STRATEGIC MARKETING ASSIGNMENT #3 TOP 3 ECONOMIES

Strategic Marketing
Assignment # 3
Top Three Economies of the
World
Program: MBA (Evening)
Submitted To:
Sir Abdul Qayyum Qureshi
Submitted By:
Muhammad Tayyab
Roll # 111405

[STRATEGIC MARKETING ASSIGNMENT # 3] April 17, 2013
P a k - A I M S Page 2
Economy of Switzerland
The Swiss economy
Switzerland’s economy is based on a highly qualified labour force performing highly skilled work.
The main areas include microtechnology, hitech, biotechnology and pharmaceuticals, as well as
banking and insurance know-how. The service sector now employs the greatest number of people.
Most of the people working in Switzerland are employed by small and medium-sized enterprises,
which play an extremely important role in the Swiss economy.
The Swiss are concerned that economic activity should have as little impact as possible on the
environment. Switzerland's energy and transport policies aim to be environmentally friendly.
The age of unlimited economic growth in Switzerland is over. Fear of unemployment has been one
of the main concerns of the Swiss for several years.
Facts and Figure of Switzerland
Zurich, Switzerland's largest city
Rank 27th
Currency 1 Swiss franc (CHF 1)
Fiscal year Calendar year
Trade
organisations
EFTA, WTO and OECD
Statistics
GDP CHF 550.6 billion (2010)
$622.8 billion (2012 est.)
$364.5 billion PPP
GDP growth 0.8% (2012 est.)
1.7% per capita nominal
2.7% real
1.6% per capita real

GDP per capita CHF 70,334
$75,440 current (nominal)
$46,815 PPP
GDP by sector agriculture (1.2%)
industry (27.5%)
services (71.3%) (2011 est.)
Inflation (CPI) 0.2%
Population
below poverty
line
4.8 %
Gini coefficient 33.7 (2008)
Labour force 4.547 million
Labour force
by occupation
agriculture (3.4%)
Industry (23.4%)
services (73.2%) (2010)
Unemployment 3.1% (2011)
Main
industries
machinery, chemicals, watches, textiles, precision instruments
Ease of Doing
Business Rank
28th
External
Exports $308.3 billion (2011 est.)
Export goods machinery, chemicals, metals, watches, agricultural products
Main export
partners
Germany 19.2%, US 10.2%, Italy 7.9%,France 7.7%, UK 5.9% (2010)
Imports $299.6 billion (2011 est.)
Import goods machinery, chemicals, vehicles, metals; agricultural products, textiles
Main import
partners
Germany 32%, Italy 10.2%, France 8.5%,US 5.3%, Netherlands 4.5%, Austria 4.3%
(2010)
FDI stock $395.6 billion (31 December 2009 est.)
Gross external
debt
$1.346 trillion (30 June 2011)
Public finances
Public debt 46.7% of GDP (2012 est.)
Revenues $222 billion (2011 est.)
Expenses $216.8 billion (2011 est.)
Economic aid donor: ODA CHF2.31 billion (0.47% of GDP)
Credit rating Standard & Poor's:
AAA (Domestic)
AAA (Foreign)
AAA (T&C Assessment)
Outlook: Stable
Moody's:
Aaa
Outlook: Stable

Fitch:
AAA
Outlook: Stable
Foreign
reserves
US$291.073 billion (March 2011)
Trade
Swiss companies are extremely competitive in world markets. In some branches, more than 90%
of goods and services are exported. The best-known export items are watches, chocolate and
cheese, but in fact mechanical and electrical engineering and chemicals together account for over
half Swiss export revenues.
The areas where Switzerland is a leading supplier include looms, paper and printing machinery,
blanking tools for metalworking, elevators and escalators, packaging equipment and rack-and-
pinion railways. However, many of the components for these items are now manufactured abroad.
Consultancy, insurance and tourism are also part of the export trade. Exports of goods and
services alone amount to about 25,000 francs - 16,000 dollars - per head per year, according to the
OSEC business network, which promotes Swiss foreign trade.
Switzerland's main trading partners are European Union members. By far the biggest partner is
Germany. In 2010 it was followed in descending order by Italy, France, the Netherlands, the US
and the United Kingdom. In 2009, 59.7% of exports went to EU countries, and 78% of the imports
came from EU states. This is despite the fact that the Swiss have consistently voted to remain
outside the body.
Swiss economic policy has always been based on free trade, with low import duties and virtually no
import quotas - the only exception being for agricultural produce. Even here many of the
restrictions are being eased as a result of recent agreements with the EU.
Companies
Nestlé headquarters in Vevey, on Lake Geneva© Nestlé S.A.
Most businesses are small or medium-sized. According to the 2008
business census, more than 99% of enterprises had fewer than 250 full-
time workers, employing about two-thirds of the total work force.
The largest company is Nestlé, the biggest food company in the world. It has around 278,000
employees, about 97% of them outside Switzerland (2009).

In 2010, 15 Swiss firms, including the pharmaceutical giant Novartis (No. 160) featured on the
“Fortune Global 500”, an annual ranking of the 500 most powerful corporations which is compiled
by the eponymous American business magazine.
Many companies are still in the hands of families who founded them. However, a survey conducted
in 2002 showed the impact of globalisation on large firms: it found 40% of board members and
26% of managers were non-Swiss, mostly from Germany, the UK and France. However, there
were still few foreign managers in medium and small businesses
A mainstay of the Swiss economy
When you mention Switzerland, most people automatically think of
mountains and cheese, with banks coming a close third. This is not surprising given that the Swiss
financial centre is a central pillar of the Swiss economy, generating over 10 % of Swiss GDP. At
the end of 2011, some 211,000 people (full-time equivalents) – or 6 % of Switzerland’s total
working population – were directly employed by banks, insurance companies and other financial
institutions.
The term "financial centre" generally refers to major cities like New York and London, which have a
dense network of banks, financial companies, stock exchanges, insurance companies and
international trading firms. These centres boast a high concentration of myriad financial services.
Switzerland’s financial centre has four main hubs - Zurich, Geneva, Basel and Lugano.
Players and services
The key players in the Swiss financial centre are the banks. One of their core businesses is wealth
management. This is reflected in a ranking of the world’s largest wealth managers, which places
three Swiss banks in the top ten. At the end of 2011 Swiss banks managed assets totalling CHF
5,600 billion. In terms of cross-border private wealth management, Switzerland is the undisputed
world market leader with a share of 27%, or CHF 2,100 billion (cf. table below).
The second most important players are insurers. Close to 70% of their global premium income in
2011 was generated overseas, indicating a high degree of internationalisation. Swiss insurance
companies have increasingly specialised in re-insurance, i.e. where an insurer insures other
insurers, making Switzerland the fourth largest reinsurer in the world.
The Swiss financial centre is also a major international force in currency trading, commodity trading
and the management of funds of hedge funds. However, in other financial services, such as the
funds business, institutional asset management, investment banking, as well as commerce and
corporate banking, it continues to play only a minor role.

International comparison
Switzerland is a relatively small country in terms of population, but it is an international
heavyweight when it comes to financial services.
The table below provides an overview of the largest asset managers worldwide.
Share of assets under management in international private banking, 2011
Source: Boston Consulting Group, 2012
Switzerland 27%
United Kingdom 25%
Luxemburg 6%
Caribbean 13%
Singapore and Hong Kong 13%
United States 8%
Other 8%
Energy policy
The Emosson dam and reservoir in Canton Valais, which produces nearly 900
million KW hours per year© Lucyna Koch
As a small country in the middle of Europe, Switzerland's energy policy is
aligned with that of its neighbours. Switzerland is part of the western
European power grid. In the summer it is able to export electricity, but in
winter it generally has to import it.
Energy policy
The two main planks of Swiss energy policy are to promote the use of
renewable resources and to encourage efficiency.
The government sees this as particularly important in the face of the upcoming liberalisation of the
European energy market, which Switzerland cannot avoid. Greater competition is likely to bring
down the prices of fossil fuels. This would boost their use yet further, which would have a
detrimental effect on the environment, undermining Switzerland's determination to cut its CO2
emissions by 2010 to 90% of its 1990 level.
Consumption
Switzerland's per capita electricity consumption is slightly higher than that of its neighbours, though
well below that in Scandinavia, the US and Canada.

However, it is worth remembering that in many countries a significant proportion of the electricity
used is consumed by large industrial plants, which Switzerland does not have. If it were unable to
import goods produced by such plants and had to make them itself, its per capita consumption
would be higher.
Switzerland, like most other countries, obtains its electric power from a number of different
sources.
Transit traffic
Switzerland stands on the route linking northern and southern Europe, but the Alps made transit
difficult until tunnels were built through them. The Gotthard railway tunnel, 15 km (9.3 miles) long,
was built more than 100 years ago. The Gotthard road tunnel, opened in 1980, was the longest in
the world at 17 km (10.6 miles) until Norway's Laerdal tunnel (24.5 km/15 miles) opened in
November 2000.
Switzerland's position as a transit country has exposed it to ever increasing amounts of freight
traffic. As Europe moves closer together, frontiers are no longer a barrier to trade. As a result, the
road network is coming under heavy pressure, and gigantic queues build up, especially on
the Gotthard route.
The situation is at its worst during the vacation season in western Europe, when sunseeking
holidaymakers join the lines of trucks with their cars and caravans.
High wages, long hours
The Swiss work a lot, an average of 41.6 hours a week for full-time employees in 2005. Full-time
employees are entitled to leave of only 20 working days per year. This is less than in many other
European countries. Public holidays vary from canton to canton, but there are generally 8 or 9.
In 1985, the Swiss rejected a general increase in vacation entitlement from four to five weeks and
in 2002 they voted against the introduction of the 36 hour week.
Strikes are rare and workplace absenteeism is low.
About three quarters of absences from the work place are for health reasons, but over 13% are for
military service or its civilian equivalent.
A survey of 71 cities round the world carried out by the Swiss bank UBS in 2006 showed both
Zurich and Geneva offered higher net salaries but demanded a higher number of hours than did
comparable cities across the world.

Earnings
According to a survey carried out by economic experts in Canton Aargau published in 2006, the
best-paid job in Switzerland is that of a long-haul airline pilot, who can expect a basic monthly
salary of 18,193 francs after 20 years experience.
There are large regional differences between salary levels.
A survey conducted by the Federal Statistical Office in 2004 showed a difference of over one
thousand francs per month in the median wage between the best and worst paid areas. In the
Zurich region it was 5,984 francs, while in Ticino it was 4,823. (The median wage is situated at the
half way point on the wage scale: half the wages under consideration are higher, and half are
lower.)
The disparity is to be explained by the nature of the economic activity conducted in the different
areas. Banking, insurance and research account for the high median wage in the Zurich region.
Cost of living
Statistics released by the European Union in 2002 showed that Switzerland was the third most
expensive country in Europe, after Norway and Iceland. The Swiss pay particularly high prices for
meat, cooking oil, fish and vegetables.
Nevertheless, Swiss wages take the cost of living into account. A survey of 71 cities round the
world carried out by the Swiss bank UBS in 2006 showed that it takes less time for workers in
Switzerland to earn enough to buy a loaf and a hamburger than it does in many other countries.
Expenditure
Food and clothing accounts for an ever smaller proportion of household budgets, dropping from
16% in 1992 to 12% in 1998 to just under 11% in 2005.
Housing is expensive, and most people live in rented accommodation. Switzerland has by far the
lowest rate of owner occupiers in Europe: in 2000 only 34.6% of homes belonged to the people
who lived in them.
Taxation is relatively low in comparison with the neighboring countries. On the other hand, the
Swiss spend a lot on insurance, including compulsory health insurance, which alone accounts for
over 5.6% of their expenditure. They spend another 5% on private insurance; the more people
have, the more they want to - or must - insure.

Important items in the household budget
Items Percent
Source: Federal Statistical Office (2005)
food and beverages 7.7%
alcohol and tobacco 1.2%
clothing and shoes 2.9%
housing and energy 16.9%
furnishing and maintenance 3.2%
health care 4.0%
transport and communications 9.9%
entertainment, recreation, culture 12.5%

Economy of Singapore
Singapore has a highly developed and successful market economy. It has an open, pro-business
environment, relatively corruption-free and transparent, stable prices, low tax rates (14.2% of GDP)
compared to other developed economies, and one of the highest per-capita gross domestic
products (GDP) in the world. Its innovative yet steadfast form of economics that combines
economic planning of Singapore Economic Development Board with free-market has given it the
nickname the Singapore Model. Singapore's sovereign wealth fund Temasek Holdings is a large
investor in the economy, holding majority stakes in several of the nation's largest companies, such
as Singapore Airlines,SingTel, ST Engineering and Media Corp.
Exports, particularly in electronics and chemicals, and services including the posture that
Singapore is the regional hub for wealth management (and the opening of the city state's first
casino in 2010 ) provide the main source of revenue for the economy, which allows it to
purchase natural resources and raw goods which it does not have. Moreover, water is a scarcity in
Singapore therefore water is defined as a precious resource in Singapore along with the scarcity of
land to be treated with land fill of Pulau Semakau. Singapore has limited arable land that
Singapore has to rely on the agrotechnology park for agricultural production and
consumption. Human Resource is another vital issue for the health of Singaporean economy.
Singapore could thus be said to rely on an extended concept of intermediary trade
to Entrepôt trade, by purchasing raw goods and refining them for re-export, such as in the wafer
fabrication industry and oil refining. Singapore also has a strategic port which makes it more
competitive than many of its neighbors in carrying out such entre pot activities. The Port of
Singapore is the busiest in the world, surpassing Rotterdam and Hong Kong. In addition,
Singapore's port infrastructure and skilled workforce, which is due to the success of the country's
education policy in producing skilled workers, is also fundamental in this aspect as they provide
easier access to markets for both importing and exporting, and also provide the skill(s) needed
to refine imports into exports.
Singapore's government promotes high levels of savings and investment through policies such as
the Central Provident Fund, which is used to fund its citizen's healthcare and retirement needs.
Most companies in Singapore are registered as private limited-liability companies (commonly
known as "private limited companies"). A private limited company in Singapore is a separate legal
entity, and shareholders are not liable for the company's debts beyond the amount of share capital
they have contributed.

Facts and figure of Singapore
Currency Singapore dollar (SGD); Brunei Dollar(B$)
Fiscal year 1 April - 31 March
Trade
organisations
WTO, APEC, IOR-ARC, ASEAN
Statistics
GDP $318.9 billion (2011 est. PPP)
GDP growth 0.3% (Q3 2012)
GDP per capita $62,100 (PPP, 2010 est.),[1]
$43,117 (nominal, 2010 est.)[2]
GDP by sector agriculture: 0%; industry: 26.6%;services: 73.4% (2011 est.)
Inflation (CPI) 5.2% (2011 est.)
Population
below poverty
line
N/A
Labour force 3.237 million (2011 est.)
Labour force
by occupation
agriculture 0.1%, industry 19.6% 18%, services 80.3% (2011)
Unemployment 1.9% (2012 est.)
Main
industries
electronics, chemicals, financial services, oil drilling equipment,petroleum
refining, rubber processing and rubber products,
processed foodand beverages, ship repair, offshore platform construction, life
sciences,entrepot trade
Ease of Doing
Business Rank
1st[3]
External
Exports $414.8 billion (2011 est.)[1]
Export goods machinery and equipment (including electronics and telecommunications),
pharmaceuticals and other chemicals, refined petroleum products
Main export
partners
Malaysia 12.2%, Hong Kong 11.0%,China 10.4%, Indonesia 10.4%, United
States 5.45%, Japan 4.5%, (2011 est.)
Imports $311.7 billion (2011 est.)[1]
Import goods machinery and equipment, mineral fuels, chemicals, foodstuffs, consumer goods
Main import
partners
Malaysia 10.7%, United States 10.7%,China 10.4%, Japan 7.2%, South
Korea5.9%, Taiwan 5.9% (2011 est)

FDI stock $497 billion (31 December 2011 est.)
Gross external
debt
$23.58 billion (31 December 2011 est.)
Public finances
Public debt 118.2% of GDP (2011 est.)
Revenues S$40.53 billion (2011 est]
Expenses S$37.18 billion (2011 est.) note: expenditures include both operational and
development expenditures
Economic aid none
Credit rating Standard & Poor's:[4]
AAA (Domestic)
AAA (Foreign)
Outlook: Stable[5]
Moody's:[5]
Aaa
Outlook: Stable
Fitch:[5]
AAA
Outlook: Stable
Foreign
reserves
US$233.368 billion (March 2011)[6]
Main data source: CIA World Fact Book
All values, unless otherwise stated, ar
Economic history
This is a chart of trend of gross domestic product of Singapore at market prices estimated by the
International Monetary Fund.
Year
Gross Domestic Product
($ millions)
US Dollar Exchange
Nominal Per Capita GDP
(as % of USA)
PPP Per Capita GDP
(as % of USA)
1980 25,117 2.14 Singapore Dollars 39.65 55.00
2011 270,020 1.29 Singapore Dollars - -

Singapore's strategic location on major sea lanes and industrious population have given the
country an economic importance in South-east Asia disproportionate to its small size. Upon
separation from Malaysia in 1965, Singapore was faced with a lack of physical resources and a
small domestic market. In response, the Singapore Government adopted a pro-business, pro-
foreign investment, export-oriented economic policy combined with state-directed investments in
strategic government-owned corporations. Whilst nominally socialist in the 1960s, the ruling party
increasingly became openly capitalist but self-described as 'pragmatic', described by some as a
euphemism for capitalism with authoritarian social controls Singapore's government moved
towards guiding the economy and investing in medicine and infrastructure. Living standards
steadily rose, with more families moving from a lower-income status to middle-income security with
increased household incomes. During a National Day Rally speech in 1987, Lee Kuan-
Yew claimed that (based on the homeownership criterion) 80% of Singaporeans could now be
considered to be members of the middle-class.
Singapore's economic strategy produced real growth averaging 8.0% from 1960 to 1999. The
economy picked up in 1999 after the regional financial crisis, with a growth rate of 5.4%, followed
by 9.9% for 2000. However, the economic slowdown in the United States, Japan and the European
Union, as well as the worldwide electronics slump, had reduced the estimated economic growth in
2001 to a negative 2.0%. The economy expanded by 2.2% the following year, and by 1.1% in 2003
when Singapore was affected by the SARSoutbreak. Subsequently, a major turnaround occurred in
2004 allowed it to make a significant recovery of 8.3% growth in Singapore, although the actual
growth fell short of the target growth for the year more than half with only 2.5%. In 2005, economic
growth was 6.4%; and in 2006, 7.9%.
Singapore's unemployment rate is around 2.2% as of 20 February 2009. As of 8 August 2010,
Singapore is the fastest growing economy in the world, with a growth rate of 17.9% for the first half
of 2010. As of 2012, despite attracting the highest figure in foreign direct investments among
countries in Southeast Asia, Singapore has 0.3% growth for its third quarter year-on-year, the
lowest among its peers in the region opposite Philippines' which got 7.1% on the same quarter but
getting the lowest foreign direct investments at only $2.1 billion.
Sectors
Manufacturing and financial business services accounted for 26% and 22%, respectively, of
Singapore's gross domestic product in 2000. The electronics industry leads Singapore's
manufacturing sector, accounting for 48% of total industrial output, but the government also is
prioritising development of the chemicals and biotechnology industries.
To maintain its competitive position despite rising wages, the government seeks to promote higher
value-added activities in the manufacturing and services sectors. It also has opened, or is in the
process of opening, the financial services, telecommunications, and power generation and retailing
sectors up to foreign service providers and greater competition. The government has also

attempted some measures including wage restraint measures and release of unused buildings in
an effort to control rising commercial rents with the view to lowering the cost of doing business in
Singapore when central business district office rents tripled in 2006.
Banking
Singapore is a financial centre in Southeast Asia. According to the Human Rights Watch, due to its
role as a financial hub for the region, Singapore has continually been criticized for reportedly
hosting bank accounts containing ill-gotten gains of corrupt leaders and their associates, including
billions of dollars of Burma’s state gas revenues hidden from national accounts.
Biotechnology
Singapore is aggressively promoting and developing its biotechnology industry. Hundred of millions
of dollars were invested into the sector to build up infrastructure, fund research and development
and to recruit top international scientists to Singapore. Leading drug makers, such
as GlaxoSmithKline (GSK), Pfizer and Merck & Co., have set up plants in Singapore. On 8 June
2006, GSK announced that it is investing another S$300 million to build another plant to
produce pediatric vaccines, its first such facility in Asia.[27]
Pharmaceuticals now account for more
than 16% of the country's manufacturing production.
Energy and infrastructure
Singapore is the pricing centre and leading oil trading hub in Asia. The oil industry makes up 5 per
cent of Singapore's GDP, with Singapore being one of the top three export refining centres in the
world. In 2007 it exported 68.1 million tonnes of oil. The oil industry has led to the promotion of the
chemical industry as well as oil and gas equipment manufacturing. Singapore has 70 per cent of
the world market for both jack-up rigs and for the conversion of Floating Production Storage
Offloading units. It has 20 per cent of the world market for ship repair, and in 2008 the marine and
offshore industry employed almost 70,000 workers.
Trade, investment and aid
Singaporean exports in 2006

Singapore's total trade in 2000 amounted to S$373 billion, an increase of 21% from 1999. Despite
its small size, Singapore is currently the fifteenth-largest trading partner of the United States. In
2000, Singapore's imports totaled $135 billion, and exports totaled $138 billion. Malaysia was
Singapore's main import source, as well as its largest export market, absorbing 18% of Singapore's
exports, with the United States close behind. Re-exports accounted for 43% of Singapore's total
sales to other countries in 2000. Singapore's principal exports are petroleum products,
food/beverages, chemicals, textile/garments, electronic components, telecommunication
apparatus, and transport equipment. Singapore's main imports are aircraft, crude oil and petroleum
products, electronic components, radio and television receivers/parts, motor vehicles, chemicals,
food/beverages, iron/steel, and textile yarns/fabrics.
Singapore workforce
In 2000, Singapore had a workforce of about 2.2 million. The National Trades Union
Congress (NTUC), the sole trade union federation which has a symbiotic relationship with the
ruling party, comprises almost 99% of total organized labour. Government policy and pro-activity
rather than labour legislation controls general labour and trade union matters. The Employment Act
offers little protection to white-collar workers due to an income threshold. The Industrial Arbitration
Court handles labour-management disputes that cannot be resolved informally through the Ministry
of Manpower. The Singapore Government has stressed the importance of cooperation between
unions, management and government (tripartism), as well as the early resolution of disputes. There
has been only one strike in the past 15 years.
Singapore has enjoyed virtually full employment for long periods of time. Amid an economic slump,
the unemployment rate rose to 4.0% by the end of 2001, from 2.4% early in the year.
Unemployment has since declined and as of 2012 the unemployment rate stands at 1.9%.
While the Singapore government has taken a stance against minimum wage and unemployment
benefit schemes, the government has introduced a Workfare Income Supplement (WIS) scheme to
supplement wages of low-skilled workers.
Public finance
Government spending in Singapore has risen since the start of the global financial crisis, from
around 15% of GDP in 2008 to 17% in 2012. The government's total expenditure as a percentage
of GDP ranks among the lowest internationally and allows for a competitive tax regime. The
government has no foreign debt and consistent budget surpluses. Singapore government debt is
issued for investment purposes, and not for fiscal needs.
Personal income taxes in Singapore are among the lowest in the world, ranging from 0% to 20%
for incomes above S$320,000. There are no capital gains or inheritance taxes in Singapore.
Singapore attracts entrepreneurs, and established corporations from around the world, with a
corporate tax structure that encourages startups and provides incentives for international business.
The corporate tax rate of 17% is low relative to other developed nations. Singapore has a single-
tier corporate income tax system, which means there is no double-taxation for shareholders.

Economy of Finland
Finland has a highly industrialized, mixed economy with a per capita output equal to that of other
western economies such as France, Germany, Sweden or the United Kingdom. The largest sector
of the economy is services at 65.7 percent, followed by manufacturing and refining at 31.4
percent. Primary production is 2.9 percent.
With respect to foreign trade, the key economic sector is manufacturing. The largest
industries are electronics (21.6 percent), machinery, vehicles and other engineered metal products
(21.1 percent), forest industry (13.1 percent), and chemicals (10.9 percent). Finland has timber and
several mineral and freshwater resources. Forestry, paper factories, and the agricultural sector (on
which taxpayers spend around 2 billion euro annually) are politically sensitive to rural residents.
The Greater Helsinki area generates around a third of GDP.
In a 2004 OECD comparison, high-technology manufacturing in Finland ranked second largest
after Ireland. Knowledge-intensive services have also ranked the smallest and slow-growth sectors
– especially agriculture and low-technology manufacturing – second largest after Ireland
Investment was below expected. Overall short-term outlook was good and GDP growth has been
above many EU peers. Finland has the 4th largest knowledge economy in Europe, behind
Sweden, Denmark and the UK.
Finland is highly integrated in the global economy, and international trade is a third of GDP. The
European Union makes 60 percent of the total trade. The largest trade flows are with
Germany, Russia, Sweden, the United Kingdom, the United States, Netherlands and China. Trade
policy is managed by the European Union, where Finland has traditionally been among the free
trade supporters, except for agriculture. Finland is the only Nordic country to have joined the
Eurozone; Denmark and Sweden have retained their traditional currencies, where as
Iceland and Norway are not members of the EU at all.
Economy of Finland
Helsinki
Rank 54
Currency Euro (EUR)
Fiscal year calendar year
Trade European Union

Organizations World Trade Organization (WTO)
Organisation for Economic Co-operation and Development (OECD)
others
Statistics
GDP $247.2 billion (2012 est.)
GDP growth 0.3% (2012 est.)
GDP per capita $36,700 (2011 est.) (PPP)
GDP by sector agriculture: 2.6%; industry: 29.1%; services: 68.2% (2010 est.)
Inflation (CPI) 3.3% (2011 est.)
Population
below poverty
line
17.9% at risk of poverty or social exclusion
Labour force 2,818 million (2011)
Labour force
by occupation
agriculture and forestry 4.5%, industry 18.3%, construction 7.3%, commerce
16%, finance, insurance, and business services 14.5%, transport and
communications 7%, public services 32.4% (2008)
Unemployment 7.3% (2012 est.)
Average gross
salary
3,463 € / 4,675 $, monthly (2006)
Average net
salary
2,043 € / 2,758 $, monthly (2006)
Main
industries
metals and metal products, electronics, machinery and scientific instruments,
shipbuilding, pulp and paper, foodstuffs, chemicals, textiles, clothing
Ease of Doing
Business Rank
11th
External
Exports $78.83 billion (2011 est.)
Export goods Electrical and optical equipment, machinery, transport equipment, paper and
pulp, chemicals, basic metals; timber
Main export
partners
Sweden 11.8%, Germany 10%, Russia9.2%, Netherlands 6.8%, United
Kingdom 5.2%, United States 4.9%,China 4.7% (2011)
Imports $80.34 billion (2011 est.)
Import goods foodstuffs, petroleum and petroleum products, chemicals, transport equipment,
iron and steel, machinery, textile yarn and fabrics, grains
Main import
partners
Russia 17.6%, Sweden 13.6%,Germany 13.6%, Netherlands 7.6%,China 4.2%
(2011)
FDI stock $87.99 billion (31 Dec. 2010 est.)
Gross external
debt
$370.8 billion (30 June 2010)
Public finances
Public debt 53.5% of GDP (2012 est.), net debt 17.4% of GDP
Revenues $129.4 billion (2012 est.)
Expenses $134 billion (2012 est.)
Economic aid donor: ODA, $1.023 billion (2007)

Credit rating AAA (Domestic)
AAA (Foreign)
(Standard & Poor's)
Foreign
reserves
US$11.492 billion (March 2011)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars
History
Finland started out as a relatively poor country that was vulnerable to shocks to the economy such
as the great famine of the 1860s. Until the 1930s, the Finnish economy was predominantly
agrarian, and, as late as in the 1950s, more than half the population and 40 percent of output were
still in the primary sector
Liberalization
Like other Nordic countries, Finland has modified its system of economic regulation since late
1980s. Financial and product market regulations were modified. Some state enterprises were
privatized and some tax rates were altered.
European Union
Finland joined the European Union in 1995. The central bank was given an inflation-targeting
mandate until Finland joined the euro zone. The growth rate has since been one of the highest
of OECD countries and Finland has topped many indicators of national performance.
Finland was one of the 11 countries joining the third phase of the Economic and Monetary Union of
the European Union, adopting the euro as the country's currency, on January 1, 1999. The national
currency markka (FIM) was withdrawn from circulation and replaced by the euro (EUR) at the
beginning of 2002.
Agriculture
Finland's climate and soils make growing crops a particular
challenge. The country lies between 60° and 70° north latitude - as
far north as Alaska - and has severe winters and relatively short
growing seasons that are sometimes interrupted by frosts. However,
because the Gulf Stream and the North Atlantic Drift Current
moderate the climate, and because of the relatively low elevation of
the land area, Finland contains half of the world's arable land north
of 60° north latitude. Annual precipitation is usually sufficient, but it occurs almost exclusively
during the winter months, making summer droughts a constant threat. In response to the climate,
farmers have relied on quick-ripening and frost-resistant varieties of crops, and they have
cultivated south-facing slopes as well as richer bottomlands to ensure production even in years
with summer frosts. Most farmland had originally been either forest or swamp, and the soil had

usually required treatment with lime and years of cultivation to neutralise excess acid and to
develop fertility. Irrigation was generally not necessary, but drainage systems were often needed to
remove excess water.
Industry
Since the 1990s, Finnish industry, which for centuries had relied on the country's vast forests, has
become increasingly dominated by electronics and services, as globalization lead to a decline of
more traditional industries.[20]
Outsourcing resulted in more manufacturing being transferred
abroad, with Finnish-based industry focusing to a greater extent on R&D and hi-tech electronics.
Electronics
The Finnish electronics and electrotechnics industry relies on heavy investment in R&D, and has
been accelerated by the liberalisation of global markets. Electrical engineering started in the late
19th century with generators and electric motors built by Gottfried Strömberg, now part of the ABB
Group. Other Finnish companies – such as Instru, Vaisala and Neles (now part of Metso) - have
succeeded in areas such as industrial automation, medical and meteorological
technology. Nokia was once a world leader in mobile telecommunications.
Metals, engineering and manufacturing
Finland has an abundance of minerals, but many large mines have closed down, and most raw
materials are now imported. For this reason, companies now tend to focus on high added-value
processing of metals. The exports include the production steel, copper, chromium, zinc and nickel,
and finished products such as steel roofing and cladding, welded steel pipes, copper pipe and
coated sheets. Outokumpu is known for developing the flash smelting process for copper
production and stainless steel.
With regard to vehicles, the Finnish motor industry consists mostly of manufacturers of tractors
(Valtra, formerly Valmet tractor), forest machines (f.ex. Ponsse), military vehicles (Sisu, Patria),
trucks (Sisu Auto), buses and Valmet Automotive, a contract manufacturer, whose factory
in Uusikaupunki produces Fisker electric cars. Shipbuilding is an important industry: the world's
largest cruise ships are built in Finland; also, the Finnish company Wärtsilä produces the world's
largest diesel engines. In addition, Finland also produces trainrolling stock.
The manufacturing industry is a significant employer of about 400,000 people.
Chemical industry
The chemical industry is one of the Finland's largest industrial sectors with its roots in tar making in
the 17th century. It produces an enormous range of products for the use of other industrial sectors,
especially for forestry and agriculture. In addition, its produces plastics, chemicals, paints, oil
products, pharmaceuticals, environmental products, biotech products and petrochemicals.
Biotechnology is regarded as one of the most promising high-tech sectors in Finland and it is
growing rapidly.

Pulp and paper industry
Forest products has been the major export industry in the past, but
diversification and growth of the economy has reduced its share.
In the 1970s, the pulp and paper industry accounted for half of
Finnish exports. Although this share has shrank, pulp and paper is
still a major industry with 52 sites across the country. Furthermore,
several of large international corporations in this business are
based in Finland. Stora Enso and UPM were placed #1 and #3 by
output in the world, both producing more than ten million tons. M-
real and Myllykoskialso appear on the top 100 list.
Energy industry
Finland's energy supply is divided as follows: nuclear power -
26%, net imports - 20%, hydroelectric power - 16%, combined production district heat - 18%,
combined production industry - 13%, condensing power - 6%.One half of all the energy consumed
in Finland goes to industry, one fifth to heating buildings and one fifth to transport. Lacking
indigenous fossil fuel resources, Finland has been an energy importer. This might change in the
future since Finland is currently building its fifth and approved the building permits for its sixth and
seventh reactors. There are some uranium resources in Finland, but to date no commercially viable
deposits have been identified for exclusive mining of uranium. However, permits have been
granted to Talvivaara to produce uranium from the tailings of their nickel-cobalt mine.
Companies
Aleksanterinkatu, a commercial street in Helsinki.
Notable companies in Finland include Nokia, the former market
leader in mobile telephony;Stora Enso, the largest paper
manufacturer in the world; Neste Oil, an oil refining and
marketing company; UPM-Kymmene, the third largest paper
manufacturer in the world; Aker Finnyards, the manufacturer of
the world's largest cruise ships (such as Royal
Caribbean'sFreedom of the Seas); Rovio Mobile, video game
developer most notable for creating Angry Birds; KONE, a
manufacturer of elevators and escalators; Wärtsilä, a producer
of power plants and ship engines; and Finnair, the
largest Helsinki-Vantaa based internationalairline. Additionally, many Nordic design firms are
headquartered in Finland. These include the Fiskars owned Iittala Group, Artek a furniture design
firm co-created by Alvar Aalto, and Marimekko made famous by Jacqueline Kennedy. Finland has
sophisticated financial markets comparable to UK in efficiency. Though foreign investment is as not
high as some other European countries, the largest foreign-headquartered companies included
names such as ABB, Tellabs, Carlsberg, and Siemens.[33]

Household income and consumption
Finland's income is generated by the approximately 1.8 million private sector workers, who make
an average 25.1 euro per hour (before the median 60% tax wedge) in 2007. According to a 2003
report, residents worked on average around 10 years for the same employee ]
and around 5
different jobs over a lifetime. 62 percent worked for small and medium-sized enterprises. Female
employment rate was high and gender segregation on career choices was higher than in the US. In
1999 part-time work rate was one of the smallest in OECD.
Future liabilities are dominated by the pension deficit. Unlike in Sweden, where pension savers can
manage their investments, in Finland employer chooses a pension fund for the employee. The
pension funding rate is higher than in most Western European countries, but still only a portion of it
is funded and pensions exclude health insurances and other unaccounted promises. Directly
held public debt has been reduced to around 32 percent in 2007. In 2007, the average household
savings rate was -3.8 and household debt 101 percent of annual disposable income, a typical level
in Europe.
In 2008, the OECD reported that "the gap between rich and poor has widened more in Finland than
in any other wealthy industrialized country over the past decade" and that "Finland is also one of
the few countries where inequality of incomes has grown between the rich and the middle-class,
and not only between rich and poor."[44]
In 2006, there were 2,381,500 households of average size 2.1 people. Forty percent of households
consisted of single person, 32 percent two and 28 percent three or more. There were 1.2 million
residential buildings in Finland and the average residential space was 38 square metres per
person. The average residential property (without land) cost 1,187 euro per square metre (without
land) and residential land on 8.6 euro per square metre. Consumer energy prices were 8-12 euro
cent per kilowatt hour. 74 percent of households had a car. There were 2.5 million cars and 0.4
other vehicles. Around 92 percent has mobile phone and 58 percent Internet connection at home.
The average total household consumption was 20,000 euro, out of which housing at around 5500
euro, transport at around 3000 euro, food and beverages excluding alcoholic at around 2500 euro,
recreation and culture at around 2000 euro. Upper-level white-collar households (409,653)
consumed an average 27,456 euro, lower-level white-collar households (394,313) 20,935 euro,
and blue-collar households (471,370) 19,415 euro
Unemployment
The unemployment rate was 8.7% in January 2013. The employment rate is (persons aged 15–64)
68,6%,Unemployment security benefits for those seeking employment are at an average OECD
level. The labor administration funds labour market training for unemployed job seekers, the
training for unemployed job seeker can last up to 6 months, which is often vocational. The aim of
the training is to improve the channels of finding employment.

Product market
Economists attribute much growth to reforms in the product markets. According to OECD, only
four EU-15 countries have less regulated product markets (UK, Ireland, Denmark and Sweden)
and only one has less regulated financial markets (Denmark). Nordic countries were pioneers in
liberalizing energy, postal, and other markets in Europe. The legal system is clear and business
bureaucracy less than most countries. For instance, starting a business takes an average of 14
days, compared to the world average of 43 days and Denmark's average of 6 days. Property rights
are well protected and contractual agreements are strictly honored. Finland is rated one of the least
corrupted countries in Corruption Perceptions Index. Finland is rated 13th in the Ease of Doing
Business Index. It indicates exceptional ease to trade across borders (5th), enforce contracts (7th),
and close a business (5th), and exceptional hardship to employ workers (127th) and pay taxes
(83rd).
Job market
According to the OECD, Finland's job market is the least flexible of the Nordic countries.[50]
Finland
increased job market regulation in the 1970s to provide stability to manufacturers. In contrast,
during the 1990s, Denmark liberalised its job market, Sweden moved to more decentralised
contracts, whereas Finnish trade unions blocked many reforms. Many professions have legally
recognized industry-wide contracts that lay down common terms of employment including seniority
levels, holiday entitlements, and salary levels, usually as part of a Comprehensive Income Policy
Agreement. Those who favor less centralized labor market policies consider these agreements
bureaucratic, inflexible, and along with tax rates, a key contributor to unemployment and distorted
prices. Centralized agreements may hinder structural change as there are fewer incentives to
acquire better skills, although Finland already enjoys one of the highest skill-levels in the world.
Taxation
Main article: Taxation in Finland
Tax is collected mainly from municipal income tax, state income tax, state value added tax,
customs fees, corporate taxes and special taxes. There are also property taxes, but municipal
income tax pays most of municipal expenses. Taxation is conducted by a state agency,
Verohallitus, which collects income taxes from each paycheck, and then pays the difference
between tax liability and taxes paid as tax rebate or collects as tax arrears afterward. Municipal
income tax is a flat tax of nominally 15-20%,with deductions applied, and directly funds
the municipality (a city or rural locality). The state income tax is a progressive tax; low-income
individuals do not necessarily pay any. The state transfers some of its income as state support to
municipalities, particularly the poorer ones. Additionally, the state churches - Finnish Evangelical
Lutheran Church and Finnish Orthodox Church - are integrated to the taxation system in order to
tax their members.
The middle income worker's tax wedge is 46% (Nation Master) and effective marginal tax rates are
very high. Value-added tax is 24% for most items. Capital gains tax is 28% and corporate tax is
26%, about the EU median. Property taxes are low, but there is atransfer tax (1.6% for apartments
or 4% for individual houses) for home buyers. Alcoholic beverages are separately taxed and highly
restricted. For instance, McKinsey estimates that a worker has to pay around 1600 euro for

another's 400 euro service[57]
- restricting service supply and demand - though some taxation is
avoided in the black market and self-service culture. Another study by Karlson, Johansson &
Johnsson estimates that the percentage of the buyer’s income entering the service vendor’s wallet
(inverted tax wedge) is slightly over 15%, compared to 10% in Belgium, 25% in France, 40% in
Switzerland and 50% in the United States. Tax cuts have been in every post-depression
government's agenda and the overall tax burden is now around 43% of GDP compared to 51.1% in
Sweden, 34.7% in Germany, 33.5% in Canada, and 30.5% in Ireland.
State and municipal politicians have struggled to cut their consumption, which is very high at 51.7%
of GDP compared to 56.6% in Sweden, 46.9 in Germany, 39.3 in Canada, and 33.5%
in Ireland. Much of the taxes are spent on public sector employees, many of which are jobs-for-life
and amount to 124,000 state employees and 430,000 municipal employees. That is 113 per 1000
residents (over a quarter of workforce) compared to 74 in the US, 70 in Germany, and 42 in Japan
(8% of workforce). The Economist Intelligence Unit's ranking for Finland's e-readiness is high at
13th, compared to 1st for United States, 3rd for Sweden, 5th for Denmark, and 14th for Germany.
Also, early and generous retirement schemes have contributed to high pension costs. Social
spending such as health or education is around OECD median. Social transfers are also around
OECD median. In 2001 Finland's outsourced proportion of spending was below Sweden's and
above most other Western European countries. Finland's health care is more bureaucrat-managed
than in most Western European countries, though many use private insurance or cash to enjoy
private clinics. Some reforms toward more equal marketplace have been made in 2007-2008. In
education, child nurseries, and elderly nurseries private competition is bottom-ranking compared to
Sweden and most other Western countries. Some public monopolies such Alkoremain, and are
sometimes challenged by the European Union. The state has a programme where the number of
jobs decreases byattrition: for two retirees, only one new employee is hired.
Occupational and income structure
Finland's export-dependent economy continuously adapted to the world market; in doing so, it
changed Finnish society as well. The prolonged worldwide boom, beginning in the late 1940s and
lasting until the first oil crisis in 1973, was a challenge that Finland met and from which it emerged
with a highly sophisticated and diversified economy, including a new occupational structure. Some
sectors kept a fairly constant share of the work force. Transportation and construction, for example,
each accounted for between 7 and 8 percent in both 1950 and 1985, and manufacturing's share
rose only from 22 to 24 percent. However, both the commercial and the service sectors more than
doubled their share of the work force, accounting, respectively, for 21 and 28 percent in 1985. The
greatest change was the decline of the economically active population employed in agriculture and
forestry, from approximately 50 percent in 1950 to 10 percent in 1985. The exodus from farms and
forests provided the manpower needed for the growth of other sectors.

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