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Restarting the Growth Engine in Finland

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  • Henrik Braconier

    (OECD)

Abstract

Impressive productivity performance during the last decades has weakened since 2007, reflecting the 2008-09 recession but also a poor performance in important sectors, like the information and communication technology sector. Reforms to raise long term productivity growth need to be pursued. Current project-based R&D-support and business subsidies seem inefficient and should be scaled back and remaining support should focus on addressing externalities in terms of the creation of high productive jobs and R&D spillovers. A R&D tax credit could provide higher flexibility, equity and efficiency than current targeted support. Capital taxation should be streamlined to improve incentives for entrepreneurship and growth. The performance of the higher education system could be improved through allocating more R&D funding and teaching resources based on quality rather than block grants. Productivity performance could be enhanced by exposing sectors like health provision, network industries and retailing to more competition through lowering government dominance in provision and loosening planning restrictions. This Working Paper relates to the 2012 OECD Economic Survey of Finland (www.oecd.org/eco/surveys/finland). Relancer le moteur de la croissance en Finlande Les remarquables performances en matière de productivité des dernières décennies ont fléchi depuis 2007, du fait de la récession de 2008-09 mais aussi des médiocres résultats obtenus dans des secteurs essentiels, comme celui des technologiques de l’information et des communications. Les réformes visant à renforcer la croissance de la productivité à long terme doivent se poursuivre. Sous leur forme actuelle, le soutien à la R-D sur la base de projets et les subventions aux entreprises paraissent inefficients et devraient être revus à la baisse, et les autres mesures de soutien devraient essentiellement se concentrer sur les externalités du point de vue de la création d’emplois hautement productifs et des retombées de la R-D. Un crédit d’impôt au titre de la R-D pourrait offrir davantage de flexibilité, d’équité et d’efficience que le soutien ciblé actuellement mis en oeuvre. La taxation du capital devrait être rationalisée de manière à renforcer les incitations à l’entreprenariat et à la croissance. Les performances du système d’enseignement supérieur pourraient être améliorées en allouant à la R-D des ressources de financement et d’enseignement sur des critères qualitatifs plutôt que sous la forme de subventions globales. Les performances en matière de productivité pourraient être améliorées en ouvrant davantage à la concurrence des secteurs tels que les soins de santé, les industries de réseau et le commerce de détail en réduisant la place prépondérante du secteur public dans leur fourniture et en assouplissant les restrictions en matière d’aménagement du territoire. Ce Document de travail se rapporte à l'Etude économique de l'OCDE de Finlande 2012 (www.oecd.org/eco/etudes/finlande).

Suggested Citation

  • Henrik Braconier, 2012. "Restarting the Growth Engine in Finland," OECD Economics Department Working Papers 981, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:981-en
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    File URL: http://dx.doi.org/10.1787/5k92zp04tlr6-en
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    Keywords

    changement structurel; competition; concurrence; croissance; entrepreneuriat; entrepreneurship; Finland; Finlande; growth; ICT; productivity; productivité; R&D; R&D; retailing; structural change; TIC; vente au détail;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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