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70 Tapani Paavonen majority of the group had voted “yes”. 32 When Finland entered the European Union, at the beginning of 1995, she was to belong to the core of the member States which were regarded as leading the integration process. 33 VIII. Economic Adjustment to Integration Empirical studies confirm the trade creation and the trade diversion effects of the classical integration theory for both the FINN-EFTA agreement and the free trade agreement with the EC. 34 From the early 1960s to the early 1970s the share of the EFTA countries in Finland's exports and imports rose remarkably, while that of the EEC/EC countries fell. The increasing significance of EFTA trade was, however, mainly a result of the favourable conditions that met the Nordic market of industrial goods. Trade grew rapidly among the Nordic countries, while the effect on trade with the other EFTA countries was rather insignificant. The greater part of the growth of Finland's EFTA trade came from trade with Sweden. Trade with Norway also grew rapidly. The importance of the Nordic market remained a permanent feature, although in the period following the free trade agreement with the EC the share of the original EEC countries was gradually resumed. 35 More significant, however, was the obvious impact of integration on economic growth, which was linked with profound structural changes in the Finnish economy and foreign trade. During a couple of decades since the 1950s Finland developed from a semi-agrarian country to an advanced industrial society. The economic growth was more vigorous in Finland than in the Western countries in average. By the 1990s, as a result of this convergence process, Finland caught up the per capita income levels of most West European countries. Finnish exports diversified considerably and eventually the traditional division export/domestic-market industries lost ground. Imports diversified too but less noticeably. Foreign trade ceased to be predominantly based on the comparative advantage, linked to national factor endowment, but on the economies of scale with specialisation. Up to the 1960s Finland's exports to Western Europe consisted mainly of scarcely processed forest products. From 1960 to 1995 the share of forest products in exports to Western Europe fell from 85 percent to 40 percent. At the same time especially metal and engi- 32. See e.g. W. KAISER et al., Die EU-Volksabstimmungen in Österreich, Finnland, Schweden und Norwegen: Verlauf, Ergebnisse, Motive und Folgen, Wien, 1995, p.1; Valtiopäivät – Riksdagen 1994, Minutes, pp.5160-5161. 33. E. ANTOLA, From the European Rim to the Core: The European Policy of Finland in the 1990s, in: Northern Dimension. The Yearbook of the Finnish Institute of International Affairs 1999, Helsinki, 1999, spec. pp.6-7. 34. For a theoretical approach to integration, see J. VINER, The Customs Union Issue, New York, 1950, pp.44-45. 35. P. KLEPPE, EFTA, NORDEK, EEC. Analys av de nordiska ländernas integrationsproblem, Stockholm, 1969, pp.66-78 & 187-192; J.-O. ANDERSSON and Y. TOLONEN, EFTA- och EEC-avtalens inverkan på Finlands utrikeshandel, Åbo, 1980, pp. 5-22; and R. VOLK and H. ES- KELINEN, EEC-vapaakauppa, op.cit., pp.2-5 & 38-56.
From Isolation to the Core: Finland's Position towards European Integration 71 neering industries as export branches rose to prominent positions (see figure 2). In accordance with the original Finnish integration aim the traditional export industries maintained, by and large, their relative competitive position in the Western markets. While the share of timber, pulp and wood manufactures (i.e. plywood) decreased considerably, that of paper and paperboard remained relatively stable. Figure 2. Distribution of Finnish exports to Western Europe (EFTA + EEC/EC/EU) among sections and selected divisions of SITC, 1960-1998 The essential growth has taken place in new export branches. The first feature of the development of a new trade pattern was the emergence of product cycles on some labour-intensive consumer-goods industries. This success was still based on comparative advantage, i.e. cheap (female) labour. The most successful was the clothing industry, which, in the beginning, used the wage difference especially with regard to Sweden and other Nordic countries to allow Finnish exports to find wider international markets. Footwear is a similar example but in a smaller scale. The Finnish basic textile industries, instead, began to decline as soon as tariff protection ceased. In the 1970s, the share of clothing in Finland's total exports rose up to 5 percent, while at the same time that of the combined textile, clothing, leather and footwear industries fluctuated between 7 and 9 percent. The price competitiveness of the Finnish light consumer-goods industries lasted until the 1980s. After World War II, the Finnish shipbuilding and engineering industries increased first under the auspices of the Soviet trade, but gradually they gained position also in Western markets. Finland has been a net exporter of ships from the early post-war years. Most characteristic of Finland has been the engineering of the so-called forest cluster, i.e. paper-mills and pulp-mills machinery, woodworking machinery and forest machines. Also hoisting and excavating machinery have been successful. From the late 1960s Finland has been a net exporter of television receivers. During the 1990s mobile telephones (Nokia) have become a well-known
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JOURNAL OF EUROPEAN INTEGRATION HIS
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INTRODUCTION Fernando Guirao The hi
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Introduction 7 had become accustome
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Introduction 9 strengthening the an
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12 Maurice FitzGerald endorsed by a
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14 Maurice FitzGerald Ireland in a
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16 Maurice FitzGerald Relations wit
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18 Maurice FitzGerald by the Counci
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Page 108 and 109: 106 Ziya Önis I. Turkey and the Co
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Book reviews - Comptes rendus - Buc
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Contributors - Auteurs - Autoren 14
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146 Books received - Livres reçus
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