Finland urgently needs more private capital, views professor Bengt Holmström.The three problems of the Finnish economy according to professor Bengt Holmström are over-education, the lack of new production methods and the scarcity of capital. “Finland needs more people like Antti Herlin and Björn Wahlroos,” Holmström states.

It is difficult, Holmström explains, to pool the scarce and dispersed private capital in Finland for rational investment activities to promote economic expansion.

Banks are similarly no longer eager to invest in businesses due to a stricter regulatory environment, he adds. As a result, the state may be compelled to assume a more active role as an owner and in directing investments – a scenario that worries Holmström.

“One is always more responsible when investing their own capital than when investing someone else's capital. In state-owned companies, in particular, the interests of tax-payers are regularly outweighed by political pressure.”

A professor of economics at the esteemed Massachusetts Institute of Technology, Holmström has lived and worked in the United States for four decades. His work has been published in all of the world's most important economics journals.

As a scientist, Holmström deems education as his most significant responsibility, which is expressly why he is concerned about higher education in Finland. Finnish basic and upper-secondary education systems, in contrast, are excellent, he says.

“Finnish high-school students are on an average ahead of American high-school students, but the advantage is lost in the universities. Students are not looked after sufficiently and enough is not demanded of them.”

Economic growth, in turn, is based on improvements in the productivity of work, which stem from expertise and new innovations – also in the traditional sectors.

“Young people should get into working life sooner. For many, studies could end in a Bachelor's Degree, and the Master's Thesis should be abolished,” proposes Holmström.

Petri Sajari – HS
Aleksi Teivainen – HT
Photo: Aku Isotalo / HS