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Finland Finnish Direct Investment Abroad
From the end of World War II until the 1970s, Finland
imported large amounts of capital to finance
infrastructure
investment and industrial development; however, by 1987
Finnish
capital exports exceeded capital imports by about six to
one.
During the earlier period, foreign firms had set up
subsidiaries
in Finland, but few Finnish enterprises had established
branches
abroad. In the 1970s, the forest industry led a shift
toward
capital exports by founding sales outlets in the most
important
foreign markets, especially in Western Europe. The
metalworking
and chemical industries did not begin to expand overseas
until
the late 1970s, but they made up for lost time during the
following decade. These industries first invested in
Sweden,
Norway, and Denmark, important markets sharing Nordic
culture.
Next came subsidiaries in the United States, which by the
mid1980s became the second-largest recipient of Finnish
investments
after Sweden and which hosted more than 300 Finnish
manufacturing
and sales firms. In the late 1980s, some firms targeted
markets
in the rapidly expanding economies of the Pacific basin.
Beginning in the late 1980s, the service sector began to
follow
industry abroad. Banks, insurance companies, and
engineering and
architectural firms established branches in major business
centers worldwide. By the late 1980s, Finnish firms owned
more
than 1,600 foreign concerns, of which some 250 were
engaged in
manufacturing; more than 900, in sales and marketing; and
450, in
other functions.
Businessmen had many motives for setting up overseas
operations. In general, the Finns wanted to deepen ties
with
industrialized countries where consumers and businesses
could
afford high-quality Finnish goods. Maintaining access to
important markets in an era of increasing protectionism
and
keeping up with new technologies had become crucial.
Finnish
enterprises, generally small by international standards,
needed
additional sources of capital and know-how to develop new
technologies. Analysts believed that, despite their small
size,
Finnish firms could succeed abroad if they followed a
comprehensive strategy, not only selling finished products
but
also offering their services in the management of raw
materials
and energy, development of new technologies, and design of
attractive products.
Government policies helped achieve greater
international
integration of productive facilities. During the 1980s,
legislation relaxed limits on foreign investment in
Finnish
firms, allowing foreigners to hold up to 40 percent of
corporate
equities; likewise, the BOF loosened restrictions on
capital
exports. The Technology Development Center (TEKES), under
the
Ministry of Trade and Industry, sponsored international
cooperation in research and development. The government
also
arranged for Finnish participation in joint projects
sponsored by
the European Space Agency (ESA) and the European Community
(EC-- see Glossary),
including the EC's Eureka technology
development
program. Although it was still too early to predict how
Finland
would perform in international joint ventures, many
observers
felt that such enterprises were the best way for the
country to
achieve industrial progress.
Data as of December 1988
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