Editing Economy of Finland (section)

== History ==
Being geographically distant from Western and Central Europe in relation to other Nordic countries, Finland struggled behind in terms of industrialization apart from the production of paper, which partially replaced the export of timber solely as a raw material towards the end of the nineteenth century. But as a relatively poor country, it was vulnerable to shocks to the economy such as the [[Finnish famine of 1866–1868|great famine of 1867–1868]], which killed around 15% of the country's population.<ref>{{cite book|author=Baten, Jörg |title=A History of the Global Economy. From 1500 to the Present.|date=2016|publisher=Cambridge University Press|page=23|isbn=978-1-107-50718-0}}</ref> Until the 1930s, the Finnish economy was predominantly agrarian and, as late as the 1950s, more than half the population and 40% of output were still in the primary sector.{{citation needed|date=March 2025}}

===After World War II===
While nationalization committees were set up in France and the United Kingdom, Finland avoided nationalizations. Finnish industry recovered quickly after the Second World War.  By the end of 1946, industrial output had surpassed pre-war numbers.<ref name=":0">{{Cite web|url=https://www.stat.fi/tup/suomi90/toukokuu_en.html|title=Statistics Finland - The growing years of Finland's industrial production|website=www.stat.fi|language=en|access-date=2020-03-09}}</ref> In the immediate post-war period of 1946 to 1951, Finnish industry continued to grow rapidly.<ref name=":0" /> Many factors contributed to the rapid industrial growth. War reparations were largely paid in manufactured products. The devaluation of currency in 1945 and 1949, which made the US dollar rise by 70% against the Finnish markka, and thus boosted exports to the West. This helped with rebuilding the country and increased demand for Finnish industrial products.<ref name=":0" /> In 1951, the [[Korean War]] boosted Finnish exports.<ref name=":0" /> Finland practiced an active exchange rate policy. Devaluation was used several times to raise the competitiveness of the Finnish exporting industries.<ref name=":0" />

Between 1950 and 1975, Finland's industry was at the mercy of international economic trends.<ref name=":0" /> The fast industrial growth in 1953-1955 was followed by a period of more moderate growth, starting in 1956.<ref name=":0" /> The causes for the deceleration of growth were the general strike of 1956, as well as weakened export trends and easing of the strict regulation of Finland's foreign trade in 1957. These events compelled Finnish industry to compete against ever toughening international challengers.<ref name=":0" /> An economic recession brought industrial output down by 3.4% in 1958.<ref name=":0" /> Industry, however, recovered quickly during the international economic boom that followed the recession.<ref name=":0" /> One reason for this was the devaluation of the Finnish markka, which increased the value of the US dollar by 39% against the Finnish markka.<ref name=":0" />

The international economy was stable in the 1960s. This trend can be seen in Finland as well, where steady growth of industrial output could be seen throughout the decade.<ref name=":0" />

After failed experiments with protectionism,{{citation needed|date=April 2013}} Finland eased some restrictions and signed a free trade agreement with the [[European Community]] in 1973. This made Finnish markets more competitive.

Finland's industrial output declined in 1975.<ref name=":0" /> The decline was caused by the free trade agreement that was made between Finland and the European Community in 1973.<ref name=":0" /> The agreement subjected Finnish industry to ever toughening international competition. Finnish exports to the west decreased.<ref name=":0" /> In 1976 and 1977, the growth in industrial output was almost zero. In 1978, it swung back towards a strong growth.<ref name=":0" /> In 1978 and 1979, Finnish industrial output grew at an above average rate.<ref name=":0" /> The stimuli for this were three devaluations of Finnish markka, which lowered value of the markka by a total of 19%.<ref name=":0" /> Impacts from the global [[1979 oil crisis]] on Finnish industry were alleviated by Finland's bilateral trade with the Soviet Union.<ref name=":0" />

Local education markets expanded. An increasing number of Finns went to study abroad in the United States and in Western Europe. These students later returned to Finland, bringing back useful and advanced professional skills. {{Citation needed|date=February 2010}} There was quite a common pragmatic credit and investment cooperation between the state and Finnish corporations. It raised suspicion in the populace, due to support for capitalism and free trade from the populace.<ref name="equity">{{cite web|url=http://siteresources.worldbank.org/INTRANETSOCIALDEVELOPMENT/Resources/finland.pdf|title=Growth and equity in Finland |author1=Markus Jäntti|author2=Juho Saari|author3=Juhana Vartiainen|date=November 2005|website=Siteresources.worldbank.org|access-date=29 December 2017}}</ref> However, the Finnish communist party (Finnish People's Democratic League) received 23.2% of the votes in the 1958 parliamentary elections.<ref>{{Cite book|last=Nohlen|first=Dieter|title=Elections in Europe: A Data Handbook|year=2010|isbn=978-3-8329-5609-7|page=606|publisher=Nomos }}</ref> Savings rates in Finland hovered among the world's highest, at around 8%, all the way to the 1980s. In the beginning of the 1970s, Finland's GDP per capita reached the level of Japan and the UK. Finland's economic development was similar to some export-led Asian countries.<ref name="equity" /> The official [[Paasikivi–Kekkonen Line|policy of neutrality]] enabled Finland to trade both with Western and Comecon markets. Significant [[bilateral trade]] was conducted with the [[Soviet Union]], but this was not allowed to grow into a dependence.

=== Liberalization ===
Like other Nordic countries, Finland has liberalized its system of economic regulation since late 1980s. The financial and product market regulations were modified. Some state enterprises were privatized and some tax rates were altered.<ref>{{cite web |url=http://www.taloustieto.fi/lukiotext/4text606.html |title=Rahoitusmarkkinoiden liberalisointi |publisher=Taloustieto Oy |access-date=29 April 2013}}</ref>
In 1991, the Finnish economy fell into a severe [[Early 1990s depression in Finland|recession]]. This was caused by a combination of [[Overheating (economics)|economic overheating]] (largely due to a change in the banking laws in 1986 which made credit much more accessible), depressed markets with key trading partners (particularly the Swedish and Soviet markets), as well as in the local markets. Slow growth with other trading partners, and the disappearance of the Soviet [[bilateral trade]] had its effects. The stock market and the Finnish housing market decreased by 50% in value.<ref name="inflation">{{cite web|url=http://www.tcmb.gov.tr/yeni/evds/yayin/kitaplar/enf_kitap/4-Antti_Suvanto.pdf |archive-url=https://web.archive.org/web/20090326210550/http://www.tcmb.gov.tr/yeni/evds/yayin/kitaplar/enf_kitap/4-Antti_Suvanto.pdf |archive-date=26 March 2009 |title=Inflation targeting: Reflection from the Finnish experience |access-date=26 April 2015 }}</ref> The growth in the 1980s was based on debt, and when the defaults began rolling in, GDP declined by 13%. [[Unemployment]] increased from almost full employment to one fifth of the workforce. The crisis was amplified by the trade unions' initial opposition to any reforms. Politicians struggled to cut spending and the public debt doubled to around 60% of GDP.<ref name="inflation"/> Much of the economic growth in the 1980s was based on debt financing. Debt defaults led to a [[savings and loan crisis]]. Over 10 billion euros were used to bail out failing banks, which led to a banking sector consolidation.<ref>{{cite web |url=http://217.71.145.20/TRIPviewer/temp/TUNNISTE_VaVM_15_1996_fi.html |title=Converted |access-date=26 April 2015 |archive-url=https://web.archive.org/web/20120207032252/http://217.71.145.20/TRIPviewer/temp/TUNNISTE_VaVM_15_1996_fi.html |archive-date=7 February 2012  }}</ref>
After devaluations, the depression bottomed out in 1993.

===European Union===
Finland joined the [[European Union]] in 1995. The central bank was given an inflation-targeting mandate until Finland joined the euro zone.<ref name="inflation"/> The growth rate has since been one of the highest of the [[Organisation for Economic Co-operation and Development|OECD]] countries. Finland has topped many indicators of national performance.

Finland was one of the 11 countries joining the third phase of the [[Economic and Monetary Union of the European Union]]. Finland adopted the [[euro]] as the country's currency on 1 January 1999. The national currency markka (FIM) was withdrawn from circulation, and replaced by the euro (EUR) at the beginning of 2002.<ref>{{cite web |title=Finland and the euro - European Commission |url=https://economy-finance.ec.europa.eu/euro/eu-countries-and-euro/finland-and-euro_en |website=economy-finance.ec.europa.eu |language=en}}</ref>