Nokia, meanwhile, has been declining even faster, as Samsung Electronics Co. Ltd. and Apple Inc. have carved up the market between them. The company that used to account for 20 percent of Finland’s gross domestic product has seen its sales decline dramatically in the smartphone era and is operating at a loss.
That raises an interesting question: What does this mean for Finland?
I’m not exaggerating how dependent Finland’s economy has been on Nokia. Here’s the Economist last year, detailing the extent of the country’s reliance:
NOKIA contributed a quarter of Finnish growth from 1998 to 2007, according to figures from the Research Institute of the Finnish Economy (ETLA). Over the same period, the mobile-phone manufacturer’s spending on research and development made up 30% of the country’s total, and it generated nearly a fifth of Finland’s exports. In the decade to 2007, Nokia was sometimes paying as much as 23% of all Finnish corporation tax. No wonder that a decline in its fortunes — Nokia’s share price has fallen by 90% since 2007, thanks partly to Apple’s ascent — has clouded Finland’s outlook.
Since the trend in recent decades has been more toward diversification, this might strike many as surprising. But, I suspect Finland is not alone though I’m thinking more about countries reliant on companies dealing with natural resources like oil or minerals.
I’m also prompted to think whether the United States is in a similar position. There are clearly American brands known worldwide that also have large revenues: General Motors, Walmart, Budweiser, McDonald’s, Apple. But, even with (incorrect?) quotes like “What’s good for General Motors is good for the country,” our economy has a number of important corporations. At the same time, this doesn’t necessarily mean they aren’t interrelated. Remember the talk from several years ago about what might happen if General Motors went bankrupt? Or, what might be the ripples if Walmart declined significantly? Perhaps more importantly, the companies cited above all make material goods. As the recent economic crisis suggested, we are very susceptible to problems in the financial industry where the products are less tangible and yet financing, investments, and debts are incredibly important parts of the modern economy. These companies are so large and intertwined with so many areas of the economy that their fate to that of many others.