Nordic Lessons on Economic and Social Development

While important lessons can be learned from the South’s extraordinary economic growth over the past fifteen years there are also extremely valuable lessons to be learned from the experience of other medium sized economies, in particular from the Nordic countries, i.e. Denmark, Finland, Norway, Sweden and Iceland. In these countries, despite some recent blips, high levels of economic growth have been the norm over a much longer period than in the South.

This growth has been achieved without sacrificing the very comprehensive social welfare provision that has also been a key characteristic of these countries. The Nordic model as it is often termed integrates social and economic planning to a much greater extent than is the case in either Ireland or Britain.

Since 1970, and in some cases long before that, the Nordic countries have all been in the top twenty of the OECD (Organisation for Economic and Cultural Development) rankings for economic performance, with several in the top ten. This record of achievement has been consistently higher than that of the UK while the South only entered the top ten in 2004.

In recent years all of the Nordic countries have been well above the average of the EU’s 25 in terms of growth rates for real GDP per capita. In terms of competitiveness the record is even more impressive. Finland heads the World Economic Forum’s rankings for 2005-6 with Denmark, Norway and Sweden also in the top fifteen.

While this record of achievement is impressive it is the explanatory factors that offer lessons on which NI should draw.

Many commentators on the Nordic phenomenon have identified technological innovation, talent and tolerance as among the most important contributing factors to the success of Nordic economies. Curiously levels of taxation are not among these characteristics except to note that Nordic rates of taxation are amongst the highest in industrialised countries and considerably higher than in either Britain or the South. Never the less these rates have not been inhibitors to economic growth.

The Nordic countries score particularly highly as far as technological innovation is concerned. Sweden especially has a very long history in this regard. But Finland, a more recent comer to technological development, has become a leading centre for telecommunications technology and is an important example to Northern Ireland of how successful a determination to carve out a major niche of global significance can be.

But innovation is not a quality that is peculiar to any nation, nor is it a quality that will simply flourish naturally. In Nordic countries innovation is deliberately fostered through a coherent, well-funded educational system. Creativity is highly valued throughout the system which notably also guarantees lifelong opportunities to pursue further and higher education and training. It is the resulting high standards of a well-educated and well-trained workforce matching entrepreneurial innovation that attracts so much investment in leading edge enterprises.

Tolerance is the third and perhaps most surprising element frequently identified as contributing to the Nordic success story. This factor is probably the one that is the most challenging if we are to learn from this success. Tolerance refers to the cultivation of an integrated and harmonious society in which respect for difference is highly valued.

Underlying this harmony and contributing significantly to it is the very comprehensive nature of the Nordic social welfare system. This system does not exist as a set of charitable services to those who cannot provide for themselves whether in employment, health or education. On the contrary and for decades the Nordic approach has been to see such services as an essential investment to ensure social cohesion as well as economic progress and not just the product of such progress. It is for this reason that taxpayers in these countries are willing to pay much more than others would ever seem prepared to accept.

Does this mean that the Nordic model has nothing to offer us in Northern Ireland? Most definitely the answer is no.

While we may not be prepared to accept Nordic rates of taxation we can at least ask ourselves how much we value creativity and innovation, and whether the goal of social cohesion has any economic implications.

Fostering creativity in Nordic communities is not just for the individuals who will shine in almost any circumstance but for the many who would be creative if given the opportunity. This means examining our curricula from nursery school to university level asking where and how can creativity be fostered and then making sure that that the means of doing so are provided.

The same question can also be asked of the workplace. How often are workers asked for their suggestions as to how operations might be improved or whether new ways of doing things or doing new things might be introduced? Experience elsewhere shows that workers at all levels can have much to contribute to new and better ways of doing things.

Research and development initiatives mark the high point in fostering creativity with possible economic effects. But even here we still lag far behind what others are achieving. Lip service is paid to research and development but real investment levels remain low. A significant step change is required and here an all-island approach would yield considerable dividends. The opening up of Southern research funding to applications from Northern research centres that is expected to be announced in the Republic’s new National Development Plan, should be accompanied by matched funding from Northern sources. The whole of Ireland would benefit from the combined research and creative talents in our universities and other institutions where research is conducted.

Then there is the challenge that we know of only too well, that of creating a harmonious and reconciled society. Meeting that challenge is not just an end in self, important as that is. The challenge has implications for our economic well being and the Nordic countries demonstrate only too effectively social harmony and not merely the absence of strife counts very highly when it comes to attracting investment and creating the conditions for a successful economy.