Ireland needs to find its own ‘Nokia’ to survive

IRELAND needs to identify key industries with significant job-creating potential and build its recovery around them, says IBEC economist Reetta Suonpera.

Speaking at the Kenmare 2009 economic symposium in Kerry over the weekend, Ms Suonpera delivered a talk entitled Lessons for Ireland from the Finnish Crisis.

In the 1990s, Finland endured a property-led economic collapse.

“The Finnish sector to suffer the most was construction, where employment halved from 201,000 in 1990 to 109,000 in 1994,” Ms Suonpera said.

“Avoiding a prolonged period of high unemployment is one of the great challenges Ireland faces.”

Not unlike Ireland, Finland began to invest heavily in research and development (R&D), hoping to create a knowledge economy. State R&D funding rose by 5.5% a year, but in 1991 private sector funding fell by 5.9%.

Then Nokia came to the rescue. The company’s emergence as a world leader in the mobile phone market helped build Finland’s reputation for IT excellence. Arguably, funding R&D had paid off.

Ms Suonpera said: “Nokia, of course, has had by far the most significant impact on the Finnish economy, accounting for 20% of exports and nearly 3% of GDP in 2002.

“In the early 1990s, however, it was a medium-sized, diversified conglomerate on the brink of bankruptcy. Through acquisitions it had interests in rubber, forest products, but also mobile phones.

“Finland and Ireland have chosen very different models on which to build their economies. Ireland has opted for an ‘early adaptor’ strategy, where it rapidly deploys and utilises technologies developed abroad. Finland can perhaps be characterised as a ‘niche innovator’ that strives to be a world leader in a few strategic areas.”

Ireland needs to identify what those areas are likely to be. And it must recognise and support a “Nokia” when and if it comes along, she said.