When a country depends on one company, like Finland did with Nokia

Here is a quick overview of how important Nokia once was for Finland:

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.

Current trends in Finnish suburbs

This blog contains a number of posts about American suburbs but I am also interested in learning more about suburbs in other countries. Here are some insights into the changes taking place in Finland’s suburbs:

Urban geographer Venla Bernelius says that the same process that took place in other parts of Europe is now under way in Finland. A previous low level of immigration, combined with relatively small income disparities has delayed the phenomenon.

“The direction appears clear. Differentiation is increasing all the time.”

Experiences from other parts of Europe and North America suggest that it is very difficult to reverse a process of ethnic differentiation. Bernelius says that the time to act is now.

At present, conditions in Finnish suburbs are nowhere near those of slums or ghettoes in other countries.

However, Matti Kortteinen, professor of urban sociology at the University of Helsinki says that isolation from the population at large makes it more difficult for immigrants to adapt to Finnish society.

“The development harms people’s overall well-being”, Kortteinen says.

One reason for the trend is that immigrants often end up living in areas where there is much municipal housing. Many Finns who are long-term unemployed also live in these areas.

“The issue is not only about ethnic differentiation. The worst-off Finns and the worst-off immigrants live in isolated suburbs”, Bernelius says.

It might be helpful to compare these trends with what is taking place in American suburbs. To start, more minorities and immigrants are moving to the American suburbs (just as it sounds like Finland). More broadly, the American suburbs contain a variety of communities and suburbs, some very wealthy and some quite poor. But, the suggestion here is that immigrants and minorities become isolated in Finnish suburbs while we would tend to think the opposite in the United States. If people have “made it” in the US or have certain income levels, they tend to move to the suburbs. A more general European pattern works in reverse: the poorer segments of the population, immigrants and natives, live in suburbs away from the city and its wealth.

It will be interesting to see how Finland, and other European nations, adjust and respond to this kind of suburban population growth.

Finland schools: raising the overall educational scores by helping the students with the most troubles

There is much angst in the United States regarding the education system and how its students compare to those of other countries. Time presents a different kind of model in Finland (which they oppose to “tiger mothering“) where there is less concern for stardom and more interest in helping the lower kids succeed:

In the ’80s, Finland stopped “streaming” pupils to different math and language tracks based on ability. “People in Finland cannot be divided by how smart they are,” says Laukkanen. “It has been very beneficial.”…

“Finland is a society based on equity,” says Laukkanen. “Japan and Korea are highly competitive societies — if you’re not better than your neighbor, your parents pay to send you to night school. In Finland, outperforming your neighbor isn’t very important. Everybody is average, but you want that average to be very high.” (See 20 back-to-school gadgets.)

This principle has gone far toward making Finland an educational overachiever. In the 2006 PISA science results, Finland’s worst students did 80% better than the OECD average for the worst group; its brightest did only 50% better than the average for bright students. “Raising the average for the bottom rungs has had a profound effect on the overall result,” says MacIsaac.

This is an interesting statistical point as there are two ways a country could go about raising the mean. Instead of trying to raise the average score by putting resources into the gifted or smartest students, the strategy in Finland is to instead raise the bottom group to a higher point.

From reading this article, it sounds like this is possible because of a particular set of cultural values that prizes community or equity over competition. Of course, some might argue that this might not be great for society: where are the next innovators or geniuses going to come from if they aren’t pushed harder? But one could argue on the other side that more help and success for the lower students (who used to be shunted off into lower track classes) helps limit later societal problems and instead promotes a more well-rounded and less bifurcated work force and citizenry.