Among the materials I picked up about Finland ahead of a trip to the country was a pamphlet that began with an overview of that nation's economy. “We are sometimes called Nokia Land,” the brochure declared proudly, rattling off a list of the company's contributions.

Finland — a nation of just 5.3 million people — is home to a surprisingly large number of MNCs, but few have had quite the same impact or reputation of Nokia.

It continued to contribute significantly to Finland, through jobs, taxes or education, despite shifting much of its manufacturing overseas, according to the Helsinki-based Research Institute of the Finnish Economy (ETLA).

“Even though a lot of the production was done in China, the bulk of the value-added research and development work took place in Finland,” says Mr Vesa Vihriala, Managing Director of ETLA. By 2000, Nokia was contributing an astonishing 4 per cent to Finland's GDP, 2.5 per cent to GDP growth, to around 20 per cent of its exports, and 15 per cent of the nation's corporate taxes.

The journey of Nokia — from a rubber goods, cable and paper producer in the 19{+t}{+h} century to telecom superstardom — also encapsulated what a lot of Finns seemed to pride themselves on: innovation and having the agility to position themselves at the very front of where things were heading (Linux creator Mr Linus Torvalds is also Finnish). “The name Nokia still serves to strengthen the Finn's feeling of national identity,” another pamphlet concluded.

AFTER NOKIA'S DECLINE

No longer. Just as the current crisis has revealed the weakness of industries that countries had once seen as their champions of growth — financial services in Britain, construction in Ireland and Spain — the recent plight of Nokia revealed to Finland its Achilles Heel: its assumption that the Nokia factor would endure and continue to bolster its export-driven economy.

When demand for global exports collapsed in 2008, Finland — which aside from its telecom sector also depends on exports from its chemicals, manufacturing, and forestry sectors — was hit hard.

In 2009, the GDP shrank 8 per cent. And though GDP grew 2.9 per cent in 2011, the future signs are less cheery — it is set to grow just 0.8 per cent, according to the European Commission, largely as a result of the weakening of its terms of trade. “Finland is continuously losing export market shares as both price and non-price competitiveness have deteriorated,” it warned in a forecast on Friday.

Moreover, Finland, which has long had a generous current account surplus — 8 per cent in the early 2000s and a respectable 2 per cent even at the height of the financial crisis — saw it fall to a deficit at the end of December (the first time since the early 1990s when the country underwent a major crisis following the collapse of the Soviet Union).

While the weakness in the other sectors contributed to this, there is little doubt that the spectacular collapse of Nokia's fortunes has had a major hand.

Things only look set to get worse, with the company set to cut more research and development jobs at home.

While some of its MNCs are thriving (elevator maker Kone has counteracted the weakness in the global construction sector with a focus on Asia and an eye for mega-projects such as the Mecca Clock Tower, the world's most elevatored building) the dearth of the Nokia factor is still very apparent.

With a fast aging population and one of Europe's more restrictive immigration regimes, its options appear limited. “It's a real shock to our identity…we no longer have a rulebook,” a senior journalist at a Finnish paper said.

NEW GROWTH OPTIONS

Unsurprisingly, the question that kept coming up again and again during my visit was: who or what would replace Nokia. “The big question is can we re-employ our resources towards productive work in a profitable efficient way,” says ETLA's Mr Vihriala. A number of industries are stepping up to attempt to fill the void: backed by the government, Finland is making a big push into the so-called “Clean tech” industry globally, in areas such as renewable energy, and waste and water management, including in India and through its old established firms.

Paper maker UPM, for example, has announced plans for a refinery for wood-based bio fuels.

Also aiming to fill the gap is the country's tech start-up sector, eager to replicate the success of Rovio, the Finnish company behind Angry Birds, which, it was recently announced, has been downloaded a mind-boggling 1 billion times (an Angry Birds theme park is set to open in June, while analysts are valuing Rovio at as much as $9 billion).

The trouble was not the lack of innovation or top-notch research — Finland has one of the biggest research and development spends relative to GDP in the world — but the lack of ability to bring the new technologies to market, and a willingness to scale up and think globally, a Helsinki-based investor said.

“Till now there had not been enough success cases in the past, and there's a lack of ambition to grow bigger.”

Mr Timo Kekkonen, a director at the Confederation of Finnish Industry and a former government advisor, argues that further regulatory changes are needed if the industry is to really thrive.

He says his past attempts to advise on reforms, including incentives and means for attracting investment from abroad, fell on deaf ears. “It was hard to convince anyone that changes were needed when everything seemed to be going up,” he says.

Still, such matters aren't deterring the likes of the Venture Garage at Aalto University in Helsinki, which is attempting to position itself as a Stanford-esque hub for start-ups, creating a supportive “launching pad” for firms in the Nordic, Baltic and Russian regions. The country's gaming industry is also hoping to pick up pace.

Mr Koo Pee Hiltunen, director of the Finnish games industry body NeoGames, estimates that while the sector currently has a turnover of around 165 million euros a year, this could rise to 1 billion euros by 2020.

“We won't be the new Nokia but we can be part of the new Nokia,” he says. The sector's opportunities have been boosted by the flood of talented employees now back on the job market, as Nokia downsizes its Finnish operations.

“When Nokia began to face challenges it was a major opportunity for the Finnish games industry,” says Mr TeroVirtala, CEO of RedLynx, the maker of the successful “Trials Evolution” games.

It is unlikely that Finland will find itself a single company or industry that will be the next Nokia, and that may hinder growth in the short term.

At the same time, the country has shown itself adept at reinventing and renewing, following the 1990s crisis — a far worse situation when unemployment was as high as 17 per cent.

And finally here's a twist: having one of the stronger fiscal situations in Europe in relative terms, Finland has been a steady ally of the German-led austerity drive, and was the only country to demand – and receive – collateral payments from Greece as a precondition for supporting the second bailout.

Ironically, Finland's vulnerability coincides with a time that its voice on the international stage counts more than ever before.

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