Jari Vilen Interview: Conversations with History; Institute of International Studies, UC Berkeley

Finland and the Global 
    Economy: Conversation with Jari Vilen, Minister for Foreign Trade, Finland, 
    January 23, 2003 by Harry Kreisler

Page 3 of 6

Finland's Adaptation to a Changing World

When one thinks, generally, of high-tech societies, societies that are very competitive, very innovative, we often think in terms of alienation, a lack of a cultural identity, a putting aside of tradition. But from what you're saying, that's not the case in Finland. You come into this modern age bringing a culture and traditions that seem to support your adjustments in the new world.

I think it's a culture-related matter, as you mentioned. Finland used to be, before we became independent in 1917, seven hundred years as part of Sweden and one hundred years as part of the Russian [empire]. And throughout those eight hundred years, both Sweden and Russia wanted to change the society. For example, changing the language: Sweden wanted to [make] Swedish the language for Finns. But I think the Finns have always been so stubborn that we maintained our culture, our traditions, and even our very difficult language -- it's one of the most difficult languages in the world, I do believe. And this has remained the same today.

We made the change to the information society only about twenty years ago, when there was a very bad recession in Finland in the early 1990s. We decided that we have to focus on high-tech, focus on education and training, and also focus on export industries. That was something that the whole nation united on. I said to some of my colleagues in the USA (I was discussing this in Washington yesterday), that I do believe that my nation is at its best when it's having its harshest time, its most difficult time. That was the same in the Second World War, when the whole country united to fight against the Soviet Union. In the recession, the whole nation united to decide that these are the measures and actions we have to take. Finland's change from the pulp and paper producing industry, from agrarian and the traditional industrial society to the high-tech society, was a transformation process in a very short time.

Help us understand Finland's situation in the period that you're talking about. You're a very small country. You were in the backyard of what was then a superpower, the Soviet Union. You probably were very dependent on your trade with the Soviet Union at that time. But then it all unraveled with the fall of the Berlin Wall. You're saying that your leadership thought about these problems of adjusting to this new world of technology even before the fall of the Soviet Union and the transformation of the global economy. Why did that happen?

The collapse of the Soviet Union, of course, affected our trade, because throughout the years we were able to [maintain] very good relations with the Soviet Union, especially in trade relations. They used to be our fifth largest export partner. But the traditional trade of Finland has always been with Europe and also with the USA. Our biggest trading partners have always been Germany, Sweden, United Kingdom, and the USA. And then comes Russia and some other countries. China, for example, is growing very fast these days.

We decided to look for those areas where we could be most competitive in the world, and it was remarkable, really. Political leaders, business leaders, and also the academies of our nation put their heads together and thought about our success stories. How can we maintain the very high level of living standards that we've been having in our country since the Second World War? What to do, and how to do that? The decision was made that we have to specialize in specific sectors. Today [we have] this information communication society, which the whole nation has united to deal with.

But the challenges we are facing today, and the challenges I'm facing as a member of the government are, what are the new "Nokias" of Finland? Where should we invest in the future? One of my purposes of visiting here is to find out the thoughts and ideas and what's going on in Berkeley at the moment, what's going on in California, and how to be proactive, not reactive to the matters, but be proactive to the world.

The collapse of the Soviet Union was actually a smaller, minor part of that development. The decision had been made almost previously.

I get the sense that your government and your country is committed to identifying alliances between the government and different parts of society to make these transitions possible.

It is true. These decisions would not have been able to be made without the [prior] decision to find a consensus between different partners. As I mentioned, we actually were hit in early 1992 by one of the worst recessions in the whole Europe. Because there was a combination of things: open up the markets, open up the banking sector; the recession of Europe as such; the collapse of the Soviet Union, which were great trading partners with us, because we were able to export a lot of things for them. See, all these together accumulated a situation that we needed desperately to have a new strategy and new plans for the future.

As I mentioned, one of the strengths of our society is that it's a small nation where people know each other. We're able to get together a plan where trade unions, entrepreneurial unions, federalists, industrialists, and politicians both in government and opposition agreed about the basic lines. The decision was investment on research and development; investment in education and training; and maintaining the high level of social security in our nation, which is a Scandinavian model. In these ways, I do believe, we're able to prevent any social unrest in our society. And, also, maintaining the legislation so that the government would deregulate the markets as much as possible. For example, energy prices and telecommunication prices in Finland are among the lowest in the whole world, because we were one of the first nations in the world to liberalize the markets, and deregulate them for those purposes.

Next page: Shaping the Future of Technology

© Copyright 2003, Regents of the University of California