Root causes of rural decline in economic well-being in Finland

Abstract

This paper analyses how dependence on primary production, distance, climatic conditions and the intensity of land use bring about variations in economic well-being in rural areas. The conventional interpretation in Finland often concludes that economic well-being declines as dependence on primary production increases. The potential oversimplification implied by this statement was studied by testing the explanatory power of distance from the nearest large city, effective temperature sum and the proportion of fields in a comparative setting. The results revealed that economic well-being in rural Finland is best explained by the effective temperature sum, followed by distance, dependence on primary production and the proportion of fields. The only element of well-being which is determined chiefly by dependence on primary production is educational capital, causing a bottleneck preventing rural areas from becoming competitive and hence attractive to new knowledge-intensive industries. These results cast light on the spatial conditions under which the current economic evolution towards a service and knowledge society is taking place and on the spatial manifestations of remnant economic structures in disadvantageous locations.