The Swedish Economy
According to 2012 figures
calculated by the World Bank, Sweden maintains the world's 15th
richest country according to GDP (gross domestic product). This is
largely due its ability to stay neutral in wartime conflicts and the
transformation of its agrarian society during the 19th and 20th
centuries into a center of industry. As a result of its neutrality
during World War II, Sweden entered a period of economic and social
prosperity due to the lack of physical damage the country sustained.
This encouraged a large population movement to urban areas and an
increase in trade now that all wartime barriers were no longer an
The next three decades would be known for the implementation of the
"Swedish Model." This consisted of a number of compromises that
created a large, privately owned industrial sector, increased public
assistance paid for by taxes, trade unions, active regulation of the
market, and the goal to create a more evenly distributed level of
income for the populace. Through this plan, social welfare systems
grew substantially, allowing for much job creation and the decline
of the unemployment rate.
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A recession was experienced in the 1990s due to the real estate and
financial bubble that formed in the 1980s. Between 1990 and 1993,
the GDP fell by 5% and unemployment was at an all time high. There
was a run on the currency in 1992 that inflating interest rates by
500% couldn't stop. In order to save the economy, the government cut
spending in the welfare sector and encouraged growth in the IT
sector. This helped pull the country out of the recession. Thanks to
the "Swedish Model," Sweden was able to stave off much of the
economic disparity that plagued many of their competitors and
maintain a balance that allowed their country to thrive financially.
The contemporary economy is largely dependent on services which make
up over 70% of the GDP. The rest is mostly industry, which is
controlled mainly by privately owned firms. Timber, hydropower, and
iron ore make up the bulk of Sweden's income through resource
exports to foreign countries. Industrial exports mainly come from
the engineering sector, which make up over 50% of the output.
Current reforms are looking to reduce welfare dependence, which
makes up approximately 50% of government spending. Taxes are still
higher than is comfortable. The average worker takes home only 40%
of their income after taxes.
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