Multinationals and the Knowledge Economy in Small Countries: The cases of Finland, Ireland and the Netherlands

Van Beers, Cees
June 2004
Economic Bulletin;Jun2004, Vol. 41 Issue 6, p205
Academic Journal
The Dutch economy is characterized by strong inward and outward foreign direct investment, and therefore foreign direct investment is potentially an important source of productivity growth in the Netherlands through research and development spillovers from foreign direct investment. The Irish incoming foreign direct investment is also enormous, while those of Finland are small but strongly increasing. The Finnish model is not explicitly focused on attracting foreign direct investment, but rather on improvement of the national domestic innovation system. It is focused on the creation of innovation centers and platforms for technological firms. Ireland is more closely comparable with the Netherlands than with Finland. In the first place, its social economic policy also focuses on wage moderation just like the Dutch government's policy in the so-called Polder model. The aim was to reduce wages to give exporters a good competitive position in the world market and make the Netherlands an attractive location factor for foreign direct investment. The second point of resemblance is that both economies have a strong inflow of multinational firms. The main difference between Ireland and the Netherlands is that Irish policies are strongly focused on being attractive to foreign investors while this component is less dominant in Dutch policies.


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