Strong growth, innovation and structural reforms in the decade preceding the global economic and financial crisis transformed Finland into one of the world’s most competitive economies, ensuring a high level of well-being for its citizens. More recently, however, competitiveness has deteriorated and output has fallen, as electronics and forestry collapsed. The latest settlement between social partners for modest wage increases over the next two years will help. More broadly, economic revival requires building on impressive human capital, strong institutions and sound macroeconomic and financial management to strengthen growth and increase integration in global value chains.

Finland enjoyed over a decade of strong output growth led by the high-tech sector before the 2008 global financial and economic crisis. It is one of the most competitive countries in the world and its residents enjoy a high level of well-being. Finland ranks seventh in the World Happiness Report 2013 (Helliwell et al., 2013), and performs better than the OECD average in all dimensions of the OECD Better Life Index (). Income inequality is still among the lowest in the OECD. Social inclusiveness contributes to Finland’s high level of subjective well-being, personal security, civic engagement, governance and social connections. Jobs and earnings are close to the OECD average, despite recent output weakness, and the work-life balance is good. Housing conditions are better than the OECD average, but households are accumulating substantial debt to finance their dwellings, which increases their vulnerability and that of the financial system to economic shocks. Environmental quality is very high and rich natural resources, notably forests, offer a promising potential for green growth. Education is excellent, even though Finland has fallen slightly in the latest Programme for International Student Assessment (PISA) rankings (OECD, 2013a). Public health care coverage is extensive, although health status is average.