Governor of the Bank of Finland expects new innovations

‘There are products that change our way of doing things but don’t have a price,’ Governor of the Bank of Finland Erkki Liikanen told explaining why digitalisation has not yet sped up economic growth.

He explained that free services don't show in the gross national product even though they improve living standards.

‘I spent a year in the USA when I was 17 years old and I didn’t make a single phone call to Finland. However, when I visited Zimbabwe with my grand-children last winter, I made daily Skype calls to Finland. If a product or service changes the living standard, it should somehow show,’ says Liikanen in the E-evening event celebrating the 90-year journey of the Telecommunication and Electronics association in Otaniemi on 29 November.

Free digital services like the free version of Skype and WhatsApp improve the living standard but show in the GNP only indirectly. As the matter of fact, Liikanen expects digitalisation to make the productivity of work grow provided that a price tag is given to free applications that ease everyday living.

‘We have to find the innovations and applications people are willing to pay for,’ he believes.

The washing machine made the productivity of work grow

Liikanen stresses the effect of time when explaining why the effect of digitalisation does not yet show in economic growth. The newest wave of digitalisation has recently begun and the use of mobile devices has become common only during the past few years. Technological turning points have been slow in the history, as well. For example, the washing machine was developed along with the invention of electricity which was the reason for the growth in the productivity of work that started in the 1930's.

‘It sounds like a joke but the washing machine freed women of clothes washing which resulted in women having more time to work,’ Liikanen explained.

Washing machines had been on the market already from the year 1910 but innovations always affect economic growth with a delay. Liikanen expects digitalisation to speed up economic growth in the future provided that that digitalisation’s own washing machine or an innovation that improves the living standard and for which people are willing to pay is found.

The Telecommunication and Electronics association chose Aalto University’s Professor of Practice Jarno Limnéll as its new Chair in the election meeting. 

Text and image by Anita Nuutinen