Finland - Economic sectors

In 2000, the balance between Finland's economic sectors was consistent with those of most OECD nations,

with agriculture contributing 5 percent to the GDP, industry 32 percent, and services 63 percent. However, until the 1960s, Finland relied much more heavily on agriculture than its neighbors. It was partly the pressure of post-World-War-II reparations to the USSR that forced Finland to build and expand its industrial base. Finland's 1999 accession to the EMU has further shifted the emphasis from agriculture and has forced the end of many subsidies to farmers. In more recent times, growth in the various sectors also has set Finland apart from its neighbors and most of the OECD countries, as manufacturing (especially high-tech products) expanded more quickly than the service sector.

The U.S. Department of Commerce identifies milk production as "the backbone of the Finnish agriculture industry." In 2000, Finland produced 2.5 million units of milk, about 0.44 percent of world milk production. Dairies and egg farms produce more than Finland needs to feed itself, while Finnish meat production roughly equals consumption. Membership in the EU has deeply affected the agriculture industry; in 1996, producer prices fell more in Finland than in any other EU country. In 1997 food prices averaged 11.2 percent lower than in 1994 (prior to EU membership). Finnish producers had to reduce prices to EU levels, especially facing competition from agricultural imports of the union's members. A new focus for agriculture is research into specific enzymes and bacilli that have health and commercial use, with the raw products of the dairy and forestry industries (milk and trees) providing some of the raw material. Finland is also basically self-sufficient in meat production.

Finland's high-tech, highly productive forestry industry overlaps and links the agriculture and industry sectors. Finland has the world's highest per capita forestry production, twice that of Sweden and 3 times that of Canada. With about 70 percent of its area covered by forests at the end of the 20th century, Finland's use of its most abundant natural resource provides the materials for Finland's industrial wood-processing industries. Finland supplies 25 percent of the world's exports of printing and writing paper and 15 percent of the world's paper and paperboard exports.

From 1993 to 1998, industry's share of the GDP rose from 31.3 percent to 33.8 percent. Manufacturing dominates this sector, with output in 1999 worth FMk504.9 billion. Nokia, the cellular phone maker, has been the main engine of Finnish industrial growth in the late 1990s. In 1998, Nokia alone contributed 1 percent to Finland's 5 percent GDP growth. However, there is some concern that Nokia holds too much responsibility for the sector and the economy. It is far and away the largest firm in manufacturing, with no other company even approaching its level of production and employment. Other branches of manufacturing in general have not seen similar growth. Unlike many other developed nations, where the service industry is often the main sector for growth in employment, Finnish industry has been the biggest job creator, especially manufacturing.

In the service sector in 1997, government services make up nearly one-third of all service sector activity. Many private services, especially business and IT services, are growing at a faster rate than public services. The production of private services increased by almost 5 percent in 1997 and has been steadily growing since the mid-1990s, with telecommunications and service to businesses marking the fastest-growing sectors. However, unlike in other OECD countries, the service sector's share of the GDP and employment has not increased as quickly as manufacturing. New jobs in the service sector are mainly created by manufacturing, which outsources many of its production-related services.