Helsinki Business Hub

Finland benefits from its position between East and West

Finland is uniquely placed as a Western country with long historical ties to the East. It is well suited to profit from the situation to its fullest.

Finland has a long history of being influenced from the west and the east. In prehistoric times tribes from both directions migrated to Finland. The Estonian neighbours to the south even speak a language related to Finnish. In more recent times Finland was politically joined to Sweden and then Russia. Now Finland is able to benefit from its historical ties with both markets.

Finland is firmly planted in the European Union. It is the only country in northern Europe to use the euro, the majority of its trade occurs with western nations and most of its foreign direct investment comes from them.

However, it has managed to exploit its historical ties with Russia as well. Finland remains a major transit point for goods passing from the east to the west. Likewise, it is attempting to be the bridge for the west to deal with Russia and Asia. One of the best examples of this is Finnair's strategy to be the main long haul carrier between western Europe and the far East. Finnair now has a greater market share in Japan than British Airways.

Situated between two different markets, Finland has managed to focus outwards and build a diverse economy. Forestry companies take advantage from Russias forests. Technology companies sell to the developed West. Maritime firms exploit Finland's position on the Baltic.

This outward focus is necessary to succeed in today's world because of the small domestic market. Luckily Finns have managed to grow their economy outward. The Baltic nations are playing an even greater role. Estonia is only a quick boat ride away, and a great deal of trade and investment occurs between Finland and the other Baltics.

Finland ranks high in economic freedom

Finland has been ranked with the 16th highest level of economic freedom in the world, according to a recent study. The study was published by the Fraser Institute, a libertarian think tank based in Canada. Economic Freedom of the World measures forty-two statistics in five broad categories: size of government, legal structure, access to sound money, freedom to trade and regulations. As it takes a great deal of time for data to be collected and interpreted, this years study concerns the year 2007.^(*

Perfect scores were awarded Finland in several categories. The areas of government enterprises and investments, military interference, integrity of the legal system, freedom to own foreign currency, black market exchange rates, bank ownership and interest rate controls were all given a perfect 10 out of 10 by the institute.

Remarkable improvements have been made by Finland in entrepreneurship. In the business regulation category, the sub-sections of starting a business, bribery, licensing restrictions and the cost of tax compliance all received almost perfect scores. The costs of bureaucracy remains the worst area of business regulations.

Since 1980, Finland has shown slow but significant improvement in economic freedom according to the study. The most impressive improvements have come in legal structures and regulations.

Finland has reorganised itself in order to better fit into the European Union and to compete across the world in this era of globalisation. Although it has been a long process, it is certain that the fruits of this labour are now being enjoyed