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Foreign Direct Investment and Politics: The Swedish Model

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  • Blomström, Magnus
  • Kokko, Ari

Abstract

Sweden is home to a remarkably large number of prosperous multinationals. We argue that this is partly the result of industrial policies that have been biased in favour of large firms, and partly the result of an institutional setting where regulations and controls have facilitated investment abroad by Swedish firms, while impeding foreign direct investment in Sweden. A particularly important feature of the institutional environment is that Swedish labour unions have supported Swedish investment abroad, but opposed foreign investment in Sweden. This paper outlines the development of Swedish foreign investment policies, describes the traditional Swedish model of industrial policy, and discusses the attitudes of the Swedish labour movement. The implications for long-run growth of Swedish industrial policy are also discussed. We argue that the large multinationals have been supported at the expense of small- and medium-sized firms, and that the non-multinational sector is thus less dynamic in Sweden than in many other countries.

Suggested Citation

  • Blomström, Magnus & Kokko, Ari, 1995. "Foreign Direct Investment and Politics: The Swedish Model," CEPR Discussion Papers 1266, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1266
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    Cited by:

    1. Saïd Hanchane & Abdouni Abdeljabbar, 2004. "La dynamique de la croissance économique et de l'ouverture dans les pays en voie de développement : quelques investigations empiriques à partir des données de Panel," Working Papers halshs-00083720, HAL.
    2. bouoiyour, jamal & El Mouhoub, Mouhoud & Hanchane, Hichame, 2008. "Investissements directs étrangers et croissance économique : Estimation d’un modèle à erreurs composées
      [Foreign direct investment and economic growth: Estimation of error component model]
      ," MPRA Paper 38208, University Library of Munich, Germany.
    3. Kokko, Ari, 2006. "The Home Country Effects Of Fdi In Developed Economies," EIJS Working Paper Series 225, Stockholm School of Economics, The European Institute of Japanese Studies.
    4. Helga Kristjánsdóttir, 2005. "Determinants of Foreign Direct Investment in Iceland," CAM Working Papers 2005-15, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.

    More about this item

    Keywords

    Economic Policy; FDI; Sweden;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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