This OECD review of Finland presents an overall picture, set within a macro-economic context, of regulatory achievements and challenges including regulatory quality, competition policy, and market openness.

This OECD review of Finland presents an overall picture, set within a macro-economic context, of regulatory achievements and challenges including regulatory quality, competition policy, and market openness.

In the past, vigorous reforms promoting competition and liberalising the economy have helped Finland to stimulate strong growth and an above average performance among OECD countries. The rise of a world class ICT sector is a defining characteristic of todays economy, but so is a large public sector and a continuing high level of state ownership. This report suggests that more impetus needs to be given to the reform process across the Finnish society. A stronger, strategic and centrally-driven regulatory governance policy will help to unlock further positive changes. The success of the ICT sector needs to be mirrored by a stronger performance of other parts of the economy. The efficiency of public services, which are mainly delivered at the local level, requires attention. Clear policies are needed to determine the scope of state ownership and the governance of state-owned entities. These will help to delineate the respective roles of the state and the private sector. Some service and other sectors would benefit from more competition. And regulatory reform of the labour market is an increasingly pressing need. Finland is one of many OECD countries to request a broad review by the OECD of its regulatory practices and reforms. This review presents an overall picture, set within a macro-economic context, of regulatory achievements and challenges including regulatory quality, competition policy, and market openness. It also assesses progress in the commercialisation of government services. The background material used to prepare this report is available at: www.oecd.org/regreform/backgroundreports In the same series: Regulatory Reform in Canada Regulatory Reform in the Czech Republic Regulatory Reform in Denmark Regulatory Reform in Greece Regulatory Reform in Hungary Regulatory Reform in Ireland Regulatory Reform in Italy Regulatory Reform in Japan Regulatory Reform in Korea Regulatory Reform in Mexico Regulatory Reform in Norway Regulatory Reform in the Netherlands Regulatory Reform in Poland Regulatory Reform in Spain Regulatory Reform in Turkey Regulatory Reform in the United Kingdom Regulatory Reform in the United States For a comparative analysis of regulatory policy performance in OECD countries, see Regulatory Policies in OECD Countries: From Interventionism to Regulatory Governance, published in 2002, and Integrating Market Openness into the Regulatory Process: Emerging Patterns in OECD Countries, available at www.oecd.org/regreform. The analytical basis of the OECD Regulatory Review programme was laid in the OECD Report on Regulatory Reform: Synthesis, and the supporting two-volume OECD Report on Regulatory Reform: Sectoral and Thematic Studies, published in 1997.

This OECD review of Finland presents an overall picture, set within a macro-economic context, of regulatory achievements and challenges including regulatory quality, competition policy, and market openness.

This OECD Review of Regulatory Reform of Norway presents an overall picture, set within a macro-economic context, of regulatory achievements and challenges including regulatory quality, competition policy, and market openness.

In recent years, liberalization, privatization and deregulation have become commonplace in sectors once dominated by government-owned monopolies. In telecommunications, for example, during the 1990s, more than 129 countries established independent regulatory agencies and more than 100 countries privatized the state-owned telecom operator. Why did so many countries liberalize in such a short period of time? For example, why did both Denmark and Burundi, nations different along so many relevant dimensions, liberalize their telecom sectors around the same time? Kirsten L. Rodine-Hardy argues that international organizations – not national governments or market forces – are the primary drivers of policy convergence in the important arena of telecommunications regulation: they create and shape preferences for reform and provide forums for expert discussions and the emergence of policy standards. Yet she also shows that international convergence leaves room for substantial variation among countries, using both econometric analysis and controlled case comparisons of eight European countries.

Finland's reform efforts over the last 20 years have strengthened competition in many parts of the economy and fostered above-average growth. A key feature of reform has been the deregulation of important sectors of the economy, reversing a legacy of state control.However, the challenges posed by high unemployment and a rapidly aging population underline the need to spread reforms across all parts of Finnish society. Finland also needs to improve efficiency in its large public sector.The economy has also changed significantly, to complement the country's traditional strength in industrial goods and natural resources, an information and communications technology sector has flourished. RandD expenditure is now the second highest in the OECD, as a percentage of GDP. To build on those successes, further reforms are needed. The public sector remains large relative to other OECD countries, as do tax burdens. Although significant reforms of the public sector have already taken place, further steps are needed to promote greater efficiency. Finland has worked hard to improve its regulatory governance since the1980s, but stronger political drive for impact assessments of new laws and regulations, as well as supporting structures in the centre of government, would improve the efficiency and coherence of regulatory instruments.There is need for further reform, as Finland's population is aging more rapidly than it is in most OECD countries. The number of people over age 65 is projected to increase by more than 50% by 2020, and the labour force could start to decline within a decade. Rapid aging also underscores the need for labour market reforms. Although unemployment has halved since 1994, at 9% it is still above the EU average. Structural unemployment, especially long-term unemployment, remains a major problem. Centralized wage negotiations offer little incentive for improvement in sheltered sectors of the economy. Moreover, the regulatory regime does little to encourage unemployed individuals to return to work.