Potential Job Creation and Resource Dependance in Rural Finland

Open access

Abstract

Despite strong secular economic growth after the crisis of 1990-93, most of rural Finland has continued to face severe job losses. By applying small-area analysis, this paper seeks to explain why some rural areas inevitably experience declining employment while others prosper and grow even faster than urban areas. The variation of job creation in rural small areas derives from local economic conditions, local demographic structure, proximity to larger centers, and natural conditions. Contrary to expectations, the coldest areas with nature reserves have passed the worst job loss. Those areas had a lower burden of declining primary industries than traditional agro-forest areas, and because of tourism, industry has expanded in some places in Lapland. The dependence of an area on the primary sector is a good indicator of the highest rural job losses during the urban-centric economic growth period. Especially the most resource dependent areas have lagged behind and fail in job creation on account of their uncompetitive industrial environment. Persistent labor surplus plagues such areas, implying that established policy measures have been unable to restructure and modernize traditional rural areas. Since Finnish rural and regional policies have been being inefficient they should be reformed especially in resource-based areas in a fundamental way.

Tiivistelmä

Huolimatta vahvasta talouskasvusta vuosien 1990-93 kriisin jälkeen, useimmat maaseutualueet kärsivät kasvukaudella vakavista työpaikkojen menetyksistä Suomessa. Tässä tutkimuksessa tarkastellaan pienaluetasolla syitä, miksi osa maaseutualueista kärsi talouden kasvukaudella työpaikkojen vähenemisestä vaikka toiset maaseutualueet menestyivät ja kasvoivat jopa nopeammin kuin useat kaupunkialueet. Tulosten perusteella työpaikkojen lukumäärän muutokset ovat yhteydessä maaseutualueiden paikallisiin taloudelliset olosuhteet, väestörakenteeseen, läheisyyteen suurempiin kasvaviin keskuksiin ja luonnonolosuhteisiin. Odotusten vastaisesti maaseutualueet, joille on tunnusomaista kylmä ilmasto sekä luonnonsuojelualueiden suuri osuus maapinta-alasta, ovat välttäneet pahimmat työpaikkojen lukumäärän menetykset. Menestystä selittää se, että näiltä alueilta puuttuu perinteisten supistuvien alkutuotantoelinkeinojen taakka sekä se, että matkailu on paikoin kasvanut erittäin voimakkaasti Lapissa. Riippuvuus alkutuotannosta onkin hyvä indikaattori suurimmille työpaikkojen lukumäärän menetyksille kaupunkikeskeisenä kasvukautena. Varsinkin eniten resurssiriippuvaiset alueet ovat kokeneet eniten menetyksiä ja epäonnistuneet työpaikkojen luomisessa alueen alhaisen kilpailukyvyn vuoksi. Tämä osoittaa, että poliittiset toimenpiteet eivät ole kyenneet uudistamaan ja nykyaikaistamaan perinteisiä maaseutualueita. Tehotonta maaseutu- ja aluepolitiikkaa pitäisikin tulosten perusteella muokata perusteellisesti erityisesti resurssiriippuvaisilla alueilla.

References

  • [1] Anselin, L. (1988). Lagrange multiplier test diagnostics for spatial dependence and spatial heterogenity. Geographical Analysis 20(1), 1-17. Doi: 10.1111/j.1538-4632.1988.tb00159.x.

  • [2] Anselin, L. (1990). Spatial dependence and spatial structural instability in applied regression analysis. Journal of Regional Science, 30(2), 185-207. Doi: 10.1111/j.1467-9787.1990.tb00092.x.

  • [3] Ayres, C. (1962). The theory of economic progress, 2nd ed. New York: Schocken Books.

  • [4] Bosma, N. & Schutjens, V. (2011). Understanding regional variation in entrepreneurial activity and entrepreneurial attitude in Europe. Annals of Regional Science, 47(3), 711-742. Doi: 10.1007/s00168-010-0375-7.

  • [5] Bryden, J. & Bollman, R. (2000). Rural employment in industrialised countries. Agricultural Economics, 22(2), 185 - 197. Doi: 10.1111/j.1574-0862.2000.tb00017.x.

  • [6] Castells, M. (2000). The rise of the network society, 2nd ed. Oxford: Blackwell.

  • [7] Castells, M. & Himanen, P. (2002). The information society and the welfare state. The Finnish model. Oxford: Oxford University Press.

  • [8] Cooke, P. & De Laurentis, C. (2002). The index of knowledge economies in the European Union: Performance rankings of cities and regions. Regional Industrial Research Paper 41. Cardiff: Centre for Advanced Studies.

  • [9] Cooke, P. & Leydesdorff, L. (2006). Regional development in the knowledge-based economy: The construction of advantage. Journal of Technology Transfer, 31(1), 5 - 15. Doi: 10.1007/s10961-005-5009-3.

  • [10] Copus, A., Hall, C., Barnes, A., Dalton, G., Cook, P., Weingarten, P., Baum, S., Stange, H., Lindner, C., Hill, A., Eiden, G., McQuaid, R., Grieg, M. & Johansson, M. (2006). Study on employment in rural areas (SERA), final report for the European Commission. Brussels:

  • [11] Danson, M. (2009). New regions and regionalization through clusters. International Journal of Public Sector Management, 22(3), 260 - 271. Doi: 10.1108/09513550910949235.

  • [13] Deller, S., Tsai T.-H., Marcouiller, D. & English, D. (2001). The role amenities and quality of life in rural economic growth. American Journal of Agricultural Economics, 83(8), 352 - 365. Doi: 10.1111/0002-9092.00161.

  • [14] Faraway, J. (2006). Extending the linear model with R. Generalized linear, mixed effects and nonparametric regression models. New York: Chapman and Hall/CRC.

  • [15] Foray, D., & Lundvall, B. (1996). The knowledge-based economy: From the economics of knowledge to the learning economy. In Employment and growth in the knowledge-based economy (pp. 11 - 32). Paris: OECD.

  • [16] Gallup, J., Sachs, J. & Mellinger, A. (1999). Geography and economic development. International Regional Science Review, 22(2), 179-232. Doi: 10.1177/016001799761012334.

  • [17] Gløersen, E., Dubois, A., Copus, A. & Schürmann, C. (2005). Northern peripheral, sparsely populated regions in the European north. Nordregio Report 2005: 4. Stockholm: NORDREGIO.

  • [18] Granberg, L. (1999). The emergence of welfare state rationality in Finnish agricultural policy. Sociologia Ruralis, 39(3), 311 - 327. Doi: 10.1111/1467-9523.00110.

  • [19] Hartog, M., Boschma, R. & Sotarauta, M. (2012). The impact of related variety on regional employment growth in Finland 1993 - 2006: High-tech versus medium/low-tech. Industry and Innovation, 19(6), 459 - 476. Doi: 10.1080/13662716.2012.718874.

  • [20] Heikkilä, E. & Pikkarainen, M. (2010). Differential population development in the regions of Finland, Population, Space and Place, 16(4), 323 - 334. Doi: 10.1002/psp.561.

  • [21] Heikkilä, M. & Kainulainen, S. (2000). Maan sisäiset hyvinvointierot. Yhteiskuntapolitiikka, 65(6), 489 - 501.

  • [22] Helminen, V., Ristimäki, M. & Oinonen, K. (2003). Etätyö ja työmatkat Suomessa. Helsinki: Edita Publishing.

  • [23] Hill, F. & Gaddy, C. (2003). The Siberian curse: How communist planners left Russia out in the cold. Washington D.C.: The Brookings Institution.

  • [24] Hjerppe, R. (1989). The Finnish economy 1860 - 1985: Growth and structural change. Studies on Finland’s Economic Growth XIII. Helsinki: Bank of Finland Publications.

  • [25] Hobbs, F. & Stoops, N. (2002). Demographic trends in the 20th century. U.S. Census Bureau, Census 2000 Special Reports, Series CENSR-4. Washington, D.C.: U.S. Government Printing Office.

  • [26] Irvin, E., Isserman, A., Kilkenny, M. & Partridge, M. (2010). A century of research on rural development and regional issues. American Journal of Agricultural Economics, 92(2), 522-553. Doi: 10.1093/ajae/aaq008.

  • [27] Jauhiainen, J. (2008). Regional and Innovation Policies in Finland - Towards Convergence and/or Mismatch? Regional Studies, 42(7), 1031-1045. Doi: 10.1080/00343400701543140.

  • [28] Kalugina, Z. (2007). Institutional traps in agrarian transformation in Russia. Eastern European Countryside, 13(1), 69 - 82.

  • [29] Karvonen, S. (2009). Kuinka Suomi jakautuu 2000-luvulla? Yhteiskuntapolitiikka, 74(5), 467-484.

  • [30] Karvonen, S. & Rintala, T. (2004). Alueellisten hyvinvointierojen kasvu jatkuu. Yhteiskuntapolitiikka, 69(2), 159 - 170.

  • [31] Kitson, M., Martin, R. & Tyler, P. (2004). Regional competitiveness: An elusive yet key concept? Regional Studies, 38(9), 991 - 999. Doi: 10.1080/0034340042000320816.

  • [32] Koski, R. (2002). Pohjalaisen yrittäjyyden synty, leviäminen ja alueellinen eriytyminen. Acta Wasaensia 101. Aluetiede 7.

  • [33] Kosonen, R. (1995). The role of institutions and institutional lag in transition towards indigenous local development: The case of Vyborg/Russia. Geographische Zeitschrift, 83(2), 100 - 113.

  • [34] Kosonen, R. (2002). Governance, the local regulation process, and enterprise adaptation process in post-socialism. The case of Vyborg. Helsinki School of Economics A-199.

  • [35] Krätke, S. (2007). Metropolisation of the European economic territory as a consequence of increasing specialisation of urban agglomerations in the knowledge economy. European Planning Studies, 15(1), 1 - 27. Doi: 10.1080/09654310601016424.

  • [36] Krugman, P. (1991). Increasing returns and economic geography. Journal of Political Economy, vol. 99, no. 3, pp. 483 - 499.

  • [37] Laakso, S. & Loikkanen, S. (2004). Kaupunkitalous. Helsinki: Gaudeamus.

  • [38] Lehtonen, O. & Tykkyläinen, M. (2010). Self-reinforcing spatial clusters of migration and socio-economic conditions in Finland in 1998 - 2006. Journal of Rural Studies, 26(4), 361-373. Doi: 10.1016/j.jrurstud.2010.02.003.

  • [39] Lehtonen, O. & Markku Tykkyläinen, M. (2012). Työpaikkakehityksen alueelliset kehitysprosessit Itä-Suomessa 1994 - 2003. Terra 123(2), 85 - 105.

  • [40] Lindstrom, D. E. (1964). Influence of rural institutions on economic development. Illinois Agricultural Economics, 4(3), 85 - 93.

  • [41] Lundholm, E. (2007). New motives for migration? On interregional mobility in the Nordic countries [doctoral thesis]. Umeå University.

  • [42] Malinen, P. Kytölä, L., Keränen, H. & Keränen, R. (2006). Suomen maaseututyypit 2006. Maa- ja metsätalousministeriö 7/2006.

  • [43] Markey, S., Halseth, G. & Manson, D. (2006). The struggle to compete: From comparative to competitive advantage in Northern British Columbia. International Planning Studies, 11(1), 19 - 39. Doi: 10.1080/13563470600935016.

  • [44] Martin, R. & Sunley, P. (2006). Path dependency and regional economic evolution. Journal of Economic Geography, 6(4), 395 - 437. Doi: 10.1093/jeg/lbl012.

  • [45] Maskell, P. & Malmberg, A. (1999). Localised learning and industrial competitiveness. Cambridge Journal of Economics, 23(2), 167-185. Doi: 10.1093/cje/23.2.167.

  • [46] Mekbeb, E., Lilieholm, R., Blahna, D. & Kruger, L. (2009). Resource use, dependence and vulnerability: Community-resource linkages on Alaska’s Tongass National Forest. WTI Transactions on Ecology and the Environment, 122(1), 263-272. Doi: 10.2495/ECO090251.

  • [47] Mikkonen, K. (2002). Competitive advantage of regions and small economic areas: The case of Finland. Fennia, 180(1-2), 191 - 198.

  • [48] Neubauer, J., Dubois, A., Hanell, T., Lähteenmäki-Smith, K., Pettersson, K., Roto, J. & Steineke, M. (2007). Regional development in the Nordic Countries. Nordregio Report 2007: 1. Stockholm: NORDREGIO.

  • [49] North, D. (1991). Institutions. Journal of Economic Perspectives, 5(1), 97 - 112.

  • [50] OECD. (1996). The knowledge-based economy. Paris: OECD.

  • [51] OECD. (2008). Rural policy reviews: Finland. Paris: OECD.

  • [52] OECD. (2009). Main science and technology indicators 2009-1. Paris: OECD.

  • [53] Olfert, M. & Partridge, M. (2010). Best practices in twenty-first-century rural development and policy. Growth and Change, 41(2), 147 - 164. Doi: 10.1111/j.1468-2257.2010.00523.x.

  • [54] Overdevest, C. & Green, G. (1995). Forest dependence and community well-being: A segmented market approach. Society & Natural Resources: An International Journal, 8(2), 111 - 131. Doi: 10.1080/08941929509380906.

  • [55] van der Panne, G. & van Beers, C. (2008). On the Marshall-Jacobs controversy: It takes two to tango. Industrial and Corporate Change, 17(5), 1049-1070. Doi: 10.1093/icc/dtn029.

  • [56] Partridge, M. (2010). The dueling models: NEG vs. amenity migration in explaining US engines of growth. Papers in Regional Science, 89(3), 513 - 536. Doi: 10.1111/j.1435-5957.2010.00315.x.

  • [57] Partridge, M., Bollman, R., Olfert, M., Rose, M. & Alasia, A. (2007). Riding the wave of urban growth in the countryside: Spread, backwash, or stagnation? Land Economics, 83(2), 128 - 152.

  • [58] Partridge, M., Olfert, M. & Alasia, A. (2007). Canadian cities as regional engines of growth: Agglomeration and amenities. Canadian Journal of Economics, 40(1), 39 - 68.

  • [59] Partridge, M., & Rickman, D. (2008). Distance from urban agglomeration economies and rural poverty. Journal of Regional Science, 48(2), 285-310. Doi: 10.1111/j.1467-9787.2008.00552.x.

  • [60] Partridge, M., Rickman, D., Kamar, A. & Olfert, M. (2008a). Lost in space: Population growth in the American hinterlands and small cities. Journal of Economic Geography, 8(6), 727 - 757. Doi: 10.1093/jeg/lbn038.

  • [61] Partridge, M., Rickman, D., Kamar, A. & Olfert, M. (2008b). Employment growth in the American urban hierarchy: Long live distance. The B. E. Journal of Macroeconomics, 8(1), 1 - 36. Doi: 10.2202/1935-1690.1627.

  • [62] Partridge, M., Rickman, D., Kamar, A. & Olfert, M. (2009). Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy. Journal of International Economics, 78(1), 126 - 140. Doi: 10.1016/j.jinteco.2009.02.004.

  • [63] Patriquin, M., Parkins, J. & Stedman, R. (2007). Socio-economic status of boreal communities in Canada. Forestry, 80(3), 279 - 291. Doi: 10.1093/forestry/cpm014.

  • [64] Pekkala, S. (2003). What draws people to urban growth centers: Jobs vs. pay. VATT Discussion Papers 310.

  • [65] Piipponen, M. (2006). Working community structures and employee generations: Three mill communities of northwest Russia in the 1990s. Aleksanteri Papers 2:2006. Helsinki: Kikimora.

  • [66] Polèse, M., & Shearmur, R. (2004). Is distance really dead? Comparing location patterns over time in Canada. International Regional Science Review, 27(4), 431 - 457. Doi: 10.1177/0160017604267637.

  • [67] Polèse, M. & Shearmur, R. (2006a). Why some regions will decline: A Canadian case study with thoughts on local development strategies. Papers in Regional Science, 85(1), 23 - 46. Doi: 10.1111/j.1435-5957.2006.00024.x.

  • [68] Polèse, M. & Shearmur, R. (2006b). Growth and location of economic activity: The spatial dynamics of industries in Canada 1971-2001. Growth and Change, 37(3), 362 - 395. Doi: 10.1111/j.1468-2257.2006.00328.x.

  • [69] Puga, D. (2002). European regional policies in light of recent location theories. Journal of Economic Geography, 2(4), 373 - 406. Doi: 10.1093/jeg/2.4.373.

  • [70] Pyöriä, P., Melin, H. & Blom, R. (2005). Knowledge workers in the information society. Tampere: Tampere University Press.

  • [71] Raiser, M. (2001). Informal institutions, social capital, and economic transition: Reflections on a neglected dimension (pp. 218 - 240). In Cornia, G. A. & Popov, V., ed., Transition and institutions: The experience of gradual and late reformers. Oxford: Oxford University Press.

  • [72] Rodriquez-Pose, A. & Frateri, U. (2007). Regional business cycles and the emergence of sheltered economies in the southern periphery of Europe. Growth and Change, 38(4), 621-648. Doi: 10.1111/j.1468-2257.2007.00390.x.

  • [73] Ruttan, V. & Hayami, Y. (1984). Toward a theory of induced institutional innovation. Journal of Development Studies, 20(4), 203 - 223. Doi: 10.1080/00220388408421914.

  • [74] Saarinen, J. (2003). The Regional Economics of Tourism in Northern Finland: The Socioeconomic Implications of Recent Tourism Development and Future Possibilities for Regional Development. Scandinavian Journal of Hospitality and Tourism, 3(2), 91 - 113. Doi: 10.1080/15022250310001927.

  • [75] Sachs, J. & Warner, A. (1997). Fundamental sources of long-run growth. American Economic Review, 87(2), 184 - 188.

  • [76] Simmie, J. & Martin, R. (2010). The economic resilience of regions: Towards an evolutionary approach. Cambridge Journal of Regions, Economy and Society, 3(1), 27-43. Doi: 10.1093/cjres/rsp029.

  • [77] Shearmur, R. & Polèse, M. (2007). Do local factors explain local employment growth? Evidence from Canada, 1971-2001. Regional Studies, 41(4), 453-471. Doi: 10.1080/00343400600928269.

  • [78] Stedman, R., Parkins, J. & Beckley, T. (2004). Resource dependence and community wellbeing in rural Canada. Rural Sociology, 69(2), 213-234. Doi: 10.1526/003601104323087589.

  • [79] Stedman, R., Parkins, J. & Beckley, T. (2005). Forest dependence and community wellbeing in rural Canada: Variation by forest sector and region. Canadian Journal of Forest Research. 35(1), 215 - 220. Doi: 10.1139/x04-140.

  • [80] Stenholm, P., Acs, Z. & Wuebker, R. (2013). Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity. Journal of Business Venturing, 28(1), 176 - 193. Doi: 10.1016/j.jbusvent.2011.11.002.

  • [81] Stephens, H. & Partridge, M. (2011). Do entrepreneurs enhance economic growth in lagging regions? Growth and Change, 42(4), 431-465. Doi: 10.1111/j.1468-2257.2011.00563.x.

  • [82] Stone, K. H. (1973). Northern Finland’s post-war colonizing and emigration. A geographical analysis of rural demographic counter-currents. European demographic monographs. The Hague: Martinus Nijhoff.

  • [83] SuomiCD. (m.a.) Data base. Helsinki: Statistics Finland.

  • [84] Suorsa, K. (2007). Regionality, innovation policy and peripheral regions in Finland, Sweden and Norway. Fennia, 185(1), 15 - 29.

  • [85] Terluin, I. (2003). Differences in economic development in rural regions of advanced countries: An overview and critical analysis of theories. Journal of Rural Studies, 19(3), 327-344. Doi: 10.1016/S0743-0167(02)00071-2.

  • [86] Terluin, I. & Post, J. (2000). Employment dynamics in rural Europe. Wallingford: CABI Publishing.

  • [87] Tervo, H. (2005). Regional policy lessons from Finland (pp. 267-282). In Felsenstein, D. & Portnov, B. A., eds., Regional disparities in small countries, Berlin: Springer-Verlag.

  • [88] Tervo, H. (2009). Centres and peripheries in Finland: Granger causality tests using panel data. Spatial Economic Analysis, 4(4), 377 - 390. Doi: 10.1080/17421770903317652.

  • [89] Tervo, H. (2010). Cities, hinterlands and agglomeration shadows: Spatial developments in Finland during 1880-2004. Exploration in Economic History, 47(4), 476-486. Doi: 10.1016/j.eeh.2010.05.002.

  • [90] Tuhkunen, A. (2007). Between location and a sense of place. Acta Universitatis Tamperensis.

  • [91] Väisänen, P. O. (1966). Asutustilojen alueellisesta jakaantumisesta vuoden 1959 maatalouslaskennan mukaan. Asutustoiminnan aikakauskirja,19(3), 5 - 11.

  • [92] Vartiainen, P. & Viiri, A. (2002). Universities and their local partners. Industry and Higher Education, 16(2), 83 - 89. Doi: 10.5367/000000002101296153.

  • [93] Vatanen, E. & M. Hyppönen (2008). Pallas-Yllästunturin kansallispuiston investointien vaikutukset Tunturi-Lapin paikallistalouteen. Maaseudun uusi aika, 16(3), 24 - 41.

  • [94] Venables, W. N. & Ripley, B. D. (2002). Modern applied statistics with S, 4th ed. Berlin: Springer.

  • [95] Voutilainen, O., Vihinen, H. & Wuori, O. (2009). Maatalous, maaseutu ja tukien kohdentuminen. MTT Kasvu 7.

  • [96] Yli-Jokipii, P. & Koski, A. (1995). The changing pattern of Finnish regional policies. Fennia, 173(2), 53 - 67.

European Countryside

The Journal of Mendel University in Brno

Journal Information


CiteScore 2016: 0.69

SCImago Journal Rank (SJR) 2016: 0.190
Source Normalized Impact per Paper (SNIP) 2016: 0.896

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 15 15 15
PDF Downloads 1 1 1