Materials Flows in Finland: Resource Use in a Small Open Economy

In this article, the development of natural resource use in Finland during the period 1970-1997 is analyzed. In measuring natural resource use, the concept of total material requirement (TMR) is applied. The focus is on the linkages of resource use with the changing structures of the economy. The linkages are studied using input-output analysis.
Using input-output analysis, the TMR is further partitioned into resources used for domestic final use or for total material consumption (TMC) and total material requirement of exports (TME). The analysis shows that TMR has the problem of double accounting: if the TMRs of all countries of the world are summed, then international trade would be accounted for twice in the world TMR, once in imports and once in exports of each country.
The TMC concept does not have this kind of defect. In a small, open economy like that of Finland, where the share of foreign trade is large, the difference between the TMR and the TMC is also large. We show that by 1997, the TME comprised about half of Finland's TMR and that the growth of the TMR over the study period has been due to the TME only as the TMC has stayed rather constant.