Jari Gustafsson returned to Helsinki last autumn, after nine years in London, Japan and Beijing. He visited Finland several times when living abroad and was not always heartened by what he saw. Finland was more prosperous when he left.
Permanent Secretary Jari Gustafsson of the Ministry of Employment and the Economy wants to see rapid growth replace the current economic slump, which began in 2008. Old and new opportunities are arising based on digitalisation.
Gustafsson is sitting in his legendary office at Aleksanterinkatu 4 in Helsinki. He became Permanent Secretary at the beginning of October 2015.
During our interview, as March was giving way to April, the spring sun shone brightly after the dark winter. There are also signs of better days in the national economy. Gross domestic product rose by a percent in 2015. There are other positive signs, such as the recent SME barometer. Housing construction has also begun to turn around. However, unemployment continues to weigh Finland down.
"On the other hand, growth figures like this, of half to one percent, are not signs of a rosy future. This is low growth by European standards and means that the gap with Finland’s reference countries is growing. Still, the figures do suggest that the worst is over," says Gustafsson.
Working on your strengths
The road to recovery and faster growth lies through areas of previous strength for Finland. For example, Finland has a skills base in the digital sector. New innovations will partly come from familiar areas. VTT’s Bioruukki piloting facility is one possible source of innovation.
"It is hard to imagine where growth will come from if not from there. The basic issues haven’t changed. Maybe what needs to change is the desire for growth, which is not one of our strengths."
Finnish companies have experienced difficulties in growing, although there are signs of a rosier future among firms collaborating with VTT and Tekes – the Finnish Funding Agency for Innovation. One reason for this is the smoother flow of information. "Small companies cannot keep track of everything going on around them," Gustafsson says.
Companies of all sizes are needed in order to sustain budding growth. Gustafsson believes that there is nothing to be gained from categorising companies into important and less important firms.
"Slush is an example of the young people from whom we can learn at least the right attitude. While SME entrepreneurs remain the centre of our attention, the importance and role of large companies as drivers of growth has changed in nature rather than disappearing."
One potential means of creating growth and investments would be to change the mindset. Innovation should be regarded as an investment in future returns rather than a cost. In addition, scientists, the public administration and businesses could improve their mutual communication by engaging in closer dialogue.
"Digital technology is powering development in many sectors. We have only seen the very beginning of the Internet of Things. Revenue models are being sought: the role of organisations like VTT and Tekes is to act as a communication channel for this", says Jari Gustafsson.
VTT Bioruukki in Espoo is a piloting centre which promotes the use of biomass and develops bioenergy and biochemical-based production methods. Companies can run pilots in the Bioruukki processing facilities, dispensing with the need for their own equipment. New technologies will bring the forest and chemical industries closer together.
In addition to the bioeconomy, cleantech is being studied at Bioruukki. Cleantech is one of the key projects of the Ministry of Employment and the Economy and features in Gustafsson’s own career history. His perspective on this was crystallised by two years in Beijing and other parts of Asia.
"Plenty of new growth sectors will become more important whether we are involved or not. The only question is how we can get on board and share in this. That is why it is good that we have strengths that we are supporting with our own choices," he says.
As the Finnish ambassador in Beijing, Gustafsson could observe Finnish companies on the clean technology market.
"A company manufacturing indoor air purification equipment is a good example. Only three percent of Chinese households whose indoor air can be cleaned have such devices. The peak year for China’s air-pollution climate commitments is 2030, so the market has existed for quite a while. This is just one example. For a number of reasons, China is a pioneer which is imitated by other Asian countries."
Gustafsson believes that demand is rising slowly in different parts of Asia.
"Indonesia, for example, is waking up to investments of this kind. Jakarta has a population of 15 million and little attention has been paid to air pollution. All major cities in Asia are in the same situation. Like demand, expertise is no hindrance to cleantech companies. The problem is our capacity for risk-taking and desire to scale up to genuinely large markets."
Water, education and health technology
While pondering these issues in his office, the Permanent Secretary cites the old adage that at times you can be too close to an issue. He praises a presentation in which a medical training package had been turned into an export product.
"Digital services have outperformed traditional sectors in the export markets. Why not sell training packages of this kind instead of bringing students here?"
Among the various public services, Gustafsson is also thinking of health technology and the environmental business.
"We have the world’s best water utilities but, with a few exceptions, no private companies operating on the open market. We are one of the great Nordic welfare states, but not one of the countries that have turned this strength into a business," Jari Gustafsson says.