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What are the Policy Lessons from Sweden? On the Rise, Fall and Revival of a Capitalist Welfare State

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  • Andreas Bergh

Abstract

This paper discusses a number of questions with regard to Sweden's economic and political development:• How did Sweden become rich?• What explains Sweden's high level of income equality?• What were the causes of Sweden's problems from 1970 to 1995?• How is it possible that Sweden, since the crisis of the early 1990s, is growing faster than most EU countries despite its high taxes and generous welfare state?These questions are analysed using recent insights from institutional economics, as well as studies of inequality and economic growth. The main conclusion is that there is little, if any, Swedish exceptionalism: Sweden became rich because of well-functioning capitalist institutions, and inequality was low before the expansion of the welfare state. The recent favourable growth record of Sweden, including the period of financial stress (2008-10), is a likely outcome of a number of far-reaching structural reforms implemented in the 1980s and 1990s.

Suggested Citation

  • Andreas Bergh, 2014. "What are the Policy Lessons from Sweden? On the Rise, Fall and Revival of a Capitalist Welfare State," New Political Economy, Taylor & Francis Journals, vol. 19(5), pages 662-694, September.
  • Handle: RePEc:taf:cnpexx:v:19:y:2014:i:5:p:662-694
    DOI: 10.1080/13563467.2013.849670
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    References listed on IDEAS

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    1. Johansson, Mats, 2006. "Inkomst och ojämlikhet i Sverige 1951-2002," Arbetsrapport 2006:3, Institute for Futures Studies.
    2. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
    3. Ritva Reinikka & Jakob Svensson, 2005. "Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 259-267, 04/05.
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