The Review on Competitiveness 2005: Low-Technology Sectors with Slower Productivity Growth Can Be Competitive

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Helsinki, 13 October, 2005 — The Review on Competitiveness 2005: Low-Technology Sectors with Slower Productivity Growth Can Be Competitive

This is one finding of Finland's Ministry of Trade and Industryís new Review on Competitiveness 2005. The Review assesses development of Finlandís competitive status from the perspectives of the operating environment, production structure, and business sectors, and also from the perspective of the standard of living measuring the performance of the economy.The basic message of the review is that Finlandís competitive status and points of departure are excellent when compared against the principal competitor countries.

This is one finding of Finland's Ministry of Trade and Industryís new Review on Competitiveness 2005. The Review assesses development of Finlandís competitive status from the perspectives of the operating environment, production structure, and business sectors, and also from the perspective of the standard of living measuring the performance of the economy.

The basic message of the review is that Finlandís competitive status and points of departure are excellent when compared against the principal competitor countries. Finland is also a leading country as concerns implementation of the Lisbon strategy for increasing competitiveness within the European Union.

Increase in productivity has slowed down since the peak figures reached in the 1990s, but is still among the fastest in developed countries. As in most OECD countries, productivity has increased more rapidly than the standard of living. This stems from the declining trend in work input.

The competitiveness report identifies employment as the biggest bottleneck in raising the standard of living. The falling number of jobs in industry requires more rapid growth in the services sector if any essential improvement in employment is to be made. However, raising the standard of living from its current ranking calls for a clear acceleration of productivity growth.

International comparison of productivity between sectors shows that some sectors can be competitive even though they do not involve high technology or fast productivity growth. The example given is the food industry.

The reverse side of good productivity growth within industry is the weak development of prices in production, especially in the ICT industry. The Review on Competitiveness concludes that falling unit prices and weakening terms of trade make it more difficult to raise productivity and the standard of living.

On the basis of the investments coming into the country, Finland is Ė contrary to the generally held view Ė an attractive location for business. This conclusion is supported by the growth rate of overall productivity, which is among the highest in developed countries. As ways of speeding up productivity growth, the Review on Competitiveness proposes, for example, further development of mental capital and preconditions for entrepreneurship.

Further information
Researcher Esa Viitamo, Etlatieto Oy, tel. +358 50 5321 954
Deputy Director General Matti Pietarinen, MTI, tel. +358 9 1606 3608

The Review on Competitiveness is available in Finnish (the summary in English) at www.ktm.fi/julkaisut

More information
http://www.etla.fi