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Economic Growth and the Swedish Model

Author

Listed:
  • Henrekson, Magnus
  • Jonung, Lars

    () (Dept. of Economics, Stockholm School of Economics)

  • Stymne, Joakim

Abstract

We examine the growth performance of Sweden in the post-World War II period, focusing on explaining the relative decline of economic growth in Sweden since the early 1970s. The hypothesis that the relative decline is a consequence of productivity catch-up is rejected. A number of potential "ultimate" causes behind the slowdown are explored. An increasingly inefficient process of capital formation; a shrinking share of the economy being exposed to international competition; long-run negative effects of activist stabilisation policies; rapid growth of the public sector; deteriorating incentives for human capital formation; and weak incentives for implementing the results of R&D efforts are all part of the story. The evidence suggests that the incentive structure created by "the Swedish model" made Sweden less successful in adapting to the shocks of the 1970s and 1980s than other OECD countries.

Suggested Citation

  • Henrekson, Magnus & Jonung, Lars & Stymne, Joakim, 1994. "Economic Growth and the Swedish Model," SSE/EFI Working Paper Series in Economics and Finance 19, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0019
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    Cited by:

    1. Steven J. Davis & Magnus Henrekson, 1997. "Industrial Policy, Employer Size, and Economic Performance in Sweden," NBER Chapters,in: The Welfare State in Transition: Reforming the Swedish Model, pages 353-398 National Bureau of Economic Research, Inc.
    2. Jonung, Lars, 2009. "Financial Crisis and Crisis Management in Sweden. Lessons for Today," ADBI Working Papers 165, Asian Development Bank Institute.
    3. Hansson, Pontus & Jonung, Lars, 1997. "Finance and economic growth: the case of Sweden 1834-1991," Research in Economics, Elsevier, vol. 51(3), pages 275-301, September.

    More about this item

    Keywords

    Catching up; convergence; economic growth; human capital; productivity; welfare state;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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