Swedish Economy



Sweden in the early 19th century was still largely an agricultural country, untouched by the Industrial Revolution. Sweden had no tradition of primogenature. Over generations family farms were divided into smaller and smaller parcels. This put increasing pressure on the land and marginal land was tilled. Despite the agricultural situation, the population continued to grow. Swedish bishop and poet Esaias Tegne'r explained why the population expanded so significanly, "peace, vaccination and potatos." Some parishes reported the population tripling. As a result, the population of tenant farmers and landless laborers increased enabling large landowners to obtain labor at low cost and reducing many Swedes to abject poverty. This helped fuel large numbers of Swedes to emigrate, many to the United States. Along with the emigration, Sweden after the mid-19th century began to industrialize. Important changes and reforms finally led Sweden into the industrial era. Sweden for many decades achieved the highest economic growth rate in the world, only exceed by Japan in many decades. As a result, Sweden transforned itself from one of the poorest to one of the richest countries in the world (measured in terms of GDP per capita). Beginning in the 1970s the rate if growth and the relative wealth of Sweden has declined. A major factor here has been the growth in government.

Medieval Era


Renaisance


Post-Napoleonic Sweeden

Sweden in the early 19th century was still largely an agricultural country, untouched by the Industrial Revolution. Sweden had no tradition of primogenature. Over generations family farms were divided into smaller and smaller parcels. This put increasing pressure on the land and marginal land was tilled. Despite the agricultural situation, the population continued to grow. Swedish bishop and poet Esaias Tegne'r explained why the population expanded so significanly, "peace, vaccination and potatos." Some parishes reported the population tripling. As a result, the population of tenant farmers and landless laborers increased enabling large landowners to obtain labor at low cost and reducing many Swedes to abject poverty. Unlike other countries such as England and France, there was no growth significant of industy in the early 19th century to supply jobs to the expanding rural population. There were liberal efforts to reform Swedish agriculture which included the enclosure movement, farm schools, technological innovation. Swedish agriculture proved to resist to change. These programd had very little impact. Some of the reformers, gave up in frustration such as Gustav Unonius who is now known as the "the father of Swedish emigration". Sweden did begin to industrialize after the mid-19th century. The same kind of Dickensian conditions began to develop in Sweden as often reported in England. Even so the great bulk of Swedish emmigration came from rural areas.

Emigration

The poverty developing in the 19th century helped fuel large numbers of Swedes to emigrate, many to the United States.Sweden was one of the many European countries that played an important part in the population of America through immigration. A far as we know, America and to a lesser exrent Canada are the only countries to which significant numbers of Swedish emigrants went. Sweden estblished a colony in the North america (Deleware) during the 17th century, but the great bulk of swedish immigrants came in the late 19th and early 20th century. Most Swedish immigrants camr to the United States and settled in the Midwest where they left and indelible imprint. Small numbers ofindividuals came to America in the late 18th and early 19th century. It was note until the 1840s, however that signoficant numbers of Swedish immigrants began arriving in America. The first organized group of Swedes arrived in New York and settled in Iowa and Illinois. By the 1930s nealy 1.3 million Swedes had reached America, making Sweden the seventh most important country in terms of American immigration.

Industrialization

Along with the emigration, Sweden after the mid-19th century began to industrialize. Important changes and reforms finally led Sweden into the industrial era. Although little industrialization occurred in the first half of the 19th century, Sweden clearly had the potential to industrialize. There were important mineral resourxces, including some of the most important iron ore deposits in Europe, There were also vluable copper resourcea as well as abundant timber resources in the country's forests. Sweden in the early-19th centuery was primarily an exporter of these resources. Swedish metal working was mostly village based foundaries using very basic technology. There was textile and wood working business that were still at the handicraft level. Sweses found industrial organizatiion virtually impossible because of the continuing importance of the medival guild system. This established intricate regulations about whereabd how work could be conducted. This esential made free enterprise capitalism and industrialization impossible, The Swedes finally passed sweeping liberal reforms that did away with the guild system (1846). This set in motion the industrial revolution in Sweden. New techologies and capitalism transfiormed bacjkward agrain Sweden. Sweden for many decades achieved the highest economic growth rate in the world, only exceed by Japan in many decades. As a result, Sweden transforned itself from one of the poorest to one of the richest countries in the world (measured in terms of GDP per capita).

Growth of Government (1970-90)

Beginning in the 1970s the rate if growth and the relative wealth of Sweden has declined. A major factor here has been the growth in government. Sweden and the United States in 1970 had governments that consumed about the same level of the national GDP, a little less than 30 percent. At that time America pursued different policies. American Government spending increased slightly, Swesish Government spending balooned, at the high point reaching over 60 percent of GDP. The results were presictable. The Swedish growth rate declined sharoly. Sweden declined from the fourth brichest countryto the 17th richest. [Bergh and Henrekson] There is acadademic debate about the impact of Government spending on economic growth. Euyropean Union ecomists embarassed by the obvious slowing of ecomomies in big-government countries are trying to redefine national wealtgh. A risuing body of academiic research substantiates that growth in government tends to slow economic growth. [Romero-Avila, Bergh and Karlssoff] Giobernment tax and spending policies also adversely affected the ecomomy. As a result, Sweden experienced an econimic crisis (early-1990s).

Free Market Reforms

Sweden as a result of the economic crisis of the early 1990s instituted a rangevof free market reforms. One interesting vreform was in education. Sweden now hs a nation-wide system of free school choice. The Government issues parents vouchers for both primary and secondary education. After yearsof reckless public pension policies, the Governmrent now has a financially stable public pension system. Payouts can be adjusted if if ciontributions decline. Sweden also carried thorough reformed the tax cide. Marginal tax rates were cut significahntly. Tge Swedish Government still consumes a huge share og the GDP, buut that share hads beebn reduced by 10 percent. And the Swedish economy has responded with somewhat higher growth rates. [Bergh and Henrekson]

Sources

Berg, Andreas and Martin Karlsson. Public Choice (2010).

Berg, Andreas and Magnus Henrekson. "Lessons from the Swedish welfare state," Wall Street Journal (July 12, 2010), p. A15.

Romero-Avila, Diego. European Journal of Political Ecomomy (2008).







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Created: 6:42 AM 6/26/2004
Last updated: 10:20 AM 3/21/2010