But the crisis is here one invests. As Finland has become a success. Which demonstrates the powerful effect of countercyclical spending on education. While we Gelmini cuts will sweep over schools, universities and research
Elisabetta Segre, Francesco Vona
From Sbilanciamoci.info
We want to tell a story, want to tell Gemini to the Minister and all those who think that the only cuts and deregulation are good recipes to get out of a crisis. This is obviously a success story that, like many of those told in recent times, beginning with the fall of the Berlin Wall.
We are in Finland and our storytelling is the National Bureau of Statistics.
We just said that the Wall fell and with him the most important trading partner of the Baltic country, the Soviet Union. The economy suffers a terrible setback (Figure 1, GDP in millions of euro, Finland 1985-2007, constant 2007 prices, source: Eurostat, and Figure 2, Unemployment Rate, Finland 1988 - 2008, source: Eurostat). The unemployment rate touches 17% of the workforce (Source Eurostat) and the domestic product falls of almost 40 percentage points between '90 and '93. The economy is highly centralized and the labor force is heavily unionized and protected.
Let us now jump ahead 10 years and without changing coordinates we find ourselves in one of the most competitive countries in the world (Global Economic Forum - Global Competitiveness Report), which has managed to combine an average GDP growth of over 3.5% per annum between 1997 and 2007 (Eurostat) with a strong focus on environmental impacts that may result in such robust growth: the Environmental Performance index developed by Yale University Finland ranks in 4th place.
What happened in those 10 years? Probably Finnish politicians have followed the orthodox neoliberal recipes in vogue in the '90s (examples include the OECD Job Studies, 1994): liberalization of the labor market, decentralization of bargaining, widespread cuts in public spending in particular devoted to social protection (so dangerous to productivity because it makes it all terribly lazy workers). Not at all. The Finnish policy makers have decided to go against the tide: they preferred a well-focused industrial policy by increasing Investment in R & D (Figure 3, public investment in R & D as a percentage of GDP, Finland 1985-2007, source: Eurostat) and in training, especially at university level, thereby offsetting the costs in terms of unemployment - is still rather high - with the benefits generated by growth rates, allowing you to maintain a high level of protection and social protection for vulnerable groups. KELA Statistics Institute (a public institution in charge of providing various types of subsidies to different categories of users) tell us that, exactly on the period of greatest economic distress, public aid to university students reached a peak ( Figure 4 Support financial university education as a percentage of GDP, Finland 1985-2007, constant prices 2007, Source: Authors' calculations on data from Eurostat and Kela).
This story reveals the powerful effect of counter-cyclical spending for education. Among the strategic factors that propel the growth of the economy are indeed long-term training and policies for research and innovation. In particular, the families most affected by the crisis may find it difficult to finance the investment in that type of human capital that economists call general (mainly education), or detached from the specificity of a given technological and organizational business but more adaptable to new contexts. An extensive economic literature shows that investments in human capital and general education, increasing their ability to learn, can foster the adoption of new technologies and at the same time reduce the risk of unemployment due to skill mismatches (that is a bad match between qualifications required by enterprises and those offered by the workforce).
The opportunity to support the human capital accumulation during the general recession seems to be a pillar of the structural policies as necessary to maintain or increase the innovative capacity of a system.
The article summarizes the work published in: Segre E. and F. Vona, "Investment in Human Capital for overcoming the crisis: the Finnish experience", in R. Pizzuti (ed.) 2010 Report on the Welfare State, the University at Academia
original title: A history of the Finnish Minister Gelmini
From Sbilanciamoci.info
We want to tell a story, want to tell Gemini to the Minister and all those who think that the only cuts and deregulation are good recipes to get out of a crisis. This is obviously a success story that, like many of those told in recent times, beginning with the fall of the Berlin Wall.
We are in Finland and our storytelling is the National Bureau of Statistics.
We just said that the Wall fell and with him the most important trading partner of the Baltic country, the Soviet Union. The economy suffers a terrible setback (Figure 1, GDP in millions of euro, Finland 1985-2007, constant 2007 prices, source: Eurostat, and Figure 2, Unemployment Rate, Finland 1988 - 2008, source: Eurostat). The unemployment rate touches 17% of the workforce (Source Eurostat) and the domestic product falls of almost 40 percentage points between '90 and '93. The economy is highly centralized and the labor force is heavily unionized and protected.
Let us now jump ahead 10 years and without changing coordinates we find ourselves in one of the most competitive countries in the world (Global Economic Forum - Global Competitiveness Report), which has managed to combine an average GDP growth of over 3.5% per annum between 1997 and 2007 (Eurostat) with a strong focus on environmental impacts that may result in such robust growth: the Environmental Performance index developed by Yale University Finland ranks in 4th place.
What happened in those 10 years? Probably Finnish politicians have followed the orthodox neoliberal recipes in vogue in the '90s (examples include the OECD Job Studies, 1994): liberalization of the labor market, decentralization of bargaining, widespread cuts in public spending in particular devoted to social protection (so dangerous to productivity because it makes it all terribly lazy workers). Not at all. The Finnish policy makers have decided to go against the tide: they preferred a well-focused industrial policy by increasing Investment in R & D (Figure 3, public investment in R & D as a percentage of GDP, Finland 1985-2007, source: Eurostat) and in training, especially at university level, thereby offsetting the costs in terms of unemployment - is still rather high - with the benefits generated by growth rates, allowing you to maintain a high level of protection and social protection for vulnerable groups. KELA Statistics Institute (a public institution in charge of providing various types of subsidies to different categories of users) tell us that, exactly on the period of greatest economic distress, public aid to university students reached a peak ( Figure 4 Support financial university education as a percentage of GDP, Finland 1985-2007, constant prices 2007, Source: Authors' calculations on data from Eurostat and Kela).
This story reveals the powerful effect of counter-cyclical spending for education. Among the strategic factors that propel the growth of the economy are indeed long-term training and policies for research and innovation. In particular, the families most affected by the crisis may find it difficult to finance the investment in that type of human capital that economists call general (mainly education), or detached from the specificity of a given technological and organizational business but more adaptable to new contexts. An extensive economic literature shows that investments in human capital and general education, increasing their ability to learn, can foster the adoption of new technologies and at the same time reduce the risk of unemployment due to skill mismatches (that is a bad match between qualifications required by enterprises and those offered by the workforce).
The opportunity to support the human capital accumulation during the general recession seems to be a pillar of the structural policies as necessary to maintain or increase the innovative capacity of a system.
The article summarizes the work published in: Segre E. and F. Vona, "Investment in Human Capital for overcoming the crisis: the Finnish experience", in R. Pizzuti (ed.) 2010 Report on the Welfare State, the University at Academia
original title: A history of the Finnish Minister Gelmini
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