How business shapes public policy - Finnish experience
I recently read an interesting study in the Journal of International Business Studies on how the Finnish shipbuilding sector influenced the country's industrial policy back in the 1950s and 1980s.
The authors introduce the concept of "manufacturing national consent". Business builds its reputation as a critical sector for the national economy, and thus legitimizes state support.
What exactly did shipbuilders do in Finland?
- Lobbied for interests through institutional dialogue, not behind the scenes - with official participation in working groups and ministerial councils.
- Communicated through the media, creating an image of the industry as a symbol of national independence.
- Built coalitions - created associations representing the entire industry, not just one company.
- Operated with numbers: number of jobs, share in exports, multiplier for the economy.
As a result, twice in 30 years, they have achieved solutions that have radically improved their position in the international market: lower transaction costs, access to state export financing, modernization.
As a result of the political influence of business, the state has changed the conditions that have reduced the costs of exports, in particular through special financial instruments and agreements.
The study examines two specific micro-histories in the history of Finnish shipbuilding - two periods of active change in government policy caused by the industry itself.
The period of the 1950s. After World War II, Finland had huge reparations obligations to the USSR, and the shipbuilding industry became one of the main instruments for fulfilling these obligations.
Shipbuilding companies, such as Crichton-Vulcan (the predecessor of Wärtsilä Marine), actively engaged in export production, first to the USSR and later to the West. They lobbied for the creation of state mechanisms for export financing: preferential loans, state guarantees, etc. Through business associations, they promoted the narrative that ship exports are not just a business, but a strategic function of national economic recovery.
As a result, the government developed new export credit mechanisms that significantly reduced the cost of concluding international contracts. This allowed Finland not only to fulfill its obligations to the USSR but also to enter new markets in Western Europe. Shipbuilding has become a "business card" of Finnish exports.
Early 1980s. Against the backdrop of the global crisis and growing competition from Asian countries (especially South Korea and Japan), Finnish shipyards lost their price competitiveness.
Wärtsilä (then a key player) initiated the creation of a national shipbuilding plan together with the government. They convinced the government that preserving the industry was a matter of technological sovereignty and employment. The business prepared analytical documents, reports, and forecasts, and held talks with government officials and politicians. A package of support was offered: state subsidies for design, compensation for capital expenditures, financial support for export contracts.
As a result, the Finnish government created a special state fund to support shipbuilding, which provided direct funding and compensation mechanisms. This helped keep the sector afloat, avoid mass layoffs and support exports to Scandinavia, Germany and the USSR.
To me, all this sounds very similar to what Ukrainian oligarchs are accused of: business puts pressure on the state, gets benefits, and says "we are important." Of course, there are nuances :
- The Finnish lobby was public and institutionalized. In Ukraine, it is often shadowy
- the entire industry received support, not just one holding
- The goals are export capacity, innovation, modernization, not rent-seeking in the domestic market.
