Finland drops down new list of most competitive nations

Latest IMD survey sees Finland fall five places

print this

Finland had to be content with 8th place in the latest World Competitiveness Yearbook, an eagerly watched barometer produced by the Lausanne-based Institute for Management Development (IMD). Finland had previously done well in the IMD's eyes, and was placed 3rd overall in 2003. High wages and a high tax burden were among the reasons offered for the slippage.
      In 2003 Finland had collected top marks in a number of categories, and was top of the table in economies with a population of less than 20 million. It is not all that easy to draw direct comparisons between the 2003 and 2004 Yearbooks, as some of the parameters have been altered, but after adjustments, Finland could be seen to drop five places.
      The United States remained in top spot, and Singapore leap-frogged over both Finland and Luxemburg to take 2nd place. Canada was 3rd and Australia 4th. Luxemburg was another big faller, sliding from 2nd to 9th in the table. The United Kingdom also slipped slightly, from 19th to 22nd.
     
The IMD is assisted in Finland by the Research Institute of the Finnish Economy or ETLA. Petri Rouvinen, ETLA' s Research Director, points to a number of technical reasons why Finland slid down the table. One of them is the strengthening of the euro, but there are signals that something else concrete has taken place, and that countries like Australia, Singapore and Hong Kong have simply gone past us.
      The IMD processes a large number of parameters, including "hard" statistics on the national economy. The Institute studied 60 economies using 323 criteria to measure competitiveness, ranging from economic performance to business efficiency and infrastructure. Some 40% of the point-values come from the opinions of corporate leaders: how they see their own country's competitiveness.
      In this respect, Finland got high marks for education, the relative lack of corruption, management reliability, and the quality of the banking services. Where we fall down, apparently, is in high wage-levels and high taxation.
     
However, Rouvinen points out the basic conflict and contradictions of such studies in this area, observing that praise is given for the benefits brought by high taxation, but that the same high taxation is also used as a stick to beat countries with. He notes that similar anomalies exist in other areas of the data. For example, a current account surplus is a bonus, but almost certainly there will be counterweights that pull this advantage back in other areas.
      Quite the most significant change in Finnish executives' views on Finland was in their belief in the country as an attractive place for international firms to invest. The country slumped down towards the bottom of the pile, after placing in the top 10 last year.
      The change in attitude has been linked to the so-called "China syndrome" mentioned repeatedly over the past 12 months, as companies look to move production and other branches to cheaper regions.
      There will be some, Rouvinen included, who are not so disappointed at Finland's slippage off the podium. Complacency is a very dangerous state of mind, he points out.


Links:
  IMD World Competitiveness Yearbook 2004

Helsingin Sanomat