VATT in the 2000s: New researcher generation and academic ambition

Aki Kangasharju worked as a research director at VATT for ten years in the 2000s and for a year as the director general. “The most important thing about leading a research institute is finding a good balance between scientific credibility, supporting political decision-making and participating in public debate”, he summarizes his leadership approach.

Aki Kangasharju

New generation of researchers

When VATT was founded in 1990, civil servants working for the Ministry of Finance became researchers overnight. Some adapted easily, while others found it harder.

The institute’s goal was to improve the scientific quality of research and young researchers with PhDs were recruited to VATT, almost straight from university. Kangasharju, who joined VATT in 2001 as a research director, belonged to this new generation.

– At first, I was purely a scientist. Officially, my role was to study the productivity and efficiency of public services, but I also looked at labour markets, corporate subsidies and regional development among other topics. This just goes to show just how much academic freedom was valued even then at VATT, Kangasharju describes his early days at VATT.

The new generation was more international: Researchers attended conferences and were invited on research visits. As the work became more international, publishing in scientific journals also increased. 
Kangasharju visited the United States, Netherlands and United Kingdom. In those days, VATT also had an apartment just behind the institute on Nervander’s Street where employees could host visiting researchers.
However, his time at VATT turned the young researcher into a seasoned leader.

– At first, I was in a predominantly scientific role, but over time my role became more administrative until in the end I was the leader of the whole institute, Kangasharju describes his career development at VATT.

When Kangasharju’s term as director general started, the share of researchers with a PhD was on the rise and the scientific quality of the research had already improved significantly.

– When I started at VATT, the big mission was to improve the scientific quality of research. In ten years, the quality of research had improved a lot, as a new generation of researchers had grown into their roles, Kangasharju summarizes the transformation during his ten years at VATT.

Shortage of researchers

The number of researchers with a PhD in economics has grown steadily since the early 2000s, but there are still relatively few economic researchers in Finland. For this reason, Kangasharju would like to see a clearer role division between different research institutes and universities.

– In a small country with only a few economists, it is not sensible that everybody is focussed on research in the same fields. This leaves giant knowledge gaps elsewhere, Kangasharju argues. 

According to Kangasharju, as a small open economy, Finland particularly needs knowledge of the global economy. However, we have very few researchers in this field and by contrast very many labour economists.

Kangasharju would like to see VATT champion climate change research in Finland.

– VATT has been doing environmental research for some time, but has there been any attempt to claim leadership in this area? With the benefit of hindsight, I wonder, if we should have focussed more on that, he ponders.

However, research institutes do not decide on research focus areas in isolation. They face challenges reflecting the limited size of the economic profession and values of the academic world.

– Research based on large datasets, better computers and new methods was first adopted at VATT in labour market research.  Therefore, labour market research is a source of pride for the whole institute, Kangasharju says.

Applied microeconometrics and large registry datasets are opening doors abroad for Finnish researchers. However, this may entail a risk.

– In the academic world, there is a citation-bias: everyone wants to conduct research that can be published well and gets cited, Kangasharju states.

According to him, researchers should be thinking more strategically.
– Researchers should be thinking more in terms of what kind of research Finland needs and not so much in terms of what can be published, Kangasharju declares. 

Researchers need support in making these decisions.

– Support, praise and promotions should also be awarded to those researchers, who cannot publish in as high-ranking journals due to data limitations but who are clearly filling knowledge gaps in areas of societal importance, on which there is little prior research, Kangasharju declares.

Leadership is a balancing act

Kangasharju explains that a research institute’s operational possibilities can be depicted by a triangle, where one corner represents scientific credibility, the other support for political decision-making and the third daily political debate. The role of the director is to strike a balance between these corners in the prevailing societal circumstances.

– In the beginning, VATT employees were civil servants carrying out investigations. In a bid to gain credibility for these investigations, the institute started hiring researchers with PhDs and used scientific publications as means of demonstrating the quality of its research, Kangasharju describes the challenges faced by VATT in the 1990s and 2000s.

However, reward schemes that boost academic excellence might be turning research institutes too university-like.

– The pendulum has swung quite far in the other direction and perhaps there’s a need to go back a little bit. Now, that the high scientific quality of VATT’s research has been proven, perhaps its to time to consider more carefully what kind research Finland needs. VATT is a good position to do so, due its higher share of budget finance, he examines VATT’s current situation.

VATT has profiled itself by only engaging in public debate through its research results. However, according to Kangasharju, VATT would have a lot more to offer to the public debate.

– Other research institutes are commenting on fiscal policy, but not VATT. It is a shame, because VATT would clearly have more to say than it is currently bringing to the public debate, Kangasharju states.

Desire to be smart and cool

The impetus behind Kangasharju’s career choice was a comment made by his sister, who is five years older than him and was studying to be a home-economics teacher in Jyväskylä at the time.

– She said the economics students are smart and cool. I also wanted to be smart and cool, Kangasharju describes his decision to apply to study economics.

He went to the library and, partly by accident, came upon the entrance exam book for economics by Pekkarinen and Sutela. It was love at first sight.

– I’ve always been fascinated with the macro view that the economy is like a machine, even though it’s not really a machine, and how everything in the economy is related with everything else and how ‘everything effects everything’, as they say in the book, Kangasharju says.

Kangasharju, who has himself studied the efficiency of the welfare state, praises the Finnish welfare society and the public library system for enabling him to become an economist.

– Without the public library system, I would not have come across that book in the countryside, where I lived, Kangasharju says reflecting back to on the moment in 1989, when decided to apply to study economics.


Aki Kangasharju

Master of Philosophy (Economics) 1994, University of Jyväskylä 
Doctor of Philosophy (Economics) 1998, University of Jyväskylä
Docent of Economics, 2006 –, University of Jyväskylä

Pellervo Economic Research, researcher 1997-2001
Massachusetts Institute of Technologyssa (MIT), visiting researcher 2000
VATT Institute for Economic Research, research professor and research director 2001-2011 
VATT Institute for Economic Research, director general 2011-2012
Nordea, research director and chief economist 2012-2019
ETLA, managing director 2019-

Tekes, member of the board 2014-2017
University of Jyväskylä, member of the board 2018-