Sunday, February 3, 2013
A New Model of Capitalism for Nordic Countries
This article from The Economist talks about Sweden's slow move toward more conservative economic policies and how that has helped their economic growth. Public spending as a share of GDP is 49% today while it was 67% in 1993.The corporate tax rate has also been decreased from 26% to 22%. As a result of these changes Sweden's economic performance has benefited. Between 1993 and 2010 GDP growth has averaged 2.7% a year, outperforming many other EU countries. Despite their conservative movement, Sweden has a strong welfare state still with 30% of the labor force employed by the Government. It seems that Sweden has slowly improved its institutions in a way that doesn't undermine their basic foundations, but have increased their performance.
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2 comments:
Interesting to read about a country beating other nations in terms of economic growth by reducing the size of government. Currently, U.S. seems intent on growing the role our government plays in our economy. However, we have experienced extremely slow growth as we try to get out of the current recession and I believe we could do well to learn from Sweden's example.
The economic system of Sweden reminds me of the ideal system my own country, India, wants to follow. India also wants a balance between capitalism and socialism. However, excess Government involvement leads to corruption, imperfect competition and many other problems. In my view, India can learn a lot from the steps taken by Sweden, as described in the article, in order to perfect its own economic model.
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