OECD Economic Surveys: Finland 2012

Table of contents
Basic statistics of Finland (2010)
Executive Summary
Assessment and recommendations
	Finland is being hit by the renewed global economic slowdown
		Figure 1. Recent macroeconomic developments
		Box 1. A reinforced architecture for Economic and Monetary Union
		The economy is losing momentum and inflation is set to fall
			Figure 2. Unit labour costs and wages
			Figure 3. Inflation is pushed by energy price hikes
		The labour market is stagnating, which calls for more active labour market policies
			Table 1. Main economic indicators for Finland
			Figure 4. Labour market development
		The financial sector is solid, but should continue strengthening its liquidity position to enhance ability to absorb shocks
		The property market is stabilising
			Figure 5. Housing prices and residential investment
	Fiscal policy has been prudent but long-term fiscal challenges remain
		Figure 6. General government balance
		Long-term fiscal challenges should be addressed now
			Box 2. Long-term fiscal outlook
				Table 2. Summary of macroeconomic and fiscal projections
		A stronger fiscal framework would help achieving medium-term sustainability
			Box 3. Recommendations on labour market policies, labour supply and fiscal policy
	Restarting the growth engine is becoming urgent with the drastic drop in productivity
		Figure 7. Labour productivity and growth
		Reforms to higher education could improve quality and leverage public R&D spending
		Business support should be cut and focused on remaining externalities
			Figure 8. Firms having introduced either a product or a process innovation
		Supporting entrepreneurship, innovation and firm growth would enhance productivity
		Stronger competition would boost productivity in lagging service sectors
			Figure 9. Product market regulations and price levels
		Productivity in the inefficient retail sector can be raised by more competition and less regulation
			Figure 10. The retail sector
			Table 3. Staffing and funding of Nordic competition authorities, 2010
		Broader public sector reform can improve fiscal sustainability through efficiency and address equality
			Figure 11. Productivity and efficiency
			Box 4. Recommendations for productivity enhancing reforms
	Greater efficiency and equity in the health care system would lower fiscal costs and improve health outcomes
		The decentralised structure of the Finnish health care system contributes to inefficiencies
		Resources should be shifted from secondary to less costly primary care to enhance efficiency
			Figure 12. Doctor consultations and hospital discharges
		More user choice could increase efficiency and innovation
		Prioritising health promotion and non-institutional long-term care would improve health outcomes
			Box 5. Recommendations on health care policy
	Bibliography
	Annex A1. Progress in structural reform
Chapter 1. Restarting the growth engine
	Finland’s strong productivity performance started to weaken before the recession
		Figure 1.1. Labour productivity and GDP growth
		Box 1.1. The impact of the ICT sector and Nokia on the Finnish economy
			Figure 1.2. The information and communication technology (ICT) sector
			Table 1.1. Nokia’s Finnish operations in relation to the Finnish economy
		Productivity growth has been uneven
			Figure 1.3. Decomposition of labour productivity growth in selected OECD countries
			Figure 1.4. Labour productivity
			Box 1.2. Structural breaks in Finnish labour productivity
				Figure 1.5. Labour productivity based on Trend Output Indicator
				Figure 1.6. Relationship between productivity and GDP growth around recessions
			Figure 1.7. Service employment share and GDP per capita
	Rigidities hamper structural transformation and thus slow productivity growth
		Figure 1.8. Decomposing labour productivity growth
		Figure 1.9. Residual correlation coefficients between employment growth and the firm’s productivity level
		Extensive employment protection can impede functioning of labour markets with adverse effects on productivity
			Figure 1.10. Protection of permanent workers against dismissal
		Greater work-time flexibility and stronger incentives for part-time work could improve employment outcomes and productivity
			Figure 1.11. Part time employment
	Further deregulation, opening of markets and more competition would benefit especially service sector productivity
		Figure 1.12. Product market regulation and prices
		Box 1.3. Institutions and labour productivity in the OECD area
			Table 1.2. Policy variables
			Table 1.3. Baseline regression
			Table 1.4. Impact of policy variables
		More competition and deregulation in retailing would raise productivity
			Figure 1.13. The retail sector
			Table 1.5. Staffing and funding of Nordic competition authorities, 2010
			Box 1.4. Retail sector reforms in Nordic countries
			Figure 1.14. Size distribution of food retail stores
	Policies bearing on entrepreneurship, innovation, investment and R&D could be more efficient
		Conditions for start-ups are beneficial in Finland…
			Figure 1.15. Access to capital
		… but new entrants are often inefficient…
			Figure 1.16. Contributions to labour productivity growth in Finnish firms
			Figure 1.17. Productivity in Finnish firms
		… and start-ups tend to grow slowly
			Figure 1.18. Entry rates and productivity growth
		Government direct support has had little if any long-term impact on employment and productivity and should be reduced further
			Box 1.5. Government-funded finance companies and support schemes in Finland
				Figure 1.19. Innovation support organisations in Finland
		Tax policies should support high productivity and growth
		R&D policies should be modernised and redirected to more general support for innovation
			Figure 1.20. R&D and innovation
			Figure 1.21. Size distribution of university departments
			Box 1.6. Recommendations for productivity enhancing reforms
	Notes
	Bibliography
Chapter 2. Enhancing efficiency and reducing inequalities in health care
	Health reform ranks high in the Finnish policy agenda
		Box 2.1. Health is a key dimension of well-being
	The performance of the Finnish health care system has been mixed overall
		Life expectancy is above average with women in better health than men
			Figure 2.1. Life expectancy and infant mortality
			Figure 2.2. Amenable mortality by gender and cause
		Health inequalities across socio-economic groups and regions are large
			Figure 2.3. Inequality in access to physicians
	The highly decentralised health care system with multiple tracks and parallel financing contributes to inequality and inefficiency
		Figure 2.4. Breakdown of health expenditure
		Box 2.2. The Finnish health care system in OECD perspective
			Figure 2.5. Typology of OECD health care systems
			Figure 2.6. Policy and institutions
		The delivery of primary care through three channels contributes to inequalities
			Box 2.3. Pros and cons of decentralisation in health care
			Table 2.1. Main features of the parallel provision of health care
		Rising spending pressures call for efforts at improving input use and efficiency
			Figure 2.7. Total expenditure on health care
			Figure 2.8. Trends in health care spending
			Figure 2.9. Health workforce and remunerations
			Figure 2.10. Productivity and efficiency
	Policies to improve efficiency and equality while ensuring long-term sustainability
		Reform of municipalities and services has large potential for both efficiency and equity gains
			Box 2.4. An overview of Finnish health care reform proposals
		Achieving greater economies of scale in health care provision over time is key for efficiency
			Box 2.5. Health care reforms in Norway and Denmark
		Better balance between primary and specialised care would help both equity and efficiency
			Figure 2.11. Doctor consultations and hospital discharges
		User choice and innovation can be increased through the use of more market-type mechanisms
		Developing better information flows would enhance efficiency
		Investing more in prevention and promoting healthy lifestyles can have high pay-offs
			Figure 2.12. Non-medical determinants of health
		Organising efficient long-term care for an ageing population is important for wellbeing and sustainability
			Figure 2.13. Institutional care and housing services in social care for older people
		Measures towards ensuring the availability of an adequate health workforce are needed
			Box 2.6. Recommendations on health care policy
	Notes
	Bibliography
	Annex 2.A1. Some stylised facts about life satisfaction in Finland
		Table 2.A1.1. Comparisons between different indicators of life satisfaction of countries
		Table 2.A1.2. Life satisfaction and others indicators in Finland and OECD, 1981-2008
		Table 2.A1.3. Weighted least square regressions of life satisfaction on different components, controlling for individual-year fixed effects, robust standard errors