International Business and Country Analysis: Finland

International Business and Country Analysis:
Finland
By:
Hassaan Elahi (28270)
A project report submitted in partial fulfillment
of the requirements for the Course of
International Business to Sir Zeeshan Aslam at
the Iqra University, Main Campus
Karachi, Pakistan.
February 2018

International Business and Country Analysis: Finland
Abstract
This report is based on analyzing the international business opportunities in Finland
for Pakistan and have also given in-depth country analysis of Finland based on
current trends and most recent data related to different aspects of the country. In this
report, objective of choosing Finland and its importance for Pakistan in trade
relations has been given. Moreover, brief description and the evolution of the
country have also been mentioned. The report has also given a detailed analysis of
the country’s current political, socioeconomic and cultural scenarios and have also
mentioned the risks associated with conducting and operating businesses in Finland
for foreigners. Furthermore, the report has also analyzed the current economic trends
of Finland by highlighting its key performance indicators that are used by the
country, assessing its current trade performance, balance of payment and exchange
rate situation both in the past and future, mode of trade used by the country,
investment opportunities and trends, and key trading partners of the country with
their share. The report has also analyzed the current industry situation of Finland by
highlighting and assessing its key performing sectors, export and import oriented
industries, export and import partners, as well as its current export and import market
share. Moreover, Finland’s competitive advantage, its major resources and
companies have also been mentioned. Lastly, the report has also given forecast of
the next five years based on the analyzed data and have also suggested some

solutions for the country to improve its major weaknesses. In addition, the report has
also highlighted the ways in which Pakistan can reap benefit from Finland, how
Pakistan can collaborate with this country and what exporters and government of
Pakistan can do to maintain a long term robust trade relationship with Finland by
providing mutual benefit to both the countries.

Contents
Introduction ...................................................................................................................................................................1
 Objective ..........................................................................................................................................................1
 Brief of Country ...............................................................................................................................................2
 Evolution of Finland.........................................................................................................................................2
Country..........................................................................................................................................................................4
 Political Scenario..............................................................................................................................................4
 Socioeconomic Scenario/Demographics ..........................................................................................................6
 Cultural Assessment .........................................................................................................................................7
 Risk Factor .......................................................................................................................................................9
Economic Analysis......................................................................................................................................................11
 Key Performance Indicators ...........................................................................................................................11
 Trade Performance .........................................................................................................................................14
 Balance of Payment........................................................................................................................................14
 Situation of exchange rate in the past and prediction about future .................................................................16
 Modes of Trade...............................................................................................................................................16
 Investment ......................................................................................................................................................17
 Key trading partners and their share...............................................................................................................18
Industry........................................................................................................................................................................19
 Key performing sectors ..................................................................................................................................19
 Export oriented industries and export market share .......................................................................................20
 Export Partners...............................................................................................................................................20
 Import oriented industries and import market share.......................................................................................21
 Import Partners...............................................................................................................................................21
 Competitive advantage of country..................................................................................................................22
 Major resources and companies of Finland ....................................................................................................23
Takeaway.....................................................................................................................................................................24
 Forecast of the next 5 years ............................................................................................................................24
 What the country can do to improve its current situation...............................................................................25
 Advantages that Pakistan can reap from Finland............................................................................................26
 How Pakistan can collaborate with the country..............................................................................................27
 Suggestion for the exporters and government of Pakistan..............................................................................28
References ...................................................................................................................................................................30

1
Introduction
 Objective
The objective of choosing Finland for this report is that this country has the potential
to benefit Pakistan in various areas if the bilateral relationship between these two
countries continue to improve. One of the main contributors in this improvement of
relationship between these countries is China-Pakistan Economic Corridor (CPEC).
Finland is interested to work and collaborate with Pakistan in different
socioeconomic development sectors. To achieve this aim, regular facilitation to
improve the interactions between the private sectors of Pakistan and Finland has
been in effect and is considered to be essentially important. Since 2017, Finland has
been aiming to achieve the highest possible economic growth rate in Europe and
improved relationships with Pakistan could also help the country in reaching this
objective as well. Moreover, after the improved law and order situations in Pakistan
and the establishment of China-Pakistan Economic Corridor (CPEC) project, plenty
of business opportunities for Finland in Pakistan has been created in which Finnish
investors are interested and this can help both the countries equally. (APP, 2017)
During the third round of Pakistan-Finland Bilateral Political Consultations (BPC)
which was held in June 2017, the two countries have already agreed to improve the
cooperation in different areas, especially in the fields of trade, economy, commerce,

2
industry, energy, industry, agriculture, investment, IT and telecom, culture,
technology and science, education and parliamentary exchanges. Moreover, in order
to improve the security environments and bring peace in their respective regions, the
two countries have also exchanged their views. This effort can again benefit both the
countries a lot. (Business Recorder, 2017)
 Brief of Country
Having a population of around 5.5 million, Finland is considered one of the most
sparsely populated country of the European Union, having a spread over of around
338,145 square kilometers. This country is a bilingual country as under Finnish
Constitution, the official languages of Finland is Swedish and Finnish. Located
between Sweden and the Finnish mainland is the Åland Islands which are
demilitarized, autonomous and monolingual Swedish speaking administrative
province of the Finland. Helsinki is the capital of Finland and the country celebrate
its independence day on 6 December every year. (Department of Foreign Affairs and
Trade, 2017)
 Evolution of Finland
After the 2nd
world war, the policy of neutrality was maintained by Finland
throughout the cold war. Considering its proximity to the Soviet Union, Finland’s
foreign policies were, in general, understandably cautious. Instead, Finland decided

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to work with other Nordic countries and reject to take the side of any super powers
who were involved in the cold war. In 1952, Finland was a part of the passport union,
which was formulated by the Nordic Council. This union helped citizens of Finland,
Denmark, Sweden, Iceland and Norway to easily cross borders, gain jobs and more.
This was significant for Finland during the 50’s and 60’s, as many citizens of Finland
attempted to obtain higher paying jobs in the country of Sweden. (A history of
Finland, 2013)
During 1970’s, Finland and its economy started to remarkably recover as the
country’s GDP rise to the level of its rivals United Kingdom and Japan. Education
was also improved as many of the Finns went to study abroad in the United States
and Europe. As compared to other countries who were bordering the Soviet Union,
Finland was considered unique because it was mainly a capitalist country. The Finns
also supported this form of economy and until the 1980’s, rates of savings remained
around 8%, which was considered highest among the world at that time. (A history
of Finland, 2013)
Between the years of 70’s and 90’s, Finland was recognized as one of the most
advanced countries in the world, having a high living standard. The country also
remained stable both politically and socially. However, in 1991, the country was
soon faced by a depression. Depression around the world’s markets, overheating of
Finland’s own economy and a fixed currency were the main culprits behind this

4
depression, which also led to the decline of the stocks and housing by a half. The
GDP of the country decreased by 15% and the employment rate, which was once
nearly around 100% went down drastically to one fifth, leading to a massive
unemployment. This depression, however, hit bottom during 1993 and markets of
Finland slowly started to recover. In 1995, Finland joined the European Union and
integrated quickly. The country also worked to increase its protection against the
borders of Russia by building a strong military force which was also involved in
both UN missions and NATO. In the western world, the GDP and the growth rate of
Finland’s economy is still considered one of the highest. (A history of Finland, 2013)
Country
 Political Scenario
With a republican constitution, Finland is a parliamentary democracy where on
every six year term new President is elected. Executive powers in this country are
mostly under the control of the Cabinet which is leaded by the Prime Minister.
However, handling of foreign affairs is the responsibility of the President in
cooperation with the Cabinet, except for certain decisions related to peace or war,
and international agreements, which must be submitted to the Parliament. The
President is also the Commander-in-Chief of the army and he/she must also approve
the laws. From fifteen multi member constituencies, the unicameral parliament

5
(Riksdag in Swedish and Eduskunta in Finnish) has 200 members which are elected
after every four years. Moreover, Presidential vetoes can be override by the
Parliament. (Department of Foreign Affairs and Trade, 2017)
In 2012, the presidential elections were won by the President Sauli Niinistö with
63% votes, who represented National Coalition Party. This country has a multi-party
system, in which 3 strong parties of the country must work together with each other
in order to form a coalition government. This system allows equal distribution of
power and no single party gains all the control alone. National Parliamentary
elections in Finland were last held on April 19, 2015. During that time, the Centre
Party secured 49 of the 200 seats in the Parliament by winning 21% of the votes.
Juha Sipila who was the Chairman of the Centre Party, became the Prime Minister
of Finland, and after becoming the Prime Minister, he formed a center-right
governing coalition with the National Coalition Party (37 seats) and the Finns Party
(38 seats). (Department of Foreign Affairs and Trade, 2017)
This coalition also helped to narrowly avoid a collapse in June 2017, after the
National Coalition Party and Centre Party became unwilling to work with the Finns
Party, following its decision to elect Jussi Halla-aho as its leader who was a
controversial immigration hard-liner. This collapse was averted when the majority
of the parliamentarians of Finns Party broke away to establish a new parliamentary
group which is called the Blue Reform party, with which the coalition partners were

6
willing to work. This new reformed coalition now has the majority of the seats in the
Parliament, with 105 seats from the total of 200 seats - National Coalition Party (37),
Centre Party (49), and Blue Reform (19). On April 2019, the next general elections
are scheduled to be held. (Department of Foreign Affairs and Trade, 2017)
 Socioeconomic Scenario/Demographics
As most of the population of Finland is ethnic Finnish, this country is very ethnically
homogenous. Hunter-gatherers were the earliest inhabitants of this area, who are
now most closely related to the modern day Sami people who live in Finland. Today,
there are around 4500 Sami people left in this country, who are now officially
recognized as a minority. For over 7000 years, these Sami people have been living
in the north of the Arctic Circle, accounting for a 5% minority in the province of
Lapland today. Official statistics on ethnicity are not properly maintained in Finland.
(World Population Review, 2018)
Foreign citizens make up 3.5% of the total population in Finland, which is
considered one of the lowest percentage rate in the European Union. Estonia,
Sweden and Russia are the countries from which most of the foreign citizens belong.
Unless they cannot get citizenship in another nation, children of foreigners do not
automatically receive citizenship of Finland when they are born in this country.
According to the population figures of 2009, the CIA fact book suggested that of

7
5,351,427 population in Finland, 16.6% were aged between 0 and 14 years.
Moreover, 66.4% of the population was aged between 15 and 64 years. Furthermore,
in 2009, Finland also recorded a very high percentage of people (i.e. 17%) who were
aged over 65 years. This was considerably higher than the world’s average. (World
Population Review, 2018)
According to the statistics of 2016, Finland’s income distribution indicated that
around 637,000 people who belonged to the households were at the risk of poverty.
It was estimated that in the household population, the share of persons at risk of
poverty was 11.8% in 2016, which was similar to the previous year. Moreover, the
risk of poverty was highest during the year of 1966 in the past 50 year period which
was covered by the income statistics. Around 18.6% of the population was under the
risk of poverty during that year. In 1993, when the average income of people fell
rapidly and when the country was in the period of recession, the number of people
who were at the risk of poverty recorded to be the lowest as 7.2% people shared the
risk of poverty from the total population during that time. (Statistics Finland, 2017)
 Cultural Assessment
The culture of Finland is a blend of indigenous heritage, with European and Nordic
influences. In the country’s various regions, differences in traditions and customs
can be observed. There are Romani, Swedish-speaking Finns, Sami, Jews and the

8
Tartar who have all maintained their unique identities of culture. We can observe
this melting pot in their literature, festivals, visual arts, cinema, music, and even
cuisine. (iExplore, n.d.)
Finish architects and artists have made some of the most important contributions to
sculpture and industrial design. The people of Finland are also very musical, with
rich folk traditions, e.g. Sami music that often expresses their myths and beliefs.
Locals also like to listen opera and classical music, with the country boasting famous
works like Finlandia and Kullervo by Jean Sibellus. Heavy metal and pop spread in
the culture of Finland when it established close relationships with its Nordic
neighbors, which coincided with a surge in rock bands, musical acts, hip hop and
dance music. (iExplore, n.d.)
A rich culinary tradition began to develop in Finland, thanks to the Western and
European influences. New flavors have been given to the usual staples like
vegetables, fish, berries and meat by the modern Finnish cooking. In the areas of
Lakeland and Lapland, seafood and reindeer are also the most popular menu items.
Harvested from the forest, the Artic wild berries along with rare mushroom species
gives unique flavor and taste to the dishes. Tea, coffee, buttermilk and milk are
common beverages, along with local brews like sima (mead), sahti (traditional beer),
pontikka (moonshine), and kilju (sugar wine). (iExplore, n.d.)

9
Finland’s traditions and festivities are closely tied to the calendar of Christians, as
well as to various pagan and protestant holidays. Christmas and Midsummer events
are also commonly celebrated in the country, along with Vappu/May Day. In the
daily Finnish life, the ubiquitous sauna bath is also a permanent fixture. (iExplore,
n.d.)
 Risk Factor
Culture of Finland has long been a homogenous and many Finns a have little or no
knowledge about foreign customs and religions. This may cause some
misunderstandings and confusion in multicultural dealings, however, people in
Finland usually make a genuine effort to be polite and respectful towards foreigners.
(Passport to Trade 2.0, 2014)
Nevertheless, foreigners in Finland are increasing. There were around 12,800
foreigners coming to Finland mostly from Germany, Sweden, USA, and the Soviet
Union during the year of 1980. Moreover, there were around 26,200 foreigners in
1990, who were mostly Swedes, along with the Russians who were also increasing
in numbers at that time. (Passport to Trade 2.0, 2014)
According to the survey of Coface for Trade (2018) overall economic and political
environment of Finland is good. The business environment is also considered as
efficient and stable, however, there is still room for some improvements that are

10
needed to be done. The corporate default probability of Finland is also low on
average. (Global Edge, 2018)
The environment for conducting business is also good in Finland, corporate financial
information is also available and considered as reliable, institutional quality is very
good and collection of debt is efficient. Intercompany transactions are also running
smoothly in the environment. The overall business climate is rated A1 (i.e., low on
risk) by Coface for Trade (2018).
Strengths and weakness associated with Finland according to the survey of Coface
for Trade (2018) are listed below:
 Strengths:
 Prudent economic policies
 High standards of living
 Favorable business climate and skilled workforce
 Cutting-edge industries
 Weaknesses:
 Loss of competitiveness and industrial crisis
 Highly vulnerable to the international situations
 Ageing population

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 High dependence of the Finnish banking sector on Danish and Swedish
financial sectors, despite the return of a major institution in 2017
Overall, the risk factors for foreigners to operate their business activities in Finland
are very low as Finland has been rated A1 (i.e., very low) on the scale of business
defaulting risk in the country risk assessment map of 2018. (Coface for Trade, 2018)
Economic Analysis
 Key Performance Indicators
Current key performance indicators of Finland has been indicating that the economy
is in good shape and has recovered after the overall slowdown that was recorded in
the 3rd
quarter of 2017 due to weak private consumption. Finland’s estimates of
monthly economic activity also showed an upward revisions in the statistics from
September to November which was also one of the positive signals. Despite the
month-on-month slowdown in the growth of economic activity during December, it
remained elevated by historical standards with capping off a strong 4th
quarter. Even
though economic sentiments fell month-on-month during January - a decrease that
was consistent with the sharp drop which was recorded all over the euro area as a
whole, it remained high afterwards, while the confidence of consumers also rose by
a large margin. However, unpromisingly real wages dropped in the 4th
quarter,
though at a slower rate as compared to the 3rd
quarter. (FocusEconomics, 2018)

12
It is expected that economic growth in Finland will remain slow but robust this year
due to the increased exports along with the improvements in Finnish cost
competitiveness. High business confidence and loose monetary policy will also
benefit the economy that will also support fixed investments coming to the country.
However, continuing fiscal consolidation by the government this year will constraint
the contribution of public consumption to growth. According to the panelists of
FocusEconomics, it is expected that Finland’s economy will expand by 2.4 percent
in 2018, remaining unchanged from the forecast of the last month, and 2.1 percent
in 2019. (FocusEconomics, 2018)

13
Finland’s key performance indicators and economic data:

14
 Trade Performance
According to Global Edge (2017) Finland ranked 94 in the trade balance rank as
compared to 134 countries. Moreover, the total trade balance of Finland in 2016 was
in deficit by around $3,176,077,836. Export of goods and services (as a percent of
GDP) remained 35.35% in 2016 as compared to imports of goods and services which
remained high at 36.56%.
 Balance of Payment
During September 2017, the current account of the balance of payment showed a
EUR 0.1 billion surplus. In balance of payment terms, the value of exported goods
grew by 6% as compared to the past 12 months. On net, the capital also flowed
abroad from Finland. The current account’s 12 months moving total was in deficit
by EUR 0.6 billion. In the balance of payment terms, within the sub-items of the
current account, the goods account was in surplus by EUR 0.2 billion. The exported
goods value in the balance of payment terms increased by 6% year-on-year and
totaled around EUR 5.0 billion. Moreover, as compared to past 12 months, the value
of imported goods in the balance of payment terms rose by 7%. A deficit of EUR
0.1 billion was also recorded in the service account. Furthermore, a surplus of EUR
0.2 billion was also recorded in the primary income account. This account also
includes investment income like dividends and interests. However, a deficit of EUR
0.2 billion was recorded in the secondary income account. If we talk about financial

15
account, net capital outflow from Finland in September totaled around EUR 6.1
billion. Within the sub-items of the financial account, Finland’s net capital outflow
was mostly in the form of portfolio investments which amounted EUR 9.0 billion.
(Statistics Finland, 2017)

16
 Situation of exchange rate in the past and prediction about future
Euro is the official currency of Finland. On 21 March 2018, the EUR/USD increased
from 1.2240 to 1.2279 in the previous trading session, which was an overall increase
by 0.31%. Historically, in July 1973, the Euro Dollar exchange rate was recorded
the highest, which was around 1.87 and was recorded the lowest of around 0.70 in
February 1985. According to the expectations of analysts and global macro models
of Trading Economics, it is forecasted that the Euro Dollar exchange rate will be
traded at 1.21 by the end of this quarter. It is estimated that in 12 month time period,
it will be traded at 1.15. (Trading Economics, 2018)
 Modes of Trade
According to Xu (2014) the following are the three export entry modes, five
intermediate entry modes, and four hierarchical entry modes that are commonly used
by international companies who wants to enter into Finland for conducting their
businesses
Export Entry Modes:
 Indirect export mode
 Direct export mode
 Cooperative export mode

17
Intermediate Entry Modes
 Contract Manufacturing
 Licensing
 Franchising
 Joint Ventures
 Strategic Alliances
Hierarchical Entry Modes
 Domestic based sales representative
 Foreign sales and production subsidiary
 Acquisition
 Greenfield Investment
 Investment
In 2016, Finland’s Foreign Direct Investment (FDI) rose by 76591 EUR million.
Moreover, from 1994 till 2016, Finland’s Foreign Direct Investment averaged
around 43884.78 EUR million and was the highest in 2016 (i.e., 76591 EUR million)
and was recorded lowest in 1994, which was around 5356 EUR million. According
to Trading Economics analysts and global macro models, it is expected that by the
end of this quarter, Finland’s Foreign Direct Investment will be at 75664.62 EUR

18
million. Moreover, according to econometric models, in the long-run Foreign Direct
Investment in Finland is forecasted to be around 76159.83 EUR million in 2020.
(Trading Economics, 2018)
 Key trading partners and their share
According to Workman (2018) the following list below showcase top 15 trading
partners of Finland in terms of exports. They are those countries who have imported
the most Finnish shipment in 2016 by dollar value. Moreover, the list also shows
each import country’s share of total Finnish exports in terms of percentage.
 Sweden: US$5.6 billion (9.7% of total Finnish exports)
 Germany: $7.2 billion (12.5%)
 United States: $4.1 billion (7.2%)
 Russia: $3.2 billion (5.5%)
 Netherlands: $3.7 billion (6.4%)
 United Kingdom: $2.5 billion (4.3%)
 China: $2.8 billion (4.9%)
 Japan: $976.5 million (1.7%)
 France: $1.7 billion (2.9%)
 Belgium: $1.8 billion (3.1%)
 Norway: $1.6 billion (2.7%)

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 Estonia: $1.6 billion (2.7%)
 Italy: $1.3 billion (2.3%)
 Poland: $1.4 billion (2.4%)
 Spain: $966.6 million (1.7%)
Industry
 Key performing sectors
According to Economy Watch (2010) the following are the key performing sectors
of Finland:
 Electronics
 Metal and metal products
 Scientific instruments and machinery
 Paper, pulp and timber
 Shipbuilding
 Foodstuff
 Clothing
 Chemicals
 Textiles

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 Export oriented industries and export market share
According to Wikipedia (2018) the current export market share of Finland is
estimated to be around $71.5 billion. Moreover, Finland’s export oriented industries,
according to Wikipedia (2018) are also listed below.
 Electrical and optical equipment industries
 Machinery industry
 Industry of transport equipment
 Paper and pulp industry
 Timber industry
 Chemicals and metals industries
 Export Partners
According to Wikipedia (2018) the major export partners of Finland are listed below.
Moreover, this list also shows each country’s share (i.e., how much each country is
importing goods from Finland) in terms of percentage.
 Germany 10.7%
 United States 13.1%
 Sweden 7.6%
 Netherlands 6.7%
 United Kingdom 5.2%

21
 China 4.8%
 Russia 5.7%
 Import oriented industries and import market share
According to Wikipedia (2018) the current import market share of Finland is
estimated to be around $65 billion. Moreover, Finland’s import oriented industries,
according to Wikipedia (2018) are also listed below.
 Foodstuff
 Chemicals
 Petroleum and petroleum products
 Iron and steel industry
 Industry of transport equipment
 Machinery
 Grains
 Textile yarn and fabrics
 Import Partners
According to Wikipedia (2018) the following list shows Finland’s major import
partners and how much Finland is importing from each of them in terms of
percentage.
 Sweden 11.2%

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 Germany 14.9%
 Russia 11.2%
 Netherlands 6.1%
 China 7.4%
 France 4.1%
 Competitive advantage of country
According to Mutebi (2009) the biggest competitive advantage which Finland
possesses is its ability to be highly innovative. The country has a record of
maintaining dedicated investment in R&D (Research and Development) even in
severe economic periods. It is estimated that government nearly spend 3.5% of GDP
on Research and Development on average, which is considered highest among the
OECD and most European countries.
In terms of national infrastructure which includes transport, education,
communications and health care, the country is also well-placed. Finland has been
able to build a strong industrial economy because of this set of conditions. However,
the most important competitive advantage is the quality of institutions of Finland.
This has also helped the country to gain locally and domestically owned foreign
investments, Foreign Direct Investments, acquisitions and mergers and openness to
foreign markets. (Mutebi, 2009)

23
 Major resources and companies of Finland
According to Central Intelligence Agency (2018) major natural resources of Finland
includes iron ore, timber, lead, copper, chromite, zinc, gold, nickel, limestone and
silver. Moreover, according to Statista (2017) 10 major companies of Finland that
are considered largest by the number of their employees are also listed below:
Company Number of Employees
 Nokia Oyj 102,687
 Kone Oyj 50,905
 Stora Enso Oyj 26,269
 Kesko Oyj 22,476
 PKC Group Oyj 21,277
 Posti Group Oyj 20,632
 UPM-Kymmene Oyj 20,246
 Caverion Oyj 17,381
 Tieto Oyj 13,472
 Microsoft Mobile Oy 13,038

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Takeaway
 Forecast of the next 5 years
By analyzing the above data and current scenarios of Finland’s economy, it is
forecasted by many predictors that the economy will continue to grow over the next
4 to 5 years. According to the forecasts of the Bank of Finland, it is predicted that
the GDP of Finland’s economy will grow to 1.5% per annum between the years of
2019 and 2020. (Bank of Finland Bulletin, 2018)
Moreover, employment conditions in Finland are also expected to improve as
according to the predictions of research institute of the Finnish economy (ETLA) it
is forecasted that in 2021, unemployment will decrease to 7.2%. (YLE News , 2017)
It is also expected that in the next 5 years, Finland’s export situation will also
improve due to improvements in Finnish exporters cost competitiveness and growth
in important export markets. Moreover, due to improving conditions of investment
growth in the European areas, Finland’s export sector’s outlook is expected to
improve in the future. This export growth throughout the forecasted period will also
help to enhance the current account situations, making it close to balance. Private
consumption will also grow due to improvements in both purchasing power of
customers and improved employment situations. Household consumption will be
encouraged due to strong consumer confidence. Furthermore, the pace of investment

25
growth is expected to be slow in 2020, but it will rise strongly in the immediate years
ahead. Moreover, it is also forecasted that the general economic deficit will decrease
to 0.7% of GDP by 2020. (FINLANDS BANK. EUROSYSTEMET, 2017)
However, despite these economic improvements, general expenditures by the
government will continue to exceed revenues. Even though this vigorous GDP
growth in the next few years will push down the debt ratio on a downward trajectory,
but indebtedness of the central government will still be expected to continue in the
year of 2021. Overall, economic conditions of Finland will remain stable in the next
4 to 5 years based on above data and predictions. (Open Access Government, 2017)
 What the country can do to improve its current situation
Finland’s long-term challenges include the need to address the problem of aging
population that is decreasing the availability of young workforce, especially in the
service industries, its increased reliance on electronic industry, such as mobile
market, which can expose Finland to the pitfalls of sectoral economy and heavy
public expenditures by the Finnish government, increasing its public debts that could
decrease Finland’s competitiveness.
To solve the problem of excessive reliance on electronic industry, Finland can
accelerate its investment diversification by moving it into other sectors, mostly in
the service industry like health care and financial sectors, making the country a

26
multi-polar economy. Moreover, to deal with the problem of aging population,
Finland can delay its retirement age or can also increase its reliance on alien
workforce from other countries. Moreover, Finland can also attract young talent
from countries, such as UK or USA, by improving its labor laws. Long-term
measures include more investment in the health sectors, so that the population of the
country can stay active for a longer time and awareness and encouragement to the
families to have more than one child.
Lastly, to deal with the problem of excessive public expenditure, Finland should
reduce its expenditures on non-critical areas, like higher education, which should be
privatized as government spending on it was already high (i.e., 28% in 2014)
according to report of The World Bank (2018). Moreover, the government should
shift its expenditures into more critical areas and sectors such as, health care,
infrastructure, and service industries.
 Advantages that Pakistan can reap from Finland
Pakistan can gain help from Finland in various areas like, education, health,
renewable energy and waste to energy solutions, clean technology, water
management and many other fields. However, to achieve these goals, regular
communication between the private sectors of Pakistan and Finland is needed. By
enhancing cooperation with Finland, Pakistan can achieve good economic benefits.

27
Moreover, Finland can also help the people of Pakistan in the training and skills
development as it has an overarching vocational training system. (The Nation, 2017)
 How Pakistan can collaborate with the country
Pakistan can collaborate with Finland by making Finland a part of its China-Pakistan
Economic Corridor (CPEC) project. Finland has been already very keen to work
with Pakistan in different socioeconomic development sectors as explained above
and the country also wants to enhance its commercial presence within Pakistan. It is
also speculated that Finland will open its embassy in Pakistan in the near future. As
also explained in the introduction of this report, since the improvements in the law
and order situations in Pakistan and the commencement of the CPEC project, many
investment and business opportunities have been created in the country which can
also provide advantages to the Finnish investors. It is expected that under CPEC
project, 9 special economic zones will be created and Pakistan should try to attract
the Finnish investors to invest in these special economic zones with latest
technology. Agriculture, engineering, mining, energy, biotechnology, health and
education, and telecommunication are some of the potential areas where Pakistan
and Finland can collaborate and mutually cooperate with each other. Furthermore,
to discover more business matchmakings, organizing frequent B2B meetings is the
only best way that the Pakistani businesses can pursue to improve their corporate
relationships with Finland. Moreover to further strengthen trade relations, Pakistan’s

28
private sectors should work with Finland’s private sectors in order to identify more
collaborative models that can benefit both the countries economically. (The Express
Tribune, 2017)
 Suggestion for the exporters and government of Pakistan
As explained above, the government of Pakistan should make Finland a part of their
CPEC project and the private sector of Pakistan should collaboratively work with
Finland’s corporate sectors in various areas to provide benefits to both the countries.
However, according to Mr. Wille Eerola, who is the current chairman of the
Pakistan-Finland Business Council and also the head of Nordic-Pakistan Business
Summit, he stated in one interview with Business Recorder that the Pakistani
government and exporters can take advantage in two major areas to develop and
promote Pakistani businesses in Finland. The first area in which Pakistan can work
is that it should export IT and software professionals in Finland. This is because, in
this post-Nokia era, Finland will soon become a hub for developing mobile
applications. However, Finland still lacks software professionals, so therefore IT
companies of Pakistan can take advantage of this opportunity by exporting these
needed software professionals in Finland. (Business Recorder, 2018)
Moreover the second area where Mr. Eerola suggested that Pakistani exporters can
work with Finland is by exporting agricultural products like fruits, such as mangoes.

29
He stated that Pakistani mangoes are known for their quality and exported all over
the world, but unfortunately not in Finland. So Pakistani exporters and government
should export more agricultural products and fruits in Finland in terms of traditional
export items because there are still many unexploited business opportunities for
Pakistani exporters in this area. (Business Recorder, 2018)

30
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33
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34
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