For over a decade, The Wall Street Journal and The Heritage Foundation, Washington's preeminent think tank, have tracked the march of economic freedom around the world with the influential Index of Economic Freedom. Since 1995, the Index has brought Adam Smith's theories about liberty, prosperity and economic freedom to life by creating 10 benchmarks that gauge the economic success of 184 countries around the world. With its user-friendly format, readers can see how 18th century theories on prosperity and economic freedom are realities in the 21st century. The Index covers 10 freedoms–from property rights to entrepreneurship.
The latest Index of Economic Freedom ranks Finland 17th among 184 economies included in the annual index. Finland's economy is still pretty free, but mainly considerable deterioration in the management of government spending has caused the drop in ranking.
The report concludes that "the strong competitiveness of Finland’s economy is built on openness and transparency. The quality of the legal framework is among the world’s highest, providing effective protection of property rights. The rule of law is well maintained, and a strong tradition of minimum tolerance for corruption continues. Although public debt remains under control, respect for the principle of limited government has been seriously undercut by heavy public spending that amounts to more than half of total domestic output."
Positively, Finnish regulatory environment encourages entrepreneurial activity and innovation, sustaining a high degree of overall competitiveness.
[heritage.org]
Showing posts with label Finland. Show all posts
Showing posts with label Finland. Show all posts
10/17/11
Spot on
Steve Blank is again at it. Top points from the summary of his recent visit in Finland.
Toxic Business Press and Contradictory Government Incentives
Unique to Finland with its strong cultural emphasis on equality and the redistribution of wealth is a business press that doesn't understand startups and is overtly hostile to their success. Instead, the business press dumped on the founders for "selling out."... In 2010 it got worse, with an Act in parliament about the Monitoring of Foreigners' Corporate Acquisitions. Many founders mentioned this as a reason not to incorporate or grow their companies in Finland.
Nokia as "He Who Must Not Be Named".
..Nokia was Finland's symbol of national competence. Most Finns take their failure as a personal embarrassment. (Note to Finland -- lighten up. Nokia was blind-sided in a classic disruptive innovation. 50 percent the fault of a Nokia management that didn't see it coming, while 50 percent was due to brilliant Apple execution.) Ultimately, Nokia's difficulties will turn out to be good news for Finnish entrepreneurs. They've stopped hiring the best talent, and startups are not looking so risky compared to large companies.
Nanny Culture, Lack of Risk Taking, Not Sharing
...There's a safety net in almost every part of one's public and private life--health insurance, free college tuition, unions, collective bargaining, fixed work hours, etc. And what's great for the mass of society--a government safety net verging on the ultimate nanny state--makes it impossible to fail. There isn't much of a killer instinct among the masses... By nature, Finns are not good at tolerating risk. This gets compounded by the cultural tendency not to share or talk in meetings, sometimes to the point of silence. This is a fundamental challenge in creating an entrepreneurial culture...
Lessons Learned II
Toxic Business Press and Contradictory Government Incentives
Unique to Finland with its strong cultural emphasis on equality and the redistribution of wealth is a business press that doesn't understand startups and is overtly hostile to their success. Instead, the business press dumped on the founders for "selling out."... In 2010 it got worse, with an Act in parliament about the Monitoring of Foreigners' Corporate Acquisitions. Many founders mentioned this as a reason not to incorporate or grow their companies in Finland.
Nokia as "He Who Must Not Be Named".
..Nokia was Finland's symbol of national competence. Most Finns take their failure as a personal embarrassment. (Note to Finland -- lighten up. Nokia was blind-sided in a classic disruptive innovation. 50 percent the fault of a Nokia management that didn't see it coming, while 50 percent was due to brilliant Apple execution.) Ultimately, Nokia's difficulties will turn out to be good news for Finnish entrepreneurs. They've stopped hiring the best talent, and startups are not looking so risky compared to large companies.
Nanny Culture, Lack of Risk Taking, Not Sharing
...There's a safety net in almost every part of one's public and private life--health insurance, free college tuition, unions, collective bargaining, fixed work hours, etc. And what's great for the mass of society--a government safety net verging on the ultimate nanny state--makes it impossible to fail. There isn't much of a killer instinct among the masses... By nature, Finns are not good at tolerating risk. This gets compounded by the cultural tendency not to share or talk in meetings, sometimes to the point of silence. This is a fundamental challenge in creating an entrepreneurial culture...
Lessons Learned II
- Finland is trying to engineer an entrepreneurial cluster as a National policy to drive economic growth through entrepreneurial ventures
- They've gotten off to a good start with a start around Aalto University with passionate students
- Startup incubators, business angels and VCs are starting to emerge
- The country needs to figure out a long term privatization strategy for Venture investing
- Finnish culture makes risk-taking and sharing hard
10/5/11
Wohoo Finland, Wohoo!
Richard Florida et al. just launched new Global Creativity Index (download the report here). The Global Creativity Index ranks 82 nations on Technology, Talent, and Tolerance (the critical “3Ts” of economic development). The index is a broad composite measure based on key measures of technology (R&D investment, researchers, and patents per capita), talent (educational attainment and the creative class) and tolerance (the treatment of immigrants, racial and ethnic minorities, and gays and lesbians).
To start with, Finland is relatively prevalent (nr. 1) in the rankings based on pure R&D figures.
"Finland takes the top spot overall, ranking first in researchers, third in R&D investment, and fourth in innovation. Home to Nokia and many innovative small firms, Finland is an acknowledged leader in innovative communications technology." (p. 6)
What comes to the Talent Finland is kicking strong and is also ranked nr. 1 among the 82 nations. This is mostly because of high attendance in tetriary education in Finnish population. Finland's worst result is related to the Tolerance. Finland is ranked only 19th basically due to low acceptance of racial and ethnic minorities as well as gays and lesbians. Based on the Florida's approach this is an important proxy for creativity. Accordingly, Finland is ranked "only" third in the Global Creativity Index even if two "T"s are highly prevalent in Finland.
Importantly, the association between the Global Creativity Index based on 3T's and entrepreneurial activity is pretty high and thus, it makes sense to assess the role of 3T further.
Who's with me?
To start with, Finland is relatively prevalent (nr. 1) in the rankings based on pure R&D figures.
"Finland takes the top spot overall, ranking first in researchers, third in R&D investment, and fourth in innovation. Home to Nokia and many innovative small firms, Finland is an acknowledged leader in innovative communications technology." (p. 6)
What comes to the Talent Finland is kicking strong and is also ranked nr. 1 among the 82 nations. This is mostly because of high attendance in tetriary education in Finnish population. Finland's worst result is related to the Tolerance. Finland is ranked only 19th basically due to low acceptance of racial and ethnic minorities as well as gays and lesbians. Based on the Florida's approach this is an important proxy for creativity. Accordingly, Finland is ranked "only" third in the Global Creativity Index even if two "T"s are highly prevalent in Finland.
Importantly, the association between the Global Creativity Index based on 3T's and entrepreneurial activity is pretty high and thus, it makes sense to assess the role of 3T further.
Who's with me?
9/14/11
Latest Finnish GEM report
At last. Finnish GEM report for 2011 was published about two weeks ago. Here's the link.
But here you have some main findings (quick and dirty version):
1. Early-stage entrepreneurial activity is now higher than during the recession. Now 5.7 % of the adult population is involved in early-stage entrepreneurial activities. This means that every month on average roughly 16.100 Finnish adults are engaged in early-stage entrepreneurship.
2. The overall entrepreneurial activity, measuring the share of Finnish adult population involved in either early-stage entrepreneurial activity or established business ownership, is 15.1 % in 2010. That's second highest among the Nordic countries and 8th among innovation-driven economies. Awesome!
3. More and more individuals in Finnish adult population recognize business opportunities. Even if the active engagement in starting up new businesses is still low, over half of the Finnish adult population has recognized business opportunities. However, only 6 % of the adult population had actual intentions to start up a business within three years. This share is the lowest among the Nordic countries and among the lowest in innovation-driven and all GEM countries. Guys, this sucks!
4. In 2010 about 3 % of the Finnish adult population acted as a business angel by providing funds for early-stage entrepreneurial activity during the past three years. The share is low compared to the other GEM countries. What's the news here???
5. The share of highly innovative early-stage entrepreneurial activity in Finland is clearly lower than the average in innovation-driven economies. Finnish new entrepreneurs manage only rarely to introduce products and services, which are new to all customers and do not meet direct competition. No wonder that with the measures Finland is ranked as the lowest among Nordic countries, and as second lowest among innovation-driven economies. Are we happy with this???
6. Finnish rate of high-growth oriented entrepreneurs is clearly lower than in other Nordic countries. In 2002–2010 approximately 5.5 % of every early-stage entrepreneurially active individual has had high growth expectations. The low growth expectations create challenges for the development of Finnish employment. Oh yeah?
7.The entrepreneurial activity among highly educated individuals has declined under improving economic circumstances. This implies about increase in the opportunity costs of entrepreneurship when the availability of other job options improves. The novel Global Entrepreneurship and Develop Index (thank you Zoltan Acs and Laszlo Szerb) further supports this disparity: entrepreneurial attitudes and culture are already opportune in Finland, but most capable individuals are not willing to become entrepreneurs. Hey all the entrepreneurship societies... you have some work to do.
But here you have some main findings (quick and dirty version):
1. Early-stage entrepreneurial activity is now higher than during the recession. Now 5.7 % of the adult population is involved in early-stage entrepreneurial activities. This means that every month on average roughly 16.100 Finnish adults are engaged in early-stage entrepreneurship.
2. The overall entrepreneurial activity, measuring the share of Finnish adult population involved in either early-stage entrepreneurial activity or established business ownership, is 15.1 % in 2010. That's second highest among the Nordic countries and 8th among innovation-driven economies. Awesome!
3. More and more individuals in Finnish adult population recognize business opportunities. Even if the active engagement in starting up new businesses is still low, over half of the Finnish adult population has recognized business opportunities. However, only 6 % of the adult population had actual intentions to start up a business within three years. This share is the lowest among the Nordic countries and among the lowest in innovation-driven and all GEM countries. Guys, this sucks!
4. In 2010 about 3 % of the Finnish adult population acted as a business angel by providing funds for early-stage entrepreneurial activity during the past three years. The share is low compared to the other GEM countries. What's the news here???
5. The share of highly innovative early-stage entrepreneurial activity in Finland is clearly lower than the average in innovation-driven economies. Finnish new entrepreneurs manage only rarely to introduce products and services, which are new to all customers and do not meet direct competition. No wonder that with the measures Finland is ranked as the lowest among Nordic countries, and as second lowest among innovation-driven economies. Are we happy with this???
6. Finnish rate of high-growth oriented entrepreneurs is clearly lower than in other Nordic countries. In 2002–2010 approximately 5.5 % of every early-stage entrepreneurially active individual has had high growth expectations. The low growth expectations create challenges for the development of Finnish employment. Oh yeah?
7.The entrepreneurial activity among highly educated individuals has declined under improving economic circumstances. This implies about increase in the opportunity costs of entrepreneurship when the availability of other job options improves. The novel Global Entrepreneurship and Develop Index (thank you Zoltan Acs and Laszlo Szerb) further supports this disparity: entrepreneurial attitudes and culture are already opportune in Finland, but most capable individuals are not willing to become entrepreneurs. Hey all the entrepreneurship societies... you have some work to do.
6/13/11
Index of Economic Freedom tells us that...
This year's Index of Economic Freedom (by Heritage) shows that institutions support doing business here, but there are some issues that continuously hurt Finnish economy and probably the growth-orientation among entrepreneurs (oh yes it yes dependent on other issues, too). In all, Finlad is 17th among 183 nations (just behind the UK) and about in the middle of all free economies.
IPRs are looking good, too:
But what do you know... Well, even if the relationship between labor freedom and low prevalence of high-impact entrepreneurs is not direct or simple, this figure suggests that the Finnish labor market is heavily charged by high non-salary costs of employment and burdensome labor regulations.
IPRs are looking good, too:
But what do you know... Well, even if the relationship between labor freedom and low prevalence of high-impact entrepreneurs is not direct or simple, this figure suggests that the Finnish labor market is heavily charged by high non-salary costs of employment and burdensome labor regulations.
4/4/11
They are getting older
Brand new statistics show that over the half of Finnish entrepreneurs are over 45 years old. Younger individuals still seem to dislike this kind of behavior. Figures published by the Statistics Finland show that the total number of entrepreneurs declined from 2008 to 2009 by over 3.600 individuals being now about 237.000. Among 18-24 years old we have 5000 entrepreneurs which is only 2.3 percentage of the total number of employed population at that age.
This numbers also include the farmers which causes a possibility of age-based bias if the numbers are compared internationally. This, though, partially explains the huge drop decline in the entrepreneurial population between 1990-2009.
[source: Statistics Finland]
This numbers also include the farmers which causes a possibility of age-based bias if the numbers are compared internationally. This, though, partially explains the huge drop decline in the entrepreneurial population between 1990-2009.
[source: Statistics Finland]
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