JOUKO PAUNIO, 1928–2007

Jouko Paunio, who died in Helsinki on the 19th of June 2007 at the age of 79, was Director of the Economic Analysis Division of the UN Economic Commission for Europe from 1981 to 1986.

PAUL RAYMENT, (FORMER DIRECTOR OF THE UNECE’S ECONOMIC ANALYSIS DIVISION)

Appointments from outside the Secretariat to positions at the director and higher levels are often influenced by political and ambassadorial pressures that have little to do with the work to be done. Paunio’s appointment was a stellar exception to this pattern and reflected the determination of the then Executive Secretary, Janez Stanovnik, to have a top rank economist appointed to the directorship of the Commission’s Economic Analysis Division which, for the previous two years, had been poorly run by a career diplomat. Paunio’s arrival led to a rapid recovery of the morale of the staff in the Division and to a very fruitful period of research that enhanced the reputation of the Economic Survey of Europe – ECE’s flagship publication founded by Gunnar Myrdal in 1948 – among professional economists working in government, research institutes and universities.

Paunio’s qualifications and professional background made him an ideal candidate to direct economic analysis in an international institution. He started his career in the Statistical Office of Finland and from there progressed to the Bank of Finland’s Research Institute, at the same time completing his doctoral dissertation on The Theory of Open Inflation. He was appointed Professor at the University of Helsinki in 1966, to one of the “Swedish” chairs which required lectures to be given in that language. A combination of theoretical mastery and a sound grasp of practical statistics and econometrics marked all his teaching and published work and made him a very able and constructive participant in public debates on economic policy. Paunio had earlier studied in England, Sweden and the United States and he would always stress the importance for his students of a broad international outlook and of developing a rich network of professional contacts across the world. Thus he insisted that all doctoral students in his famous Monetary Workshop should study at a foreign university for one or more semesters. He played an important role in developing economic studies in Finland and was the driving force behind the founding in 1963 of the Yrjö Jahnsson annual lecture which has attracted a steady stream of the world’s most distinguished economists to Helsinki. The high reputation of Finnish economists owes a considerable debt to Paunio’s work and inspiration.

When Paunio joined the United Nations he continued on the path he had set himself in his university career : always insisting on the importance of analytical clarity and careful empirical research as key and prior conditions for the formulation of economic policy; and always remaining open to ideas and scholars outside the walls of one’s own institution. Under his direction ECE’s economists, in addition to producing a sharper assessment of current economic developments, embarked on a series of studies between 1982 and 1986 that focussed on the behaviour of productivity and investment in the wake of the oil shocks of the 1970s. Taken together, the ten or so papers published in the Survey over these years amount to a considerable and valuable body of work. An important feature of it was that despite the very
limited scope for detailed international comparisons between different economic systems, similar questions were asked of both the western market economies and the centrally planned economies of Eastern Europe.

This innovation of parallel studies led to an incident which not only illuminated the spirit of the time but also revealed Paunio’s integrity and strength of character. In the prepublication text of the 1985–1986 Survey the secretariat included a study showing a chronic decline of capital productivity in the centrally planned economies and a steady deceleration in the growth of labour productivity. The delegate of the GDR took strong exception to this analysis : he castigated the secretariat for applying inappropriate tools of bourgeois economic analysis to the eastern economies, accused it of getting its statistics wrong and demanded that it be immediately withdrawn from publication. Paunio’s response was calm, courteous but firm. He asked the delegate to put his objections in writing and especially to detail the secretariat’s statistical errors. It was no surprise that the delegate never responded to this invitation. Paunio nevertheless made his research team double check the data and go over the arguments again. Reassured that the work was sound, he went ahead and published it. This led to another tirade from the GDR at the following year’s Commission meeting, but this time it provoked a classic defence, from the UK’s ambassador, no less: “We cannot agree with every aspect of the secretariat’s analysis. That, however, is not the point. In the light of the differences between our economic systems, it is important that the Survey continues to be a product of independent objective research against which we can all measure our own policies. This work is an asset to member countries whatever their economic persuasion and its independence should be carefully preserved”. Although such sentiments have rarely been repeated by ambassadors since the collapse of communism, the statement not only summarises succinctly the rationale for an independent research capability in an international organisation but also reflects one of the guiding principles of Paunio’s entire career. ECE also had reason to be grateful for his stand : had it given way to the pressure not to publish it would have looked very foolish a few years later when the Berlin Wall came down and the conclusions of the study were soon shown to have been correct.

Jouko Paunio’s success in restoring professional confidence in the Economic Analysis Division was due not only to his distinction as an economist but also to his character and personality. He had no interest in scrambling up to the next rung of the hierarchical ladder or using up the travel budget for self-promotion : he concentrated on the job for which he was recruited and made a great success of it. His determination and courage was revealed very early on. Still a teenage schoolboy, he was drafted into an anti-aircraft gun unit in 1944/5 where, in miserable living conditions, he caught a serious eye infection which left him virtually blind for some time. But he managed to pass his baccalaureat examinations with the help of a fellow student who read to him the necessary texts.

He was one of the most modest of men and was exceptionally kind and considerate to all members of his staff, from the most junior to the most senior : he always listened carefully to what they had to say whether it concerned inflation theory or the redistribution of office space. Away from economics his conversation was enlivened by his broad intellectual interests, his deep love of literature and music, his enthusiasm for long-distance running (for a smaller audience perhaps),
and his engaging, often self-deprecatory, sense of humour. He was a delightful colleague and friend.

Returning to Helsinki in 1986, where to his great pleasure his wife became Ombudsman of the Finnish Parliament, Paunio continued to be active as Professor and Chairman of the University’s Department of Economics and, among other positions, as Chairman of the Nordic Economic Council. He was also very active in the policy debates of the early 1990s and with a group of younger economists drew up a programme that might have lifted Finland out of economic recession faster than was actually the case. He received many honours including honorary doctorates from Åbo Academy and the Turku School of Economics, the first economics award from the Yrjö Jahnsson Foundation and the Eino H. Laurila National Income Medal in 2006.

Shortly after retiring from his Professorship in 1993 he suffered a stroke but with typical courage he continued to do research and contribute to policy discussion for several more years.

He is survived by his wife, Riitta-Leena, his daughter, Elina, and his sons, Juha and Joel, from his first marriage. Another son, Jyri, died tragically in 2003.