Why did Finland lose its competitiveness from 2007 to 2017?

Abstract

The aim of this research is to investigate the factors to explain Finland’s loss of competitiveness from 2007 to 2017 by utilizing the World Economic Forum’s global competitiveness index framework. Preliminary analysis shows that Finland lost its competitiveness mainly in the pillars of macroeconomic environment, goods market efficiency, and business sophistication. In-depth analysis suggests that the demise of Nokia, the global financial crisis, the European sovereign debt crisis, and the Russian crisis have triggered the deterioration of the government deficit. Accompanying budget cuts by the Finnish government from R&D, education, and funding support to start-ups, in order to balance the growing government deficit, have diminished the innovation and marketing capabilities of Finnish companies, resulting in the loss of Finland’s competitiveness.