The Finnish economy grew rapidly in the decade preceding the 2008 financial crisis, but following the sharp economic contraction that ensued, Finland’s economic growth has remained modest. At the same time, labor productivity growth has also been weak compared to most relevant peer countries. Various explanations have been proposed for this poor performance.
The objective of this research project is to generate empirical evidence on the causes of Finland’s slow economic and productivity growth, and to provide policy recommendations that foster more positive economic development in the future. The project is divided into a macroeconomic component and a firm-level analysis. The former analyzes the components of Finland’s 21st-century economic growth and the lack thereof utilizing existing literature and structural autoregressive (SVAR) models.
In the firm-level analysis, the project evaluates the extent to which the slow growth of Finnish firms is driven by firm-behavioral factors, while controlling for key structural elements such as industry, firm size, and age. The project also compares the growth, investments, and profit distribution of Finnish firms to those operating in other countries, accounting for industry differences and other relevant factors.
Etla is conducting the project in cooperation with the Labour Institute for Economic Research LABORE, which is coordinating the project.
