Q: Could you explain the economic situation in Finland in the context of the regional and global trade? What are the major opportunities for foreign investors?

A: Prior to 1989, Finland was among the few European countries that actively traded with the Soviet Union. However, after the collapse of the Soviet Union, we lost about 25% of our foreign trade overnight. That, combined with domestic over-borrowing and a credit crunch, led to a severe recession in 1993.

At that time, the government started to invest in R&D and education and that helped Finland to come out from the recession fairly quickly. That investment was also the basis for the solid mobile communication empire that we now have. Since then, the growth has been very stable and even the 2000 bubble didn’t hurt us seriously.

Now Russia is back as our biggest trading partner. We import raw materials from Russia, particularly oil, and we export consumer goods and food. Germany has also been a very important and steady trading partner for us. The other significant country is our closest neighbor Sweden and there has been a lot of collaboration between Finnish and Swedish companies.

For instance, there has been a heavy merger & acquisition activity in the financial sector, the forest industry, and the metal industry. As a result, Sweden now is the biggest foreign investor in Finland, accounting for about 50% of all the foreign direct investments.

The traditionally strong industries of our economy are pulp and paper and engineering production. Finnish companies develop the machinery for the mining, pulp and paper, and metal industries, as well as for harvesting. The backbone of our economy has been the metal and the forest industry. In the late 1990s, mobile communications surged and high technology now represents the biggest part of our foreign trade. It is led by Nokia, of course, but there are many other companies in that cluster.

Q: How has the proximity to Russia and Sweden affected your economy and development? In terms of technology, Russia has lagged behind the West and acting as the middle man must have been beneficial.

A: Yes, it has been a beneficial relationship. Many foreign companies that are interested in the Russian market prefer to come first to Finland to study the market and export from here. Then they move to the Russian side. There are still many companies coming from the U.S., Asia, India, and China, and they are not willing to go directly to Russia. But the European companies now go directly to Russia, as they have already built a lot of knowledge and experience on the Russian markets. In the old Soviet days, very few European companies were really active there.

Q: What have been the major changes in the economy and the demographics since the recession in 1993?

A: The most prominent development has been the investment in research and development. Our government has been heavily supporting our industry, both the small and the large companies. That support ranges from grants and loans to technological collaboration. Our technology department agency is running large programs on national and international scale, and those programs are open for companies of all sizes. The participation of small companies is proportionate to their turnover and they can be part of important high-tech projects.

This investment has developed the cluster of companies that we have. R&D has really served as the backbone for development, and many Finnish companies have gone abroad equipped with the right skills, knowledge, and technology.

The other important part of the equation is education. The population in Finland is fairly small, but the educational level here is very high. We have just 5 million people, but those are 5milion well-educated people. The population is mainly concentrated in the suburban Helsinki area, the southern and western coasts. In Northern Finland, the land is very scarcely populated.

Regarding the demographics, our problem is the aging. The Finnish population is aging very fast; we don’t have enough young people; and the birth rate isn’t high enough. That’s why we aim to increase our immigration level, which has been really small in comparison with Sweden or Denmark.

Q: Could you describe the typical foreign investors? Are they oriented towards financial services, technology, or production?

A: A recent study showed that about twothirds of the foreign companies come to Finland primarily because of the markets. They are market-driven investors, looking for new customers.

The second reason for coming to Finland is the knowledge and the skills. The investors come here because of the technology, the highly-educated people, new ideas, or new partners for their business.

The third reason is related to raw materials, especially mining. There has been a mining boom in Finland for a number of years already. This year we have two mines opening - the biggest gold mine and the biggest nickel mine in Europe. The gold mine is owned by a canadian company, Agnico-Eagle. The nickel mine is owned by a Finnish company, which raised more than 300 million euro through Ami, the Alternative management investment Exchange in London.

In mining, we cover the whole metal chain from the mines to the finished product. That makes us stronger as it results in our own value-added production.

Q: Is Russia a current or a potential investor? Do you see Russian corporations investing in Helsinki as the basis for their regional or global expansion?

A: We have seen very little Russian investments and that has been a real disappointment. We have been talking to a number of large Russian companies that are interested in our mining and metal businesses. However, those companies are typically listed on the Helsinki Stock Exchange and are not easy to acquire. We haven’t seen much other Russian interest in Finland.