averaged a four-quarter rate of 1.7%. While lower than Sweden’s 2.3%, it is still higher than the 1.4% registered by both Denmark and Norway. But, since the Great Recession, Finnish productivity growth has been the weakest of the large Nordics, at -0.6%, compared with -0.5% in Norway and +0.4% in both Denmark and Sweden. According to our Finnish hosts, much of the healthy 1990s and early 2000s productivity growth was due almost exclusively to the performance of Nokia – a company which has now been bought by Microsoft. Moreover, Finland, by its relative hostility to immigrants, is depriving itself of a potential growth-boosting impulse. Productivity growth is not easy to achieve – but Finland, at least in the minds of its own people, clearly need to raise it.
Chart and comments provided by Oxford Economics www.oxfordeconomics.com