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Egalitarian Finland most competitive, too

Despite hefty government spending on social benefits, Finland tops global economies. Second in a three-part series.

(Page 3 of 3)

But Finland will have to adapt its model, as it develops what Dr. Himanen calls "the welfare state 2.0."

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"It will have to become more innovative, more productive, more customer driven," he argues. And that may mean giving private companies a larger role in providing welfare state services, and encouraging a more entrepreneurial approach.

"Until now we have been a textbook case of how a country should advance," says Rouvinen. "Today we are at a crossroads, because we have been a catch-up economy, and now we are at the global frontier, which is a different ballgame. We have to lead the way."

That, he suggests, demands the sort of businessman who can "come up with radical new ideas and make billions, and the Finnish mind-set does not support that."

He remains confident, though, that so long as Finland can tell success stories like Nokia's in key global industries such as telecommunications, and improve its efficiency in delivering welfare services, it can go on offering economic growth and a social safety net.

After running budget surpluses for a decade, adds Dr. Kautto, "Finland is one of the countries best equipped to meet the challenges of an aging population, globalization, and so on. In economic terms we are doing extremely well."

In the end, says Jorma Sipila, the Chancellor of Tampere University, Finland's inclusive social model is its best guarantee for the future.

"The conditions for a flourishing economy are so demanding that the state has to make social investments to raise competent people and take care of dropouts so that they carry their share of the burden," he argues. "Marrying prosperity and social protection is the only sustainable future."

Thursday: France looks at how to remodel its social model.

Finn facts

Land of Nokia

The world's No. 1 cellphone maker is based in Finland. It holds 32 percent of the global cellphone market.

Nokia started in 1865 as a forest industry company on the banks of the Nokia River. Today, it employs more than 60,000 people (about 24,000 in Finland) with factories in 10 countries and research and development facilities in 15 countries.

Nokia's share of Finland's:

GDP 4%
Business sector R&D 35%
Exports 25%
CEO Jorma Ollila's yearly pay: $4.64 million

Upwardly mobile society

In 1998, when some Americans were still getting funny looks for using cellphones, mobile subscribers in Finland already outnumbered land-line subscribers. In fact, 20 percent of households relied solely on cellphone service.

No censorship here

Reporters Without Borders ranks Finland (and several other countries) No. 1 for freedom of the press. The US ranks 22nd.

It has its challenges, too

Finland has some of the highest suicide rates in the developed world. For people aged 35-44, for example, the suicide rate is 29.9 (people per 100,000) in Finland, versus 14.4 in the US.

Speeding is expensive

A 27-year-old Finnish heir to a sausage business, Jussi Salonoja, was famously fined 170,000 euros (about $217,000 at the time) for going 80 kilometers per hour in a 40 kph zone. Speeding fines are based on the offender's income. Mr. Salonoja's reported earnings for 2002 were 7 million euros.

Linux is from where?

The open-source operating system was started in 1991 as a hobby by Finnish university student Linus Torvalds. But he wasn't the only entrepreneurial student: In 1992 (before Netscape came along), IT students at the Helsinki University of Technology developed the first graphic-based Internet browser.

Where Santa's sleigh garages

The residents Mt. Korvatunturi - in the northern part of Finland known as Lapland - claim this is the home of Santa Claus. Some 600,000 letters a year are sent there in the hope that it's true.

Sources: Yahoo; Harvard Business School; Morgan Stanley;; University of Lapland; BBC; World Health Organization.