The regional possibilities in the process of external integration of the Finnish economy

Abstract

The ambitious aim of this study was to find an answer to the question what are the prerequisites for success of Finland's sub-areas when barriers to trade are lowering and Finland is being integrated with the international economy.

The first step of the study was to define the regional success factors, the strengths and weaknesses, with respect to internationalisation. The factors were defined e.g. on the basis of Porter's concept of the competitive advantage of nations as well as the empirical findings and ideas on the most important locational factors of industrial firms. The data were gathered from the statistics and registers of Statistics Finland. The success factors were grouped into two main blocks: 1) economic activities (five variables), and 2) locational factors of industrial firms (nine variables). Both blocks of variables were then analysed with the help of principal components analysis, and finally, on the basis of the regional points produced by the first principal component of both blocks, the regions were grouped into four categories representing their competitive advantage.

Uusimaa, the southernmost region of Finland with the capital Helsinki, is in the best position and has the best prerequisites for success. The next regions are Southwest Finland with its main centre Turku, and the Tampere region. The regions of Central Ostrobothnia and South Ostrobothnia have the weakest prerequisites of all nineteen regions. The disparities within the regions are often great. The best situation generally occurs at the core area of the region. The weakest small economic areas are characterised by peripheral location, agricultural-related industries, rather low GNP per capita, low educational level of the population, and old age structure. On the basis of the results, polarisation of regional development is continuing at the same time as Finland is being internationalised.