Report: Global governance and increasing differences in income
The main challenges of the global economy relate to widening differences in income distribution and establishment of the institutions necessary to achieve supranational economic governance. The importance of national level ability to change will continue to grow. Developing economies, such as China and Russia, must be able to change their economic structures to maintain the growth in prosperity. Finland has prospects for future economic success. This, however, requires constant improvement of our economic capabilities. We must enhance the labour market's capability to respond and develop our education systems further.
These are some of the conclusions put forward in the report entitled Finland's global economic challenges 2030. The report was commissioned by the Economic Council of Finland and drawn up by Pellervo Economic Research PTT. The report was compiled to support preparatory work on the government foresight report and it examines the main international economic development trends and foreseeable changes over the next twenty years. The report also explores Finland's ability to adapt. The report provides a compact overview of certain key issues, including the problems faced by China and the United States and the future prospects of the labour market and the financial market.
Technological development will continue to serve as a driver for economic growth. Increased prosperity will be accompanied by fluctuations in economic performance. Global economic integration calls for well-running supranational governance which is hard to achieve among extremely different kinds of actors. In the developed countries, technological advances and international division of labour would seem to strengthen labour market polarisation and differences in income distribution.
We must enhance the labour market's capability to respond and develop our education systems further. Globalisation and technological change require an overall rise in the education level and investment in the training of top individuals capable of innovation. The guiding role of public innovation policy must not be too strong – it should focus on creating the right conditions for innovation in the business sector. Citizens' confidence in each other and in economic institutions is an important factor facilitating adaptation and we must not let it erode. At the international level, it is in Finland's interests to promote both the strengthening of global cooperation and the development of the European Union's internal structures.
A comment written by Professor Hiski Haukkala from the University of Tampere is annexed to the report. Haukkala is pessimistic about the possibility of achieving a well-functioning system for global governance and emphasises Russia's importance for Finland. Haukkala also voices his concern over the possible social policy consequences of labour market polarisation.
Inquiries:
Markus Lahtinen, Research Director, Pellervo Economic Research PTT, 050 491 3842, markus.lahtinen(at)ptt.fi
Hiski Haukkala, Professor, University of Tampere, 050 5822 173, hiski.haukkala(at)uta.fi
Pekka Sinko, Secretary-General, Prime Minister’s Office, 09 160 22177 , pekka.sinko(at)vnk.fi