The world economy is undergoing significant changes, characterized by increasing trade barriers and regional bloc formations. International trade and investments are increasingly perceived as phenomena creating dependencies in the new environment. These dependencies and efforts to mitigate them are also connected to the transition from fossil fuels to renewable energy sources. While this transition reduces dependency on fossil fuel-producing countries, it increases dependencies on critical raw materials for wind turbines and solar panels.
About a quarter of Finland’s intermediate imports can be considered vulnerable. Most of these imports come from the countries of the Western Bloc. Despite the share of the Eastern Bloc has declined, it is still significant (approximately 20%).
In recent decades, economic policy in Finland has largely focused on addressing market failures. Geopolitical tensions and geoeconomic actions by other countries have introduced a new dimension to the fundamental principles of economic policy. Geoeconomic risks now also justify economic policy interventions.
The changing environment is marked by the resurgence of industrial policy. Unlike horizontal economic policy, industrial policy involves the public sector making choices about which sectors, companies, and technologies to support. Given the inherent risks associated with these choices, industrial policy measures must be carefully evaluated. Particular attention should be paid to identifying market failures or problems, and ensuring that the measures address these issues. Additionally, it should be remembered that even the most promising sectors contain risks, and the scale of these risks can be too large for a small country.
Publications of the Government’s analysis, assessment and research activities 2025:4.
