State the reasons why Finland has the potential economy.

Essay by andrewhuiCollege, UndergraduateA, June 2005

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Finland has a industrial economy based on abundant forest resources, capital investments, and technology. Traditionally, Finland has been a net importer of capital to finance industrial growth. In the 1980s, Finland's economic growth rate was one of the highest of industrialized countries.

Finland has been among the fastest-growing economies in the European Union (EU) for several years, with GDP reaching 5.6% in 2000, fueled by the booming Nokia-led electronics industry. With an export-led recovery from a severe recession triggered by the collapse of the Soviet market in early 1990s, GDP has grown at an annual average rate of 4.8% since 1994. Unemployment has decreased significantly since 1994, however the current 9.1% unemployment rate (2001) remains above the EU average. Finland's membership in the EU (Finland joined on January 1, 1995) has helped spur structural changes in key economic sectors. However, total output grew only marginally in 2001, when GDP growth amounted to 0.7%.

The last time output increased as little was in 1993, at the end of the last recession. The growth in 2001 was stalled by a reduction in worldwide consumption demand, with exports, the traditional growth motor, struggling.

Exports of goods contribute 42% of Finland's GDP. Metals and engineering--including electronics--and timber--including pulp and paper--are Finland's main industries. Finnish-designed consumer products such as textiles, porcelain, and glassware are world-famous.

Except for timber and several minerals, Finland depends on imported raw materials, energy, and some components for its manufactured products. Farms tend to be small, but sizable timber stands are harvested for supplementary income in winter. The country's main agricultural products are dairy, meat, and grains. Finland's EU accession has accelerated the process of restructuring and downsizing of this sector.

An extensive social welfare system includes a variety of pension and assistance programs and a comprehensive health insurance program. Currently,