Low aggregate investment in Finland has been argued to merely reflect structural change to an innovation economy, with high R&D levels adequately compensating for reduced physical investment. This paper briefly reviews the issues and discusses the severity and persistence of the shortage. Immaterialization of investment clearly plays a role and outward FDI crowds out domestic investment to some extent. Yet, we find no obvious explanation to low investment in the real economy relative to other western economies, since Finland fares rather well in multi-factor productivity and country risk and the supply of capital abode before the onset of the global crisis. We conclude that if investment was low when capital flew abundantly to any potentially high return end, it will most certainly be seriously damaged by the repercussions of the present global financial crisis. R&D and other intangible investment may not be able to compensate, if other factors, such as exchange rate policies, act against them and long-term growth prospects are generally bleak.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Government Institute for Economic Research Finland (VATT) in its series Working Papers with number
6.
Length: Date of creation: 10 Jun 2009 Date of revision: Handle: RePEc:fer:wpaper:6
Contact details of provider: Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki Phone: +358 40 304 5500 Fax: +358 9 4780 2929 Email: Web page: http://www.vatt.fi/ More information through EDIRC
Order Information: Email:
For technical questions regarding this item, or to correct its listing, contact: (Anita Niskanen).
Find related papers by JEL classification: H50 - Public Economics - - National Government Expenditures and Related Policies - - - General F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
This paper has been announced in the following NEP Reports: