Abstract: The Significance of Foreign Direct Investment in a Small Industrializing Economy: The Case of Finland in the Interwar Period
In this paper I use a new database to clarify the number of foreign-owned companies in interwar Finland, to show the ownership distribution by country and by industry and to give a preliminary estimate of the significance of foreign direct investment in the Finnish economy: the share of industrial production in foreign-owned firms as well as their proportion of all share capital in limited liability companies. The new database shows a small but unexpectedly high amount of foreign ownership in the Finnish economy in the interwar period. The majority of companies were there to take advantage of the ample timber resource, but as trade agents or sawmillers that is, in the simpler forms of timber use, not in the fast developing paper and pulp industry. Another major group of foreign companies were the Swedish, German, British, and American multinationals selling and servicing their products in the Finnish market, rather than setting up production or assembly plants.