Econchange : State’s changing role in regard to the economy in turbulent times

Abstract

Economic systems around the world are facing pressure to change from multiple directions. The COVID-19 pandemic as well as Russia's invasion of Ukraine and its aftermath have required states' active involvement to ensure the sustainability of their economies and societies. In addition to short-term shocks, the economy is facing a number of long-term challenges:, the need to tackle climate change and rapidly transition to a fossil-free energy system, the strengthening of geopolitical blocs and tensions, an ageing population and the effects of technological development on employment. These changes challenge the established premises of fiscal, trade, labour, industrial and innovation policies in Finland and call for the state to take a more active orchestration role in the economy.

This more active role in economic policy requires new capabilities from the state. The state must be able to maintain an up-to-date overall understanding of the complex and constantly changing operational environment, steer societal resources towards implementing politically-decided strategic goals, and more strongly coordinate different actors and sectors of society amidst the changing economy. Strengthening these capabilities requires adequate resources in public administration and training for civil servants.