We Should Learn From Finland about Innovation Economy
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This is an article found by one of our forumite. Finland has been graded No. 1 in Competitiveness in the World Economic forum.
What we have found is that Finland is exceptionally good in managing Innovative Economy aka Thinking Economy.
This is looking from the Political side of Finland's development.
Goh Meng Seng
Innovation Case Study: The Need For Political Innovation
Paula Tiihonen, Committee Councellor, Committee for the Future
We are used to talking about innovations in the areas of
technology. During these years of welfare and prosperity we have
forgotton that social infrastructure also needs a lot of new ideas and
work. The welfare state, especially, needs renovation.
Finland, where only five million people live, has succeeded in
adopting modern technology. We have more high tech experts per capita
than any other country in the world. Nokia is the world`s leading
manufacturer of digital phones. Finland has the world`s most developed
electronic banking system. Finland is ranked number one in mobiles
phones and Internet nodes per capita. It is the most wired nation in
the world, with sophisticated digital and fiber optic voice and data
processing networks.
According to a report by U.S.-based International Data
Corporation, Finland is the leading information society in Europe and
is ranked second in the world, behind the United States, in the use of
information technology. The World Health Organization has recognized
Finland as a model country for its program of "Health for All by the
year 2000".
The Finnish economy is functioning better than at any time since
world war II. Finland was one of the countries in the best shape to
join the European Monetary Union.
At the same time we have had big problems with unemployment and
our political and social systems are faltering. The Scandinavian model
- a full employment welfare state with universal benefits - is not
functioning as it should. It is not keeping up with the speed of
development of technological innovations. There is a great need for
new political and social thinking. But we have started to address this
problem - by introducing a political innovation which is the only one
in the world. The Finnish Parliament has set up a Special Committee
for the Future.
1. A Common Problem: democracy is faltering
What love and democracy have in common is that we all want them,
but seldom understand that we must work hard for them.
A problem that I suppose every Western country shares relates to
democracy, which we still see as a fundamental requirement in our
society. Thus the main task of the administration - be it an old
Weberian bureaucracy or a new-style public management - is to support
democratic rule and governance. Unfortunately, recent decades have
seen respect for political institutions and especially for the heart
of our democracy, parliament, collapse. In Finland people continued to
have strong faith in their national parliament right up to the 90s.
Today, by contrast, fewer than one in three retain that trust, and
only one in eight has confidence in political parties. It was
difficult to find candidates willing to put their names on the ballot
paper in the autumn 1996 local government elections. Old fashioned
party meetings appear to be attended these days only by functionaries
in the line of duty, candidates fishing for votes and public servants
hankering for a reward from their party. What does it matter which
model or mode of administration we are following if the foundation on
which the whole thing stands is going to crumble? As a civil servant,
I am of course very well aware that big organisations can survive for
a long time without trust, acceptance or legitimatisation. The same
applies to parliamentary democracy.
This paper is based on a general sense of concern that the
foundation of democracy is weakening. What should we who work in
politics or administration or are researching these questions do?
First of all we should discover what is causing the perception that
trust is lacking. Two main explanations come to mind: 1) There is no
lack of trust at all; it's just that the media have gotten it badly
wrong, or 2) it is true that people have lost their trust in
Parliament and parties. I suppose it has became very clear for
everybody that alternative 2 is the right one. What has not been so
clearly understood is why people have rejected politics and at the
same time democracy. We should be prepared to consider also the worst
possibility: Could it be that either the tasks or the tools of
political institutions or both have vanished or anyway diminished so
much that there is no longer any reason to believe in democratic
institutions?
It is not my task to answer that question: I only deal with the
matter from the point of view of the parliament of a small European
country that has been a member of the European Union for less than
three years. The argument that I shall put to you is that some of the
traditional tasks and tools of the Finnish Parliament have disappeared
and this is the main reason for the distrust that the Finns now
harbour. As a researcher and also erstwhile civil servant, I have been
accused of being too critical and pessimistic in my evaluations. That
may well have been true in the good old times. In the 90's however,
with first the recession and then all its negative sequelae sweeping
through our country, I have tried really hard to remember to encourage
optimism in myself and to seek positive solutions. In that light, it
gives me pleasure to be able to tell you about one positive activity
that I have been helping to develop in the Finnish parliamentary
system - a dialogue between Parliament and the Government on the
subject of options for the future.
Some words concerning my background may help to explain my
determination to defend democracy and identify its problems in time. I
have worked in the service of democracy for 25 years: over 10 years
with the Government (ministries of Finance and Justice), several years
with various development agencies, and even one year at a university.
I have always wanted to be near power, observe it and also do some
research. My doctoral dissertation, which I wrote in my spare time,
was on the subject of civic self-government in various countries.
Finally, 10 years ago, I gravitated to the very heart of the political
system, Parliament, a place where I had passionately wanted to be. So,
when I say that I am worried about the role of Parliament in society,
my feelings are partly personal; after all, who would like to end his
or her career in a place that is only of trivial importance? A little
more seriously, though, when I have chosen my jobs inside the
democratic structure or focused my writings on democracy, I have done
so very conscious of how problematic its future is.
2. Basic reasons why democracy is faltering in Finland
First I want to point out that Finland is like any other Western
democracy, with the same problems. In some respects, I believe, we
have been forced to respond to change faster than other countries,
especially in the face of problems or new phenomena like fragmented
labour markets, the need for life-long learning, modern technology and
the costs of welfare. In deep recession after the collapse of the
Soviet Union, a small country lacking reserves of wealth, without safe
big firms or the inherited possessions of great families, Finland has
had to solve problems as they come, and the sooner the better. That is
the backdrop to cuts in public sector spending and also to
restructuring the welfare system. The Finnish people, who only 5-10
years ago could count on big state-owned enterprises or government
offices or universities and schools to provide them with jobs, have
now realised that controlling the labour market is not at all one of
the State's tasks. A simple thing that we should have realised even
earlier is that in a modern society, in a well-functioning country and
- most importantly - in a competitive healthy economy, it is companies
that create jobs.
Once people have grasped that there is no longer a state that will
serve as a safeguard against all the problems of their everyday lives,
they demand less of the political system. They start planning their
own lives without state-aid and recognise that the state is there
mainly to take care of big matters like foreign policy, justice and
courts, defence, etc. It is no coincidence that the only state
institutions which people in Finland still firmly trust are the
police, courts and Defence Forces. Welfare sectors of politics like
social policy and the labour market have been seen only as deserving
severe criticism, because the economies implemented in them have been
so big. On the official plane, i.e. on the level of legislation or
party politics, we go on as though no structural change had happened.
People's first experience of change has been in practise.
Putting it very briefly, I argue that people have discovered that
the State, the political system and administration no longer perform
the same tasks as before. They have likewise noticed that they can no
longer trust politicians.
I shall try to dig a little deeper in search of an explanation.
The development of Finnish society is naturally embedded in the
general evolution of the Western countries. The condition in which
democracy currently finds itself is due quite simply to the fact that
the onward march of globalisation has deprived nation states of tasks
to perform. Parties, parliaments and governments no longer have their
traditional instruments of power to wield. Globalisation has advanced
faster than anyone was able to predict, and it has not been confined
to the economic sphere. Indeed, it has become difficult to think of
any sector of politics without international linkages.
National leaders are well aware of how globalisation is embracing
capital flows, production and investment, in common with science,
technology and innovation. They try to devise national policies
conducive to making companies based in their respective countries more
competitive in global markets. They also see countries and whole
continents waging a major and never-ending competitiveness war. Every
action - every political decision or omission of one - is viewed as a
move in this big game of success.
You can argue that there still are areas which are absolutely
under the control of national parliaments and governments. Until now,
social policy has been regarded as each country's own affair. But it
is not. As a borrower, an investment location, a trade partner and
indeed as the focus of any economic activity that one can think of,
Finland is subject to constant monitoring and evaluation. We are
continually being ranked according to criteria of the greatest
conceivable diversity and, unlike what happens in the case of the
Eurovision Song Contest, how well we do has direct and indirect
effects on our lives. International analysts do not limit their
assessments to EMU criteria, but rather examine dozens of competitive
factors, risks, the health or otherwise of banks and the State's
creditworthiness. A system of constant scrutiny has made those who
shape domestic policies quite cautious. An unguarded sentence -
however trivial - uttered by a minister can be interpreted as a signal
dangerous for Finland.
Decision making even in matters of social policy or education has
become more complex. International ramifications, both short- and
long-term, must be weighed. An excellent example is provided by
taxation, something that belongs to the core of domestic policy and
national sovereignty. Countries with high taxes do not attract
financiers, investors nor permanent investment. Young researchers and
experts, who have been expensively trained by our society, will not
stay in Finland if their incomes are negligible. On the other hand,
good education and a high level of skill cannot be achieved without
the support of society, and this in turn requires tax income. The same
applies to stable conditions in society. Citizens generally like to be
able to walk the streets in peace. The first thing that people who
provide funds want to be sure of is that they will get their
investment back whatever the circumstances. When international
classifications are conducted, social benefits are regarded as
expenses that must be covered by tax revenue or contributions
collected from companies. Yet, the same economists who call for curbs
on social spending would like society to provide their children with
good and free education and health care.
This example exists mostly at the level of knowledge. Perhaps the
majority of people have not yet seen the change and the reason for it.
But I believe they have realised that some outsiders are making
demands and setting goals with respect to the politics practised in
Finland: These outsiders even lay down the rules to be followed so as
to arrive at good solutions.
I shall take another example of a change in practice that I regard
as a basic reason for distrust: European Union membership. Since we
agreed to membership, the official system of politics has continued
for the most part as though nothing had changed. Indeed, our
politicians have told us that the power of Finnish politics has grown
an the role of the Parliament has strengthened.
What is the reality? Finland has one of the best-educated
populations of any country. The Finnish people understood the meaning
of the EU. Finland sought and obtained economic and political
stability and security. Quite rightly, citizens wanted us to be in the
places where important decisions that affected Finland had long been
made. We wanted to be among those with power. This means that the
nation state structure was not perceived as sufficient in its basic
elements. The Finnish people knew very well that EU membership meant
that 70-90% of all laws in Finland would come from Brussels, that the
Government and the central bank would no longer be able to wield such
financial or monetary tools as inflation or revaluation. They also
knew that in the long run EU integration would demand alignment of
taxation and public finance policy and even of social policy in member
states. Harmonisation is something that will spread from one sector to
another. There are many reasons for that.
Nevertheless we are still not actually prepared to assess the
significance of our membership in any greater depth than that. We have
to combine globalisation and EU membership honestly. For Europe to be
strong, its policies and economy must be efficient and its
institutions effective. No community can be strong if it lacks
responsible bodies with broad authority to steer development, consult
and produce decisions when they are needed. This does not exclude
democratic deliberation and control.
Inevitably, a profound contradiction exists between a Europe that
is secure and strong in the economic and political senses and national
democracy in its present form. For the EU to be able to champion
European interests in the global economy better than the nation states
that have lost their power, it must have the instruments with which to
act. It must be able to even out inequalities. It must also have the
capability to mount a defence, or even direct attacks, against a
variety of economic and political disturbances. Naturally, it is not
only states that must pool their strength; enterprises, banks and
insurance companies must all form alliances in their respective ways.
A common currency, collective security and defence and, eventually,
also to some degree a common social policy are logical future links in
the globalisation chain. Given the heterogeneity of Europe, however,
whether it lends itself to becoming a coherent monetary and economic
area at all is quite another matter.
The position of national parliamentary democracy will weaken
within the EU as economic, security and foreign-policy boundaries
blur. If monetary and economic union as well as common security and
defence arrangements are achieved, there will also have to be
agreement providing for foreign policy to be handled collectively, to
some degree at least. Europe can not appear in the arenas of the
global economy as a multicephalous entity. It has been forecast that
in the 21st century there will be at most one European country,
Germany, among the world's 20 biggest economies. By what right, then,
will France, Britain and Italy participate in the G7 summits of the
wealthiest countries?
It could be imagined that, as it takes on the new tasks that
globalisation has brought, the EU would transfer some of the functions
that it assumed in earlier decades back to member states. Europe's big
political leaders are willing to countenance such a transfer, but
officialdom in Brussels is reluctant to relinquish its status and
privileges. Civil servants defend their achieved rights everywhere.
Even though the emergence of an EU state may take years or decades
to happen, citizens see or at least sense that power is in the process
of being transferred. People in Europe are well-educated and their
media are free. Rhetoric and cosmetics cannot mask realities for very
long. Faith and confidence in our political system will return if it
finds its place in the world of the 21st century and positively
regains its authority through new tasks.
What are the new tasks? That is another story. But, one thing is
clear: nation-states have to be able to react wisely for instance to
globalisation.
3. The Committee for the Future
Finland has achieved world acclaimed status in areas such as
Internet usage or mobile phone ownership. With the aim of giving some
structure and vision to the future, the Parliament of Finland is the
first parliament which has established a special committee to manage
questions pertaining to life and society in the future. I do not know
if these pre-eminent achievements are a mere coincidence or symbolic
fruits. But, what I know is, that after having worked as a counselor
in both two committees for the Future, I can assure you it has been a
marvellous time. It has been the mixture of hard work and joy of life.
At the beginning of the 90s the Parliament wished to assume an
active role in the discourse on the future of the nation. It obliged
the Government to submit a report on the future once each
parliamentary term. In it, the Government should define its perception
of the country's future and of the measures that will be needed over a
time span of 5-15 years. At the end of last election period in 1993
the Government gave the first report to the Parliament and Parliament
appointed the special Committee for the Future to deliberate and reply
to the Government's report. After the election in the spring of 1995
another committee for the Future was appointed. There are 17 members
in the committee.
The new committee has a further task to assess the social impacts
of technological development on behalf of Parliament.
4. The system of dialogue on the future in the Finnish Parliament
In spite of national differences, the division of labour between
the governments that draft laws and budgets and the parliaments that
approve them is approximately the same in all Western countries:
governments submit proposals, which parliaments deliberate and adopt.
In periods of social transition, parliaments have far too often been
left in the background relative to other actors. Many parliaments are
engaged in a feverish search for ways of strengthening their status as
representative institutions, to enable them to regain their position
as the focal point of political discussion.
One method that has been developed in Finland is the presentation
by the Government of reports to Parliament. Rather than introducing
legislation in Parliament, the Government submits a report on some or
other important social matter, such as rural development, energy
policy (including the construction of nuclear power stations) and
participation in EMU. This means that problems can be discussed within
the context of bigger totalities than legislative proposals permit and
above all in good time, when they are of topical relevance or can be
pre-emptively influenced.
The formation of the Committee for the Future is the latest means
found to strengthen parliamentarism and political discourse in
Finland. By replying to the Government's report on the future,
arranging seminars and through other measures, the Committee can
prompt a high level debate on general or special themes. Many of these
issues would otherwise remain in a disadvantaged position in political
discussion and the role of Parliament might otherwise be merely the
passive one of waiting for a ready-made proposal from the Government.
Dialogue between the Government and Parliament in the case of
reports follows largely the same lines as with other legislative
drafting. After a general debate in the chamber, the matter is
referred to special committees for deliberation. The committees hear
the views of experts and draft a report, which is presented in
session. There it is either adopted or rejected, in addition to which
riders or demands that the Government undertake certain measures can
be attached either unanimously or following a vote. However, a report
cannot serve as a basis for a parliamentary vote of confidence in the
Government.
Finnish parliamentary committees do not employ the rapporteur
system with which we are familiar from the European Parliament.
Instead, each committee has 17 members, all Deputies, who collectively
draft the stance to be taken on each bill, budget, bulletin or
Government report. All of a committee's reports are drafted as a
result of cooperation among the 17 members. All members assume
collective responsibility for them, unless a dissenting opinion on
some part of a report or a proposal that it be rejected altogether has
been recorded.
5. What has been on the agenda?
After the Government has submitted its report on future options,
the Committee will prepare to draft its reply to the report. The first
thing to consider is whether the Government has focused on the right
problems. On both occasions, the Committee has decided to write an
extensive and broad report of its own. Thus it did not content itself
with making some minor comments on the Government's text as is usually
done.
In the first round (1993-1994), the Committee's main reason for
writing its own text was that such global problems as environmental
threats had not been properly dealt with by the Government. The next
time (1996-1997), the Committee wished to identify instruments of
economic and social success in the future and did not want to limit
its decision making to a European context. It set about analysing how
such factors as globalisation, information and technology, innovation
and governance were affecting Finland's success in the world. All are
phenomena that operate on the global, European and nation-state level.
Actually we found out very soon and clearly that these are basic
elements in our everyday life, at workplaces and in homes, in our
studies and social life, in education and in entertainment. There are
nowadays very few activities in our society that remain completely
independent of modern technology or international knowledge and
innovation. Competition for success is tougher than it used to be. The
world is a single marketplace. The most valuable commodities are
brains, knowledge and wisdom.
The committee reports have been published in English and you can
find some of them on the Internet at:
http://www.eduskunta.fi/fakta/opas/tiedotus/tiedoeng.htm Currently we
are working with the report on the Scandinavian welfare model.
Incidentally, I am a social democrat and from that perspective I
found it significant that for the first time in my 25-year career an
important political organisation was admitting that the European and
especially the Scandinavian model of the welfare state has profound
problems, which have not disappeared with the ending of the recession,
and we must now seek a new route. This is dealt with in the report
under the heading "European values and the European model of society"
(pages 26-35). It is given a more detailed examination under the
heading "Questions for Finland" (pages 54-55), from which I have taken
the following passage as an example.
"First of all, since the Finnish welfare model has had to be
pruned owing to financing difficulties, a question that must be asked
is whether it still sufficiently accords with the original goals set
for it. If the difficulties besetting public finances persist and
further cuts have to be made, how will the rump system match the
original goals?
Secondly, our welfare model must also be called into question on
ethical and social grounds by asking simply: can any model be regarded
as successful if half a million people in a nation of five million are
permanently without jobs and in the process of being excluded from
active society?
The third reason relates to the national economy. Just as in all
other European countries, there must be constant assessment in Finland
of how big the public sector must be relative to the private.
... From the perspective of future policy making and somewhat
simplifying the matter, Finland can be regarded as having three
important sectors that to a greater degree than other factors will
determine work and livelihood and through those things our overall
human welfare in the next century. They are:
1) social security and in general the Finnish model of society,
2) forests and
3) knowledge.
The latter two are easier to approach, because their importance
for the future is already understood very widely and fairly well. The
prerequisites for developing them enjoy support, because the
perception is that success in those sectors will undoubtedly benefit
all. Forests are our most important natural resource. The ability to
exploit them must be ensured. A feature emphasised is that forests
should be put to a diversity of uses. As is the case in relation to
forests, there is complete unanimity in all political circles and
administration that in the future work and production will be founded
more on knowledge and skills than they are today.
The first problem, the features of development of social security
and the model of society, is difficult to deal with, because opinions
on it differ sharply not only between, but also within parties. Fear
of losing benefits is strong. It may be, however, that unless we are
able to create a good and functioning model of society our strengths
in the forest sector and knowledge will not be enough.
A point to which attention has been drawn in the latest - albeit
in some respects still preliminary - studies of the effectiveness of
welfare policy is that the welfare model does not meet all of the
goals set for it. When welfare in the 21st century is being pondered,
problematic aspects must be addressed as openly and honestly as
possible. The hypotheses are:
Hypothesis no. 1: Morbidity follows social dividing lines, i.e.
the poor die considerably younger and become ill more than the rich.
Hypothesis no. 2: University education follows social dividing
lines, i.e. the best places at universities go to the children of
wealthy, well-educated parents in the greater Helsinki region.
Hypothesis no. 3: Upward mobility is more difficult to achieve in
Finland today than it was in the highly-stratified, estates-based
society of the turn of the century.
Hypothesis no. 4: In quantitative terms, the relatively well-off
middle class has benefited most from housing subsidies and many other
subsidies intended as forms of social support.
Hypothesis no. 5: The dependency ratio in society is becoming
untenable, because the number of people employed is dwindling due both
to unemployment now and more and more people taking early retirement,
a trend that is likely to strengthen in the future."
6. Fine, so what?
We are used to hearing about new goals, methods and processes, but
seldom hear what real uses they are put to. Scientific seminars
normally give us presentations of brilliant theories, but only very
rarely do we get any information about how it all went in practice.
The Committee for the Future has a composition that looks fine on
paper and it has even begun functioning well, but a question that all
of us must still ask ourselves is what use the whole thing serves.
I must confess that we are living in a zone of waiting, hesitation
and danger as our experiment brings a new dimension to discussion of
politics in the Finnish Parliament. Although, viewed in retrospect,
the way in which the Committee came into being and got under way looks
very easy and self-evident on paper, in reality many old-fashioned
bureaucrats - and perhaps also some politicians - have resisted the
whole idea from day one. They have emphasised the basic tasks of the
Parliament which are 1) to make laws and 2) to approve the budget. So
they just hope the Committee will disappear and cease disturbing the
normal quiet life of Parliament. Then there are those who fear the
Committee will intrude onto their turf; competition is unwelcome. On
the other side, what arguments have those who do believe in this new
dialogue presented in support of the Committee?
First of all, in a situation where Parliament is among the
least-respected of the various actors in our society, I believe that
every effort to increase people's trust in the political system should
be welcomed. Another fact is that the nation-state's traditional tools
for shaping national politics or economics have been rendered obsolete
by globalisation and EU membership. In a nutshell, the main long-term
results identified by the Committee for the Future will be the following:
i) Possibility to set the agenda
In every country it is normally the government that sets the
agenda. The Committee for the Future and the two dialogues that it has
practised to date have enabled Parliament independently to specify the
items that are important for the future of our country. The role
played by Parliament in the normal law-making-process and in dealing
with the budget is fixed. It deliberates the legislation and budgets
that the Government submits, following a timetable that the Government
determines. The margins are very narrow. The future, on the other
hand, is a broad issue and the range of items and time scale involved
is such that everything is allowed.
Formal, legal authority is not the only form of power. Determining
the agenda to be followed in political discourse - selecting the
important matters to be included in the national debate - is nowadays
also an exercise of power. In this respect, Parliament should grasp
the reins.
ii) Active role
The old system is based on a passive role performed by Parliament.
Bills introduced by individual deputies succeed in passing through the
legislative process so seldom that it was seen as a milestone event
when one (dealing with the environment) did so 4-5 years ago. It had
been more than 10 years since anything like that had last happened.
Changes made to Governmental bills are minimal. Changes to the budget
usually amount to something between 0.01 and 0.02 per cent of the
bottom line, often even less. When a problem in society has been
recognised and planning for a solution to it has reached the point
where it is time to pass a law or include an appropriation in the
budget, the whole thing has been so thoroughly deliberated that there
is little left for Parliament - which is the final decision-making
link in the political chain - to add. If Parliament wants to have more
power, it must discuss problems earlier. Indeed, it must itself raise
new topics for discussion.
iii) Drive for innovation
We all know that the public sector is not a source of innovation.
Why? Yet we recognise that we cannot continue with the present system,
in which the public sector's share of GDP is de facto 60%. There are
new tasks waiting for the State to perform, and we cannot get rid of
old ones. The most useful thing that we could do with our long-term
interests in mind would be to trigger a rapid wave of social innovations.
We in the Committee discovered that it is easier to invent new
machines than to change an existing social system, much less create a
totally new politico-social development. There are always so many
groups that think only of their own interests and will resist any kind
of change. The most recent major social innovation in Scandinavia
occurred in the 60s, when a public health care system and an
educational system (both free of charge) were put in place.
If a parliament wants to promote any kind of innovation, it must
put it on the agenda very early. Rather than waiting for the
government to solve problems, a parliament can prompt it to do so.
Social innovation takes place on a very long time scale. The earlier
the push comes, the better.
Let us take some examples. We in Finland have been starting to
discuss the State's new tasks. A big committee was appointed by
Government to revise the Constitution, but did not include the
changing role of the State on its agenda. It even proposed to set in
stone the old welfare benefits in every detail, as though the problem
of costs had never arisen. Many criticised the proposal. The Committee
for the Future had emphasised the need for change and asked the
Government to compare different models of welfare. There are different
politics even among socialists in Europe; just look at Tony Blair and
Lionel Jospin, for example. The Finnish Ministry of Finance has
launched a project called Public Sector. It will take a lot of time
just to change attitudes, so it is important for innovation to start
at the highest possible level of politics and also that we begin to
talk about the necessity of change sufficiently early.
Another example of proposals made by the Committee for the Future
is to facilitate both national-level and EU-level comparison. To do
so, there is a need to measure welfare using a set of criteria broader
than a GDP-based one. In response to this proposal, the Government has
begun seeking solutions both here and in an EU context, but its task
is not an easy one.
While the Committee has looked for new discussion themes it has
also sought new tools for working in Parliament. As we all know,
working methods are very strict and formal in every legislature. One
of the new things we did was to organise a series of video seminars.
Some 100-150 politicians, researchers, trade unionists and
businesspersons assembled in the Parliament Building in Helsinki and,
via a video link with a studio on the other side of the world, were
brought together with experts in countries that we thought important
for the future in general or from which Finland could learn something
special. The name that we gave the video seminars, MODELS OF SUCCESS,
reveals the main idea We have had seminars together with Singapore,
South Korea, China and Wisconsin (USA). With the latter, which
resembles Finland in certain respects, a penetrating comparative study
of sub-factors in success, such as employment, was made. Reports of
the seminars are available in English.
Based in part on this input, the Committee for the Future has
developed some new methods of working. The Wisconsin project, an
astonishingly multifaceted experiment, is one example. The following
tale gives just a glimpse of a fascinating series of efforts.
A by-product of the Wisconsin project was the arrangement of
3-month job experience placements for 100 young Finns, in Wisconsin.
During our visit to Wisconsin in January, the Committee delegation
(comprising 5 deputies and myself as secretary) received an offer of
several hundred summer jobs there. The offer came suddenly. We knew
the summer would soon be upon us, and that the government bodies that
handle student exchanges usually require a minimum of a year to do so.
Thus we decided to do the whole job ourselves. In line with the
American model, all was done through voluntary effort outside and
parallel to people's official jobs. None of us on either the Finnish
or the American side had any inkling beforehand of what obstacles
would have to be surmounted. The trainee exchange project is an
example of what commitment means. All parties involved had promised to
do their best, so there was no giving in.
The way in which one minor bureaucratic problem connected with the
100 job placements was solved serves as a good example of how things
were handled. The US regulations governing exchanges of this kind
require each trainee to make an advance payment of $600 as a sort of
handling fee. With all the haste and numerous details that the process
involved, this matter remained rather in the background. Later, when
the youngsters were already packing for the trip, I found out that the
leader of the project in the USA, Professor K. - to his wife's dismay
- had gone to the director of a new bank in Wisconsin and taken a
personal loan to cover the fees for all 100 Finns. Good, sound
guarantees were required for the loan. They were provided by the
Finnish company Fiskars, which manufactures scissors, knives and other
metal products and has a factory in Wisconsin. It must be pointed out
that none of the trainees was placed in the Fiskars factory, but
without the company's help the whole project might well have foundered
then and there.
Lastly, I would like to point out some current projects of the
Committee for the Future related to electoral periods in Finland. We
shall have major elections in 1999 and 2000, when we shall be choosing
our own Parliament, our 16 representatives in the European Parliament,
and then our municipal councils and a President. There is a need to
find new items for discussion in society. The budget will swell,
because all governments want to please voters before an election.
There is also a need to include critical points of view in the
discourse. The members of the Committee for the Future are not acting
so much in the same way as the members of the other parliamentary
committees; they have not thought from the beginning that membership
in this particular committee could be a special kudo. Those committees
that deal with concrete topical politics are the place to be when one
is seeking votes. By contrast, the Committee for the Future is more
about carefully considering the interests of society as a whole.
Two important programming tasks that we shall have to tackle in
1999 will require us to set sophisticated political goals, identify
problems and propose solutions that are not so oriented towards the
present day as those that the administration or indeed political
parties generally produce. The programme of the new government formed
that year will need to be heavy on future options. The same applies to
the EU Presidency, which Finland will hold for half of 1999. There are
not many bodies at a high political level that represent the people.
As part of its routine work, the Committee for the Future interviews
prominent experts in different fields of knowledge, after which the
matters in question are discussed and the points of view that emerge
are woven into a report.
It is not so easy in a small country to sustain an open and lively
discourse. The public sector is so large that the State is, in one
form or another, always the boss. Innovation needs freedom of opinion,
but also intelligent debate both in theory and in practice.
Competition between new ideas is a basic element of future success.
One of the ways in which this manifests itself in the sphere of
politics is that heads of state, governments and parliaments are
advised by bodies of outside experts. So-called wise men or think
tanks study politics and evaluate strategic choices. They differ in
many ways, but share one important goal: They provide the top
political leadership with background information, alternative solution
models, assessment of the effects of decisions, or even critical
follow-up evaluations of ongoing reform processes. In Finland, only
solutions arrived at in the sphere of economic policy are subject to
systematic assessment. Even in economic forecasting, everything is
based on figures calculated by the Central Statistical Office.
Parliament could function as a better forum for discussion of new
ideas. Through its seminars and with its reports it is exploring the
possibilities of a more open culture of discourse in a country where
discussion has traditionally been rather stiff and stilted.
April 16, 1998 -
Originally posted by goh meng seng:This is an article found by one of our forumite. Finland has been graded No. 1 in Competitiveness in the World Economic forum.
What we have found is that Finland is exceptionally good in managing Innovative Economy aka Thinking Economy.
This is looking from the Political side of Finland's development.
Goh Meng Seng
Innovation Case Study: The Need For Political Innovation
Paula Tiihonen, Committee Councellor, Committee for the Future
.
.
.
.
.
April 16, 1998 -
1998.
Back to the future!
Anyway, we should start campaigning for joint-security against Terrorism in SEA.
We'll reap benefits from such a campaign. -
if they're so innovative how come i dont see them becoming a super power?
-
govt adopting swiss style ...
u want finland..zzz -
Dear All,
This article is written back in 1998 but it doesn't mean it is "outdated". Finland is considered as No. 1 in 2004 by World Economic Forum.
I will post the article here. Please Note that Singapore is No. 7 while Taiwan is No. 4.
Nordic Countries Lead The Way In The World Economic Forum's 2004
Competitiveness Rankings
MENAFN - 13/10/2004
United Kingdom, Japan, Chile, Canada and Estonia all gain positions -
US remains in second place
Geneva, Switzerland 13 October 2004 - Finland remains the most
competitive economy in the world and tops the rankings for the second
consecutive year in The Global Competitiveness Report 2004-2005,
released today by the World Economic Forum. The United States is in
second position, followed by Sweden, Taiwan, Denmark and Norway,
consecutively.
"The Nordic countries are characterized by excellent macroeconomic
management overall - they are all running budget surpluses - they have
extremely low levels of corruption, with their firms operating in a
legal environment in which there is widespread respect for contracts
and the rule of law, and their private sectors are on the forefront of
technological innovation. These countries prove the point that
enhanced competitiveness and boosting the capacity of economies to
operate effectively in the global economy is a multifaceted challenge
requiring concerted actions on a number of fronts," said Augusto
Lopez-Claros, Chief Economist and Director of the World Economic
Forum's Global Competitiveness Programme.
The rankings are drawn from the results of the Executive Opinion
Survey, a comprehensive survey conducted by the World Economic Forum,
which this year polled over 8,700 business leaders in 104 economies
worldwide. The survey questionnaire is designed to capture a broad
range of factors affecting an economy's business environment that are
key determinants of sustained economic growth. Particular attention is
placed on elements of the macroeconomic environment, the quality of
public institutions which underpin the development process, and the
level of technological readiness and innovation.
"Over the last several years the World Economic Forum's Growth
Competitiveness Index has been a useful tool in thinking about key
macroeconomic and institutional elements, critical to the growth
process. The present rankings continue to provide policy-makers,
businesses and organizations of civil society with valuable insights
into areas where further progress is called for, in order to improve
the environment for private sector economic activity, and generate
sustainable growth," said Lopez-Claros.
Highlights
· Finland is number one in the Growth Competitiveness Index (GCI)
rankings and holds this position for the third time in the last four
years. The country is very well managed at the macroeconomic level,
but it also scores very high in those measures that assess the quality
of its public institutions. Furthermore, the private sector shows a
high proclivity for adopting new technologies and nurturing a culture
of innovation. The United States, as last year, is ranked second:
overall technological supremacy is partly offset by a weaker
performance in those areas that capture the quality of its public
institutions and the stability of the macroeconomic environment.
· The Nordic countries continue to hold prominent positions in the
rankings among the top ten most competitive economies this year, with
Finland (1), Sweden (3), Denmark (5), Norway (6) and Iceland (10) all
in privileged places. The largest improvement among these countries is
posted by Norway with a move up from 9th to 6th place this year.
· Elsewhere in Europe the most notable developments are: the sharp
improvement in the relative position of the United Kingdom, which has
moved up 4 places to 11 in the overall rankings; the stellar
performance of Estonia (20), which is by a significant margin the most
competitive economy among the 10 countries that joined the EU in May
of this year; and the continued decline of Italy (47, compared to 26
in 2001), which now has the lowest rank among the EU-15 and a lower
rank than many of the accession countries. Italy's worsening
performance affects all areas, with particularly sharp drops in the
area of quality of public institutions (e.g., judicial independence,
favouritism in public sector decision-making and the business costs of
crime).
· Japan (9) has continued to scale positions (21 in 2001) and this
year has crossed the top ten threshold. Its improved position reflects
a combination of factors, including the strong economic recovery under
way which has boosted business confidence, and notable improvements in
various indicators which assess the transparency of public sector
institutions.
· China (46), broadly unchanged with respect to last year (44),
continues to have a mixed performance. A stable macroeconomic
environment, reflecting the strength of economic activity and the
absence of major macroeconomic imbalances, is offset by weak
institutional underpinnings in such areas as the soundness of the
banking sector, the extent of administrative controls and red tape,
and poor auditing and accounting standards.
· Elsewhere in Asia, Taiwan (4) and Singapore (7) continue to lead the
region in a complementary way. Taiwan has an unusually high rank in
the area of technology (2) - second only to the Unites States -
whereas Singapore has the number 1 rank in terms of the quality of its
macroeconomic environment, a position it has held for several years in
a row in a commanding fashion.
· With very rare exceptions, the economies in Latin America exhibit
worsening levels of competitiveness in 2004. The Andean economies are
especially noteworthy, with all showing a drop in ranks, in some cases
of precipitous proportions (Peru and Bolivia, dropping by 10 and 13
places respectively). Where some improvements are visible, such as in
Argentina (74), the levels mainly reflect a bounce with respect to the
very depressed levels of the previous year, linked to the collapse of
the currency and the country's financial system. Policy instability,
inefficient bureaucracies and corruption emerge as the most
problematic factors for doing business in Latin America.
· While a large number of countries in sub-Saharan Africa hold
positions in the lower half of the rankings, South Africa (41) leads
the region in the global rankings, showing an overall improvement on
last year's performance. More significantly, South Africa's rank is
higher than the rank of every country in Latin America, except for
Chile (see below). At the other end, Zimbabwe (99), already low last
year, falls even further. It has the lowest rankings among the 104
countries covered on inflation performance, credit ratings, the
soundness of the banking system, the costs of its agricultural
policies, brain drain and freedom of the press, among others. A sad
case overall of the development process having gone sharply awry.
· Chile (22) has not only sharply improved its position with respect
to 2003, but it continues to be the most competitive economy in Latin
America, with a staggering 26 places between it and Mexico (4
, which
is the next highest ranked country in the region. A detailed case
study on Chile is included in this year's Global Competitiveness Report.
"The Global Competitiveness Report - now in its 25th year of
publication - has become a primary source of information on the
strengths and weaknesses of over 100 economies, accounting for the
bulk of global GNP. It is an invaluable reference guide for business
leaders and policy-makers, as they endeavour to cooperate to create an
environment which is more supportive of private sector economic
activity. Increasingly, through insightful essays on various aspects
of the economic agenda for improved reform and competitiveness, the
Report is also making an important intellectual contribution to
addressing some of the most intractable problems we face as we attempt
to improve the state of the world," noted Klaus Schwab, Founder and
Executive Chairman of the World Economic Forum.
The World Economic Forum continues to expand geographic coverage of
The Global Competitiveness Report, currently featuring a total of 104
economies, of which the new entrants this year include Bahrain, Bosnia
and Herzegovina, Cyprus, Georgia and the United Arab Emirates, making
this Report the most comprehensive of its type.
Co-Directors of The Global Competitiveness Report are Klaus Schwab,
Executive Chairman of the World Economic Forum, and Michael E. Porter,
Bishop William Lawrence Professor at Harvard Business School, Harvard
University. Professor Porter presents the results of the Business
Competitiveness Index (BCI), an especially useful complement to the
GCI, with its emphasis on a range of company-specific factors
conducive to improved efficiency and productivity at the micro level,
such as the sophistication of the operating practices and strategies
of companies, and the quality of the microeconomic business
environment in which a nation's companies compete. Results of the BCI
rankings are fully reported in the Executive Summary and available
online at http://www.weforum.org/gcr
This year's Report contains a number of studies that address different
aspects of competitiveness and, more generally, themes which emanate
from the World Economic Forum's deep concern with growth and
development. Of particular note are Professor Xavier Sala-i-Martin's
contribution on the development of more comprehensive competitiveness
indicators, bringing in key factors not previously considered in the
Forum's recent competitiveness work; Dr Daniel Kaufmann's study on
governance and corruption in high-income countries; Dr Peter Heller's
paper examining the long-term fiscal implications of population aging,
climate change and globalization; Professor William Easterly's look at
the issue of why foreign aid has not been more successful in boosting
the competitiveness of poor countries; Dr Arthur Dahl's interesting
use of the Forum's Survey to cast light on the issue of why
environmental responsibility makes good business sense; and Dr Stefan
Tangermann's analysis of the glaring inefficiencies associated with
the subsidization of agriculture in OECD countries and the needed
reforms, among others.
The Report contains a detailed country profile for each of the 104
economies featured in the study, providing a comprehensive summary of
the overall position in the Index rankings as well as a guide to what
are considered to be the most prominent competitive advantages and
competitive disadvantages of each. Also included is an extensive
section of data tables with global rankings on over 100 indicators.
Should you require country profiles or specific information, please
contact [email protected]
The Report, published by Palgrave Macmillan, is available to purchase
online at www.palgrave.com/worldeconomicforum, by telephone at +44
(0)1256 302688, by fax at +44 (0)1256 330688 or by e-mail at
[email protected]
For more information about The Global Competitiveness Report and other
activities and publications of the World Economic Forum's Global
Competitiveness Programme, please visit http://www.weforum.org/gcp
FedEx Corporation is the Partner of The Global Competitiveness Report
2004-2005.
Notes to Editors:
For photographs of the authors and graphics that can be downloaded for
publication, go to www.weforum.org/GCRphotogallery
_________________________________________________________________
The World Economic Forum is the foremost global community of business,
political, intellectual and other leaders of society committed to
improving the state of the world.
Incorporated as a foundation, and based in Geneva, Switzerland, the
World Economic Forum is impartial and not-for-profit; it is tied to no
political, partisan or national interests. The Forum has NGO
consultative status with the Economic and Social Council of the United
Nations. (http://www.weforum.org).
If you do not want to receive further information about the World
Economic Forum, click here. -
Even though is article is written in 1998. A lot of things still hold true and worth pondering on.
The following section talks about the impact of globalization. It applies to now and applies to Singapore. We can see Singapore government face the same issues, and made some similiar decisions.
Another part of the article talks about the impact of EU membership to Finland. It will apply to Singapore if ASEAN moves toward EU model.Originally posted by goh meng seng:This is an article found by one of our forumite. Finland has been graded No. 1 in Competitiveness in the World Economic forum.
National leaders are well aware of how globalisation is embracing
capital flows, production and investment, in common with science,
technology and innovation. They try to devise national policies
conducive to making companies based in their respective countries more
competitive in global markets. They also see countries and whole
continents waging a major and never-ending competitiveness war. Every
action - every political decision or omission of one - is viewed as a
move in this big game of success.
You can argue that there still are areas which are absolutely
under the control of national parliaments and governments. Until now,
social policy has been regarded as each country's own affair. But it
is not. As a borrower, an investment location, a trade partner and
indeed as the focus of any economic activity that one can think of,
Finland is subject to constant monitoring and evaluation. We are
continually being ranked according to criteria of the greatest
conceivable diversity and, unlike what happens in the case of the
Eurovision Song Contest, how well we do has direct and indirect
effects on our lives. International analysts do not limit their
assessments to EMU criteria, but rather examine dozens of competitive
factors, risks, the health or otherwise of banks and the State's
creditworthiness. A system of constant scrutiny has made those who
shape domestic policies quite cautious. An unguarded sentence -
however trivial - uttered by a minister can be interpreted as a signal
dangerous for Finland.
Decision making even in matters of social policy or education has
become more complex. International ramifications, both short- and
long-term, must be weighed. An excellent example is provided by
taxation, something that belongs to the core of domestic policy and
national sovereignty. Countries with high taxes do not attract
financiers, investors nor permanent investment. Young researchers and
experts, who have been expensively trained by our society, will not
stay in Finland if their incomes are negligible. On the other hand,
good education and a high level of skill cannot be achieved without
the support of society, and this in turn requires tax income. The same
applies to stable conditions in society. Citizens generally like to be
able to walk the streets in peace. The first thing that people who
provide funds want to be sure of is that they will get their
investment back whatever the circumstances. When international
classifications are conducted, social benefits are regarded as
expenses that must be covered by tax revenue or contributions
collected from companies. Yet, the same economists who call for curbs
on social spending would like society to provide their children with
good and free education and health care.
April 16, 1998 -
Heck lah. Besides Nokia, Finland has NOTHING!
-
I think it is only fair for you to do some research on Finland first before you start to talk like that.
Even Nokia itself, is something that Singapore cannot produce. That's how bad Singapore is.
Goh Meng SengOriginally posted by foxwalk:Heck lah. Besides Nokia, Finland has NOTHING! -
Dear Sarek,
I think you got the crux of the issue here.
That is why I am advocating a ASEAN economic union or some form of trade bloc which will be the very first step for us to Innovative Economy!
Without a big critical mass, a small country like Finland and Singapore need to form economic integration or union with other bigger countries with bigger market aka population. Else, the Innovative Economy will not be sustainable at its initial state of formulation.
Goh Meng SengOriginally posted by sarek_home:Even though is article is written in 1998. A lot of things still hold true and worth pondering on.
The following section talks about the impact of globalization. It applies to now and applies to Singapore. We can see Singapore government face the same issues, and made some similiar decisions.
Another part of the article talks about the impact of EU membership to Finland. It will apply to Singapore if ASEAN moves toward EU model. -
I disagree with that view. Such union will take at least another 10 years to form. Singapore need to develop its innovative economy now. So the union can't be the first step. Good trade relationships and FTAs are enough to keep the economy going.
Joining a union is desirable only in term of providing a long term stability that exceed trade relationships and FTAs. However, Singapore can not join a economic union where the other members are economically / politically unstable. Singapore will be dragged down if one of the big member's economy collapse. On the other hand a union with strong members, while stable, will easily absorb / marginalize Singaproe because of their big size. So Singapore need to have its innovative economy in place to give it a niche before joining the stable union.Originally posted by goh meng seng:Dear Sarek,
I think you got the crux of the issue here.
That is why I am advocating a ASEAN economic union or some form of trade bloc which will be the very first step for us to Innovative Economy!
Without a big critical mass, a small country like Finland and Singapore need to form economic integration or union with other bigger countries with bigger market aka population. Else, the Innovative Economy will not be sustainable at its initial state of formulation.
Goh Meng Seng -
Taiwan's Mark Chen made remark on Singapore based on its size instead of what BG Yeo said.
You made remark on Finland based on its economic development instead of what this article said.
How "saddening".Originally posted by foxwalk:Heck lah. Besides Nokia, Finland has NOTHING! -
Dear Sarek,
Whether we like it or not, Singapore is stuck in between Malaysia and Indonesia. That's reality. In fact, contrary to what many people think, our past success depends very much on our neighbours; serving our neighbours' needs, like imports and exports, financial services, raw material processing....etc etc.
I would agree with you we could not go into a union immediately for many reasons, but at least, we must work towards that mid term growth. A trade bloc is more practical for ASEAN. A union like EU where we give up our soveriegnty of financial management (i.e. common currency) would not be advisable indeed. But at the very least, open up the capital and labour market, as well as zero tariff trade would be desirable.
Apparently, PAP is trying to have its cake and eat it. It wants the "form" of innovative economy, but resisting the necessary change of substance, in terms of political reforms. I do not believe there could have half virgins.
Goh Meng SengOriginally posted by sarek_home:I disagree with that view. Such union will take at least another 10 years to form. Singapore need to develop its innovative economy now. So the union can't be the first step. Good trade relationships and FTAs are enough to keep the economy going.
Joining a union is desirable only in term of providing a long term stability that exceed trade relationships and FTAs. However, Singapore can not join a economic union where the other members are economically / politically unstable. Singapore will be dragged down if one of the big member's economy collapse. On the other hand a union with strong members, while stable, will easily absorb / marginalize Singaproe because of their big size. So Singapore need to have its innovative economy in place to give it a niche before joining the stable union. -
Trade bloc? Against who? USA? Don't understand your concept . I understood that the concept of EU was formed as a trade bloc against USA to prevent the americans from forcibly opening european markets for american products . USA got around it by doing FTAs in other countries.Originally posted by goh meng seng:Dear Sarek,
Whether we like it or not, Singapore is stuck in between Malaysia and Indonesia. That's reality. In fact, contrary to what many people think, our past success depends very much on our neighbours; serving our neighbours' needs, like imports and exports, financial services, raw material processing....etc etc.
I would agree with you we could not go into a union immediately for many reasons, but at least, we must work towards that mid term growth. A trade bloc is more practical for ASEAN. A union like EU where we give up our soveriegnty of financial management (i.e. common currency) would not be advisable indeed. But at the very least, open up the capital and labour market, as well as zero tariff trade would be desirable.
Please explain further. -
Trade bloc is not necessary an organization that is set up against anybody.
It is just a collective of strength and weaknesses among members, to help themselves by banding together to have more power in negotiation in collective terms. This is especially beneficial for developing countries like Burma, Vietnam, Indonesia....etc. Foreign investments by MNCs could be a double edged sword (that is why in China they must go through approval by the govt). In some areas for large countries with many natural resources like Indonesia, it could become a form of cannibalisation by the MNCs or what I call "economic colonialism". Sometimes we cannot understand why people resist MNCs the way they do but there are reasons behind it.
It could also mean a collaboration in having all trade barriers within the bloc, among the members to be liberalized first, giving preferential treatments to members. In relative terms, this exercise a "trad block" against non-members. Thus, in some sense, it is a form of "membership" of a country country; if you are a member, you pay less.
Goh Meng SengOriginally posted by fymk:Trade bloc? Against who? USA? Don't understand your concept . I understood that the concept of EU was formed as a trade bloc against USA to prevent the americans from forcibly opening european markets for american products . USA got around it by doing FTAs in other countries.
Please explain further. -
That is why I am advocating a ASEAN economic union or some form of trade bloc which will be the very first step for us to Innovative Economy!
Without a big critical mass, a small country like Finland and Singapore need to form economic integration or union with other bigger countries with bigger market aka population. Else, the Innovative Economy will not be sustainable at its initial state of formulation
Just a note...
The idea on Economic Union is a great idea. No doubt. Just remember implmenti it will be very tough.
The formation of the Economic Union will often mean that states will have to give up a certain degree of their sovereignty (One eg. The formation of Euros meant that countries lost certain power over their monetary policies).
ASEAN states has traditionally, been very protective of their sovereignty and it may prove to be a hindrance to a Economic Union.