NORDEK : A Plan for Increased Nordic Economic Co-operation and Integration 1968-1970

For the first time the attempt of Denmark, Finland, Norway and Sweden to increase Nordic economic co-operation and integration (NORDEK 1968-1970) is analysed by using records from the four governments archives and interviews with central actors participating. A dominating argument has until now been that dynamics in Nordic economic integration is different from dynamics in European integration. This archive based study disproves the myth however of ideological Nordism and of short term political developments outside Norden as most important for the NORDEK initiative. The NORDEK initiative was actually more a consequence of a long term socioeconomic and socio-political path dependant process. The study also disproves the myth that the NORDEK plan was a political and ideological symbol without socioeconomic substance. The purpose with NORDEK was to create a better basis for generating economic growth and social welfare. The proposed NORDEK institutions were therefore developed to promote economic progress. The study finally shows that the NORDEK failure in 1970 was not a result of lacking economic rationale or incompatible economic interests. The failure was a result of a power struggle in Finnish domestic policy and lacking political will in the other Nordic countries to continue without Finland.

The Soviet Union, Finland and the Cold War : The Finnish Card in Soviet Foreign Policy, 1956-1959

From the Soviet point of view the actual substance of Soviet-Finnish relations in the second half of 1950s clearly differed from the contemporary and later public image, based on friendship and confidence rhetoric. As the polarization between the right and the left became more underlined in Finland in the latter half of the 1950s, the criticism towards the Soviet Union became stronger, and the USSR feared that this development would have influence on Finnish foreign policy. From the Soviet point of view, the security commitments of FCMA-treaty needed additional guarantees through control of Finnish domestic politics and economic relations, especially during international crises. In relation to Scandinavia, Finland was, from the Soviet point of view, the model country of friendship or neutrality policy. The influence of the Second Berlin Crisis or the Soviet-Finnish Night Frost Crisis in 1958-1959 to Soviet policy towards Scandinavia needs to be observed from this point of view. The Soviet Union used Finland as a tool, in agreement with Finnish highest political leadership, for weakening of the NATO membership of Norway and Denmark, and for maintaining Swedish non-alliance. The Finnish interest to EFTA membership in the summer of 1959, at the same time with the Scandinavian countries, seems to have caused a panic reaction in the USSR, as the Soviets feared that these economic arrangements would reverse the political advantages the country had received in Finland after the Night Frost Crisis. Together with history of events, this study observes the interaction of practical interests and ideologies, both in individuals and in decision-making organizations. The necessary social and ideological reforms in the Soviet Union after 1956 had influence both on the legitimacy of the regime, and led to contradictions in the argumentation of Soviet foreign policy. This was observed both in the own camp as well as in the West. Also, in Finland a breakthrough took place in the late 1950's: as the so-called counter reaction lost to the K-line, "a special relationship" developed with the Soviet Union. As a consequence of the Night Frost Crisis the Soviet relationship became a factor decisively defining the limits of domestic politics in Finland, a part of Finnish domestic political argumentation. Understood from this basis, finlandization is not, even from the viewpoint of international relations, a special case, but a domestic political culture formed by the relationship between a dominant state, a superpower, and a subordinate state, Finland.

Essays on Illegal Activities, Institutions and Economic Growth

In public economics, two extremist views on the functions of a government compete: one emphasizes government working for the public interest to provide value for the citizens, while another regards government mainly as a workhorse for private interests. Moreover, as the sole legitimate authority, the government has the right to define the rules and laws as well as to enforce them. With respect to regulation, two extremes arise: from too little regulation to too much of it. If the government does not function or ceases to exist, the state falls into anarchy or chaos (Somalia). If it regulates too much, it will completely suffocate private activities, which might be considered extralegal (the former Soviet Union). In this thesis I scrutinize the government s interventionist policies and evaluate the question of how to best promote economic well-being. The first two essays assume that the government s policies promote illegal activity. The first paper evaluates the interaction between the government and the mafia, and pays attention to the law enforcement of underground production. We show that the revenue-maximizing government will always monitor the shadow economy, as monitoring contributes to the government s revenue. In general, both legal and illegal firms are hurt by the entry of the mafia. It is, however, plausible that legal firms might benefit by the entry of the mafia if it competes with the government. The second paper tackles the issue of the measurement of the size of the shadow economy. To formulate policies it is essential to know what drives illegal economic activity; is it the tax burden, excess regulation, corruption or a weak legal environment? In this paper we propose an additional explanation for tax evasion and shadow production, namely cultural factors as manifested by religion as determinants of tax morality. According to our findings, Catholic and Protestant countries do not differ in their tax morale. The third paper contributes to the literature discussing the role of the government in promoting economic and productivity growth. Our main result is that, given the complex relationship between economic growth and economic freedom, marketization has not necessarily been beneficial in terms of growth. The last paper builds on traditional growth literature and revisits the debate on convergence clubs arising from demographic transition. We provide new evidence against the idea that countries within a club would converge over time. Instead, we propose that since the demographic transition is a dynamic process, one can expect countries to enter the last regime of stable, modern growth in stages.

Essays on Russia's Economic Transition

This study comprises an introductory section and three essays analysing Russia's economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992-2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some - albeit not highly robust - evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms' engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector.

Essays on Finnish Economic Growth and Productivity, 1860-2005

This study examines Finnish economic growth. The key driver of economic growth was productivity. And the major engine of productivity growth was technology, especially the general purpose technologies (GPTs) electricity and ICT. A new GPT builds on previous knowledge, yet often in an uncertain, punctuated, fashion. Economic history, as well as the Finnish data analyzed in this study, teaches that growth is not a smooth process but is subject to episodes of sharp acceleration and deceleration which are associated with the arrival, diffusion and exhaustion of new general purpose technologies. These are technologies that affect the whole economy by transforming both household life and the ways in which firms conduct business. The findings of previous research, that Finnish economic growth exhibited late industrialisation and significant structural changes were corroborated by this study. Yet, it was not solely a story of manufacturing and structural change was more the effect of than the cause for economic growth. We offered an empirical resolution to the Artto-Pohjola paradox as we showed that a high rate of return on capital was combined with low capital productivity growth. This result is important in understanding Finnish economic growth 1975-90. The main contribution of this thesis was the growth accounting results on the impact of ICT on growth and productivity, as well as the comparison of electricity and ICT. It was shown that ICT s contribution to GDP growth was almost twice as large as electricity s contribution over comparable periods of time. Finland has thus been far more successful as an ICT producer than a producer of electricity. Unfortunately in the use of ICT the results were still more modest than for electricity. During the end of the period considered in this thesis, Finland switched from resource-based to ICT-based growth. However, given the large dependency on the ICT-producing sector, the ongoing outsourcing of ICT production to low wage countries provides a threat to productivity performance in the future. For a developed country only change is constant and history teaches us that it is likely that Finland is obliged to reorganize its economy once again in the digital era.

The effects of marriage partners' socio-economic positions on the risk of divorce in Finland

Väitöskirjatutkimuksen tavoitteena oli selvittää, miten aviopuolisoiden sosioekonominen asema vaikuttaa avioeroriskiin Suomessa. Tutkimuksessa käytettiin Tilastokeskuksen rekistereistä koottua aineistoa, joka koskee suomalaisten ensimmäisiä avioliittoja vuoden 1990 lopussa ja avioeroja vuosina 1991−93. Väitöskirjaan sisältyy kolme osatutkimusta. Ensimmäinen osatutkimus käsitteli avioeroriskin vaihtelua aviopuolisoiden sosioekonomisen aseman eri osatekijöiden (koulutusaste, sosiaaliryhmä, pääasiallinen toiminta, tulotaso, asunnon omistaminen ja asumisahtaus) mukaan. Kaiken kaikkiaan avioeroriski oli sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa aviopuolisot olivat. Esimerkiksi miehen ja vaimon korkea koulutusaste, toimihenkilöammatti, työssäkäynti (etenkin verrattuna työttömyyteen) sekä omistusasunnossa asuminen liittyivät pienentyneeseen avioeroriskiin. Vaimon sosioekonomisen aseman yhteys avioeroriskiin oli paljolti samanlainen kuin miehen aseman yhteys. Huomattavin poikkeus tähän oli, että vaimon suuret tulot lisäsivät avioeroriskiä, vaikka miehen suurilla tuloilla oli päinvastainen vaikutus. Lisäksi kotitaloustyötä pääasiallisena toimintanaan tekevillä naisilla (pääasiallisen toiminnan luokka ”muut”) oli vielä pienempi avioeroriski kuin työssäkäyvillä naisilla. Toisessa osatutkimuksessa keskityttiin aviomiehen ja vaimon aseman yhdistettyyn vaikutukseen. Selviä viitteitä siitä, että puolisoiden koulutustasojen erilaisuus lisäisi eroriskiä, ei saatu. Pareilla, joissa molemmilla oli enintään perusasteen koulutus, oli kuitenkin odotettua pienempi avioeroriski. Eroriski oli suhteellisen alhainen pareilla, joissa vaimo oli työssäkäyvä tai kotitaloustyötä tekevä ja aviomies työssäkäyvä. Eroriskiä kasvatti se, että aviomies, vaimo tai molemmat puolisot olivat työttömiä. Vaimon korkea tulotaso lisäsi eroriskiä miehen kaikilla tulotasoilla mutta erityisen voimakkaasti silloin, kun miehen tulotaso oli alhainen. Kolmanneksi selvitettiin, vaikuttaako puolisoiden sosioekonominen asema avioeroriskiin eri tavalla riippuen siitä, kauanko avioliitto on kestänyt. Tällöin havaittiin, että vähän koulutettujen ja työntekijäammateissa toimivien puolisoiden suuri eroriski rajoittuu paljolti nuorimpiin avioliittoihin. Sen sijaan esim. puolisoiden työttömyys, vaimon korkea tulotaso ja vuokra-asunnossa asuminen kasvattivat eroriskiä riippumatta siitä, kuinka kauan avioliitto oli kestänyt. Kaiken kaikkiaan eroriski oli siis sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa puolisot olivat. Vaimon taloudellisilla ja sosiaalisilla resursseilla näyttää kuitenkin olevan myös joitakin avioeroriskiä lisääviä vaikutuksia.

The Rocky Road of Social Sustainability : The Impact of Integrated Biodiversity Conservation and Development on the Local Realities in Ranomafana National Park, Madagascar

The objective of this study is to examine the social impacts of the integrated conservation and development project (ICDP) aimed at biodiversity conservation and local socio-economic development in the Ranomafana National Park (RNP), Madagascar. Furthermore, the study explores social sustainability and justice of the ICDP in Ranomafana. This ethnographically informed impact study uses of various field methods. The research material used consists of observation, interviews (key-person and focus group), school children's writings, official statistics and project documents. Fieldwork was conducted in three phases in 2001, 2002 and 2004 in twelve villages around the park, as well as in neighbouring areas of Ranomafana. However, four of those twelve villages were chosen for closer study. This study consists of five independent articles and a concluding chapter. Social impacts were studied through reproductive health indicators as well as a life security approach. Equity and distribution of benefits and drawbacks of ICDP were analysed and the actors related to the conservation in Ranomafana were identified. The children and adolescents' environmental views were also examined. The reproductive health indicators studied showed a poor state of reproductive health in the park area. Moreover, the existing social capital in the villages seemed to be fragmented due to economic difficulties that were partly caused by the conservation regulations. The ICDP in Ranomafana did not pay attention to the heterogeneity of the affected communities even though the local beneficiaries of the ICDP varied according to their ethnicity, living place, wealth, social position and gender. In addition, various conservation actors (local people in various groups, local authorities, tourist business owners, conservation NGOs and scientists) contest their interests over the forest, conservation and its related activities. This study corroborates the same type of evidence and conclusions discussed in other similar cases elsewhere: so called social conservation programmes still cannot meet the needs of the people living near the protected areas; on the contrary, they even have a reverse impact on the people's lives. A fundamental misunderstood assumption in the conservation process in Ranomafana was to consider the local people as a problem for biodiversity conservation. Major reasons for the failure of the ICDP in Ranomafana include a lack of local institutions that would have been able to communicate as equals with the conservation NGOs as well as to transfer the tradition of the authoritarian governance in conservation management together with the over-appreciation of scientific biodiversity, and lack of will to understand the local people's rights to use the forest for their livelihoods.

Joseph A. Schumpeter's Theory of Social and Economic Evolution : a Reconstruction and Critique

The book presents a reconstruction, interpretation and critical evaluation of the Schumpeterian theoretical approach to socio-economic change. The analysis focuses on the problem of social evolution, on the interpretation of the innovation process and business cycles and, finally, on Schumpeter s optimistic neglect of ecological-environmental conditions as possible factors influencing social-economic change. The author investigates how the Schumpeterian approach describes the process of social and economic evolution, and how the logic of transformations is described, explained and understood in the Schumpeterian theory. The material of the study includes Schumpeter s works written after 1925, a related part of the commentary literature on these works, and a selected part of the related literature on the innovation process, technological transformations and the problem of long waves. Concerning the period after 1925, the Schumpeterian oeuvre is conceived and analysed as a more or less homogenous corpus of texts. The book is divided into 9 chapters. Chapters 1-2 describe the research problems and methods. Chapter 3 is an effort to provide a systematic reconstruction of Schumpeter's ideas concerning social and economic evolution. Chapters 4 and 5 focus their analysis on the innovation process. In Chapters 6 and 7 Schumpeter's theory of business cycles is examined. Chapter 8 evaluates Schumpeter's views concerning his relative neglect of ecological-environmental conditions as possible factors influencing social-economic change. Finally, chapter 9 draws the main conclusions.

The EU and Institutional Twinning in Morocco - An inquiry into the motives of cooperation through discourse ethics

This study examines Institutional Twinning in Morocco as a case of EU cooperation through the pragmatic, ethical and moral logics of reason in Jürgen Habermas’s discourse ethics. As a former accession tool, Twinning was introduced in 2004 for legal approximation in the context of the European Neighborhood Policy. Twinning is a unique instrument in development cooperation from a legal perspective. With its long historical and cultural ties to Europe, Morocco presents an interesting case study of this new form of cooperation. We will analyse motives behind the Twinning projects on illegal immigration, environment legislation and customs reform. As Twinning is a new policy instrument within the ENP context, there is relatively little preceding research, which, in itself, constitutes a reason to inquire into the subject. While introducing useful categories, the approaches discussing “normative power Europe” do not offer methodological tools precise enough to analyse the motives of the Twinning cooperation from a broad ethical standpoint. Helene Sjursen as well as Esther Barbé and Elisabeth Johansson-Nogués have elaborated on Jürgen Habermas’ discourse ethics in determining the extent of altruism in the ENP in general. Situating the analysis in the process-oriented framework of Critical Theory, discourse ethics provides the methodological framework for our research. The case studies reveal that the context in which they operate affects the pragmatic, ethical and moral aspirations of the actors. The utilitarian notion of profit maximization is quite pronounced both in terms of the number of Twinning projects in the economic sphere and the pragmatic logics of reason instrumental to security and trade-related issues. The historical background as well internal processes, however, contribute to defining areas of mutual interest to the actors as well as the motives Morocco and the EU sometimes described as the external projection of internal values. Through its different aspects, Twinning cooperation portrays the functioning of the pragmatic, ethical and moral logics of reason in international relations.

Tuloverotuksen reaalinen muuttuminen Suomessa : Kuusikymmentä vuotta verojen vuoristorataa

The study seeks to find out whether the real burden of the personal taxation has increased or decreased. In order to determine this, we investigate how the same real income has been taxed in different years. Whenever the taxes for the same real income for a given year are higher than for the base year, the real tax burden has increased. If they are lower, the real tax burden has decreased. The study thus seeks to estimate how changes in the tax regulations affect the real tax burden. It should be kept in mind that the progression in the central government income tax schedule ensures that a real change in income will bring about a change in the tax ration. In case of inflation when the tax schedules are kept nominally the same will also increase the real tax burden. In calculations of the study it is assumed that the real income remains constant, so that we can get an unbiased measure of the effects of governmental actions in real terms. The main factors influencing the amount of income taxes an individual must pay are as follows: - Gross income (income subject to central and local government taxes). - Deductions from gross income and taxes calculated according to tax schedules. - The central government income tax schedule (progressive income taxation). - The rates for the local taxes and for social security payments (proportional taxation). In the study we investigate how much a certain group of taxpayers would have paid in taxes according to the actual tax regulations prevailing indifferent years if the income were kept constant in real terms. Other factors affecting tax liability are kept strictly unchanged (as constants). The resulting taxes, expressed in fixed prices, are then compared to the taxes levied in the base year (hypothetical taxation). The question we are addressing is thus how much taxes a certain group of taxpayers with the same socioeconomic characteristics would have paid on the same real income according to the actual tax regulations prevailing in different years. This has been suggested as the main way to measure real changes in taxation, although there are several alternative measures with essentially the same aim. Next an aggregate indicator of changes in income tax rates is constructed. It is designed to show how much the taxation of income has increased or reduced from one year to next year on average. The main question remains: How aggregation over all income levels should be performed? In order to determine the average real changes in the tax scales the difference functions (difference between actual and hypothetical taxation functions) were aggregated using taxable income as weights. Besides the difference functions, the relative changes in real taxes can be used as indicators of change. In this case the ratio between the taxes computed according to the new and the old situation indicates whether the taxation has become heavier or easier. The relative changes in tax scales can be described in a way similar to that used in describing the cost of living, or by means of price indices. For example, we can use Laspeyres´ price index formula for computing the ratio between taxes determined by the new tax scales and the old tax scales. The formula answers the question: How much more or less will be paid in taxes according to the new tax scales than according to the old ones when the real income situation corresponds to the old situation. In real terms the central government tax burden experienced a steady decline from its high post-war level up until the mid-1950s. The real tax burden then drifted upwards until the mid-1970s. The real level of taxation in 1975 was twice that of 1961. In the 1980s there was a steady phase due to the inflation corrections of tax schedules. In 1989 the tax schedule fell drastically and from the mid-1990s tax schedules have decreased the real tax burden significantly. Local tax rates have risen continuously from 10 percent in 1948 to nearly 19 percent in 2008. Deductions have lowered the real tax burden especially in recent years. Aggregate figures indicate how the tax ratio for the same real income has changed over the years according to the prevailing tax regulations. We call the tax ratio calculated in this manner the real income tax ratio. A change in the real income tax ratio depicts an increase or decrease in the real tax burden. The real income tax ratio declined after the war for some years. In the beginning of the 1960s it nearly doubled to mid-1970. From mid-1990s the real income tax ratio has fallen about 35 %.

Climate change and agriculture: theory and application of mitigation policies

Agriculture’s contribution to climate change is controversial as it is a significant source of greenhouse gases but also a sink of carbon. Hence its economic and technological potential to mitigate climate change have been argued to be noteworthy. However, social profitability of emission mitigation is a result from factors among emission reductions such as surface water quality impact or profit from production. Consequently, to value comprehensive results of agricultural climate emission mitigation practices, these co-effects to environment and economics should be taken into account. The objective of this thesis was to develop an integrated economic and ecological model to analyse the social welfare of crop cultivation in Finland on distinctive cultivation technologies, conventional tillage and conservation tillage (no-till). Further, we ask whether it would be privately or socially profitable to allocate some of barley cultivation for alternative land use, such as green set-aside or afforestation, when production costs, GHG’s and water quality impacts are taken into account. In the theoretical framework we depict the optimal input use and land allocation choices in terms of environmental impacts and profit from production and derive the optimal tax and payment policies for climate and water quality friendly land allocation. The empirical application of the model uses Finnish data about production cost and profit structure and environmental impacts. According to our results, given emission mitigation practices are not self-evidently beneficial for farmers or society. On the contrary, in some cases alternative land allocation could even reduce social welfare, profiting conventional crop cultivation. This is the case regarding mineral soils such as clay and silt soils. On organic agricultural soils, climate mitigation practices, in this case afforestation and green fallow give more promising results, decreasing climate emissions and nutrient runoff to water systems. No-till technology does not seem to profit climate mitigation although it does decrease other environmental impacts. Nevertheless, the data behind climate emission mitigation practices impact to production and climate is limited and partly contradictory. More specific experiment studies on interaction of emission mitigation practices and environment would be needed. Further study would be important. Particularly area specific production and environmental factors and also food security and safety and socio-economic impacts should be taken into account.

Modern Societal Impulses and their Nordic Manifestations : On Emancipation and Constraint in Societal Development

The 1980s and the early 1990s have proved to be an important turning point in the history of the Nordic welfare states. After this breaking point, the Nordic social order has been built upon a new foundation. This study shows that the new order is mainly built upon new hierarchies and control mechanisms that have been developed consistently through economic and labour market policy measures. During the post-war period Nordic welfare states to an increasing extent created equality of opportunity and scope for agency among people. Public social services were available for all and the tax-benefit system maintained a level income distribution. During this golden era of Nordic welfare state, the scope for agency was, however, limited by social structures. Public institutions and law tended to categorize people according to their life circumstances ascribing them a predefined role. In the 1980s and 1990s this collectivist social order began to mature and it became subject to political renegotiation. Signs of a new social order in the Nordic countries have included the liberation of the financial markets, the privatizing of public functions and redefining the role of the public sector. It is now possible to reassess the ideological foundations of this new order. As a contrast to widely used political rhetoric, the foundation of the new order has not been the ideas of individual freedom or choice. Instead, the most important aim appears to have been to control and direct people to act in accordance with the rules of the market. The various levels of government and the social security system have been redirected to serve this goal. Instead of being a mechanism for redistributing income, the Nordic social security system has been geared towards creating new hierarchies on the Nordic labour markets. During the past decades, conditions for receiving income support and unemployment benefit have been tightened in all Nordic countries. As a consequence, people have been forced to accept deteriorating terms and conditions on the labour market. Country-specific variations exist, however: in sum Sweden has been most conservative, Denmark most innovative and Finland most radical in reforming labour market policy. The new hierarchies on the labour market have co-incided with slow or non-existent growth of real wages and with a strong growth of the share of capital income. Slow growth of real wages has kept inflation low and thus secured the value of capital. Societal development has thus progressed from equality of opportunity during the age of the welfare states towards a hierarchical social order where the majority of people face increasing constraints and where a fortunate minority enjoys prosperity and security.