Sweden - Economic analysis of government's policies, investment climate and political risk.






SWEDEN: Economic Policy Analysis

This site presents an analysis of the Swedish government's economic policies compared to a list of 34 economic policies as prepared by the McKeever Institute of Economic Policy Analysis (MIEPA). To read the analysis scroll through this site. This study was written in the Fall of 2000 by a native Swedish student studying in Berkeley. To learn more about the background policies, click here
  • Introduction and Policy Recommendations



    To learn more about MIEPA, click here

    Return to MIEPA's Home Page

    Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Sweden is shown below. The ratings herein are based on the following rating scale:


    5.0 Perfect Facilitation of Wealth Creation
    4.0 Midway between Perfect and Neutral
    3.0 Neutral Effect on Wealth Creation
    2.0 Midway between Neutral and Obstructionist
    1.0 Perfectly Obstructionist to Wealth Creation
    [Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]

    To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

    Return to MIEPA's Home Page


    Comparison of Sweden's economic policies to MIEPA criteria as prepared by a native student of Sweden studying in the US in the Fall of 2000.

            1               5.0           15.0             15.0      100 %
            2               5.0           15.0             15.0       100
            3               2.0            6.0             15.0        40
            4               5.0           15.0             15.0       100
            5               5.0           15.0             15.0       100
            6               5.0           15.0             15.0       100
            7               5.0           15.0             15.0       100
            8               3.0            9.0             15.0        60
            9               5.0           15.0             15.0       100
            10              4.0           12.0             15.0        80
            11              5.0           15.0             15.0       100
            12              1.0            3.0             15.0        20
            13              3.0            6.0             10.0        60
            14              5.0           10.0             10.0       100
            15              5.0           10.0             10.0       100
            16              4.0            8.0             10.0        80
            17              5.0           10.0             10.0       100
            18              5.0           10.0             10.0       100
            19              1.0            2.0             10.0        20
            20              1.0            2.0             10.0        20
            21              5.0           10.0             10.0       100
            22              5.0           10.0             10.0       100
            23              4.0            8.0             10.0        80
            24              3.0            6.0             10.0        60
            25              5.0           10.0             10.0       100
            26              1.0            2.0             10.0        20
            27              1.0            2.0             10.0        20
            28              1.0            2.0             10.0        20
            29              2.5            2.5              5.0        50
            30              5.0            5.0              5.0       100
            31              4.0            4.0              5.0        80
            32              1.0            1.0              5.0        20
            33              3.0            3.0              5.0        60
            34              2.0            2.0              5.0        40           
       TOTAL              121.5          275.5            375.0       73.5%
                          =====         ======           =====        =====
    Return to MIEPA's Home Page
    1. Freedom from Internal Control (5.0)

    The freedom from internal control in Sweden is as good as any of the nations in Western Europe. Everyone can engage in any activity, except that are of destructive nature. There are also laws that allow citizens to gain access to all the files the government is keeping on each individual. This information includes all except those of the Swedish Security Police (SÄPO), equivalent of CIA. In fact, SÄPO does not even have an official home page. The Security Police have been thoroughly criticized during the past few years, because they keep records of citizens, such as communists and left-wing oriented people, which they consider a “security hazard” for the nation. Those people in the registers have suddenly, without a reason, been fired from their governmental positions, or been denied jobs due to unknown reasons. However, SÄPO’s activity is on a very small basis, and does not harm the economy under any circumstances Immigrants in Sweden that come from outside of the European Union are eligible to work with permission. Union members, on the other hand, do not need any permission, and can move within Sweden as normal citizen. Immigrants have the privileges of a normal citizen, except for the right to vote and other minor issues. Swedish citizens are eligible to move without any restrictions.

    Personal Knowledge

    2. Freedom of Speech (5.0)

    Every Swedish citizen is assured under this Fundamental Law of the right vis-à-vis the public administration publicly to express ideas, opinions and emotions to communicate information on any subject whatsoever. Freedom of speech is only restricted regarding anti-Semitism and offences towards minorities, which are completely forbidden, and may lead to imprisonment.

    Sweden. The Swedish Parliament. Fundamental Law on Freedom of Expression. 11 Dec. <2000 http://www.riksdagen.se/arbetar/grundbok%5Fen/flfe05.htm>.

    3. Effective, Fair Police Force (2.0)

    The Swedish police is very fair, however, as the Swedish economy declined during the 1990s, one of the first areas the Swedish government cut costs from was the Police Force. The oldest, and most experienced police officers and crime investigators were forced to retire, policemen and women were fired, and the police organization was forced to reorganize in order to cut costs. The downsizing has made work impossible for the officers. Instead of enforcing safety, they now have to sit at the station and take care of the paperwork previously managed by secretaries, and also ignore the least serious crimes, in order to investigate the more serious crimes, which eventually get closed. Furthermore, there have not been any new acceptances to the police academy since 1995. It is also not unusual that ninety thousand citizens (90,000) have to share three (3) police officers. As a result, the Swedish Police Force has become one of the least effective in the world. Crimes are simply not solved.

    Sweden. The Riksdag. Snabbprotokoll 1997/98:54. 22 Jan. 1998. 6 Dec. 2000 .

    4. Currency (5.0)

    The only official currency in Swedish is the Swedish Kronor and Öre, (1 Krona=100 Öre). No other currencies are used in the country, and no restrictions on exchange are applied. Furthermore, Sweden has chosen to stand outside the European Monetary Union (EMU), and will keep a referendum on the issue in 2001.

    Sweden. The Riksbank. Coins and notes general information. 31 May. 2000. 5 Dec. 2000 http://www.riksbank.com/System/ItemMenu.ASP? ItemID=1462&SelItemID=1462.

    5. Commercial Banks (5.0)

    The banking system in Sweden is very good. It is easy, sometimes, too easy. During the early 1990s, and the economical recession, the Swedish government discontinued to give subsidies for car and home loans, leaving households unable to pay their debts. As a result, the banks lost incredible amounts of money, which, in fact, the Swedish government covered - an estimated of US$ 10 billion free of charge in order to save the bank system from a collapse. However, today, the banks are earning large amounts of money and are more careful to whom and how much they lend.

    Mellin, Lena. “Han fick sparken- och 17 miljoner. Aftonbladet. 26 Dec. 1999. 18 Dec. 2000 .

    6. Communication Systems (5.0)

    The communication system in Sweden is absolutely the most advanced in the world. The regular telephone lines are excellent. Failure in the ground telephone system is extremely unusual, and regarding the cell phone system, Sweden is the leading country in the world on Global System of Mobile Communication (GSM 900-1800MHz), which is a Swedish- developed European-Asian-African standard. Over 60% of the Swedish population has at least one cell phone, often more. The television and the radio communication is digital, and 80% of the households have Internet access, often broadband. All the universities are also equipped with the latest technology. Failures in the communication systems are something Sweden has hardly experienced. About 80% of research and development (R&D) expenditures are related to transportation and telecommunications equipment, pharmaceuticals and machinery.

    Mobil. Mobil nummer 9. 28 Oct. 2000. 3 Dec. 2000 . United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 2 Dec. 2000 .

    7. Transportation (5.0)

    The infrastructure in Sweden is good. Trains, cars or flights easily access all parts of the country, making transportation very easy. The largest airport in Sweden, Arlanda (Stockholm), is also the most reliable in Europe. There is a total of 12, 821 km (8,013 miles) of railroad, 201,907 km (131,816 miles) of highway (77.5% is paved), 256 airports, and a vast number of ports and harbors. Swedish highways and secondary roads are of high quality, although outside of major cities they are often narrowed in to two lanes with a wide shoulder. Slower vehicles are expected to move into the shoulder to allow faster ones to pass. Moving violations, especially speeding and driving under the influence of alcohol or drugs, are strictly enforced and fines can be severe. Tradeport. Sweden - Consular Information Sheet. 13 Jul. 2000. 3 Dec. 2000 . United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 3 Dec. 2000 .

    8. Education (3.0)

    Sweden's labor force of 4.3 million is disciplined and experienced in almost all modern technologies. The completely free education system starts out with a 9-year elementary school, followed by an optional high school. But since a high school student receives almost $100 per month for attending high school, and also the need of a higher education, basically everyone continues to high school. After high school, however, the extensive unemployment subsidies offered by the government has become an incentive, and are financially more attractive for individuals to stay home (uneducated) and receive unemployment benefits. As the population has grown in Sweden, (and the need for education has increased), in combination with “under paid” teachers, have resulted in the quality and standard of education dramatically decreasing. High school students are teaching elementary school and the quality of the college education is not far behind the level high school taught just 15 years ago. Colleges are transferred into universities in order to increase its status, and classes are dismissed due to lack of teachers. The Swedish educational system has transferred into a “place” where unemployment is hidden. Unemployed people are forced to attend pointless courses in order to change their status from unemployed to student, once again showing the incompetent actions of the Swedish government.

    United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 3 Dec. 2000 .

    9. Social Mobility: Natives (5.0); Foreigners (1.0)

    Sweden still has free education for everybody (elementary through university level). However, teacher at the lower levels, in particular high schools, are extremely unmotivated. Unfortunately, it also makes the students unmotivated as well, which in the long run hurts the entire society. As a result students receive bad grades that prohibits the students from being accepted to college. Immigrants and minorities are groups that tend to get extra hurt, since they already have a language problem when entering the educational system, making this group even more incapable for social movement. Also the attitude towards well-educated foreigners is unfortunate. Foreigners in higher positions in the Swedish society are extremely unusual- it is simply not accepted, whatsoever. Foreigners frequently change their names in order to get to a job interview, which they eventually get turned down at. Foreign lawyers, physicians, and engineers from, in particular, Arabic countries are repeatedly placed as workers in maintenance, postal service, and elderly care. Something Swedes tend not to talk about is their education level because in many cases it is very weak.

    Social mobility is very easy for a native Swede, since the entire society is built on cronyism. Everyone employs his or her family in first hand. The Swedish vice Prime Minister, Mona Sahlin (SAP), does not have a college degree. The Swedish Minister of Finances, Bosse Ringholm (SAP), failed math and English in high school, and quit after the second year in order to play soccer. Currently, Sweden is experiencing a brain drain. More than 20,000 well-educated people are annually leaving the country.

    Personal Experience

    10. Freedom from Outside Control (4.0)

    Until 1995, and Sweden’s membership in the European Union, the Swedish society had never been opposed to any outside control. The lack of outside control left the Swedish government to manipulate the economy and set its own policies as it preferred. However, since the entrance into the Union, Sweden has been put under regulations by the European Union. Accounting numbers that previously could be hidden through manipulation suddenly became visible to the public. Overnight, Sweden was proved as not having as good an economy as government officials always claimed, but rather an enormous national debt. The European Union’s observance of the Swedish economy has, however, helped Sweden than injured the country, even though it will take a long time to heal all the wounds.

    Personal Experience

    11. Foreign Currency Transactions (5.0)

    The Swedish payment system handles SEK 400 billion ($45 billion) a day. Foreign currency transactions are conducted officially in commercial banks and exchange offices without any restrictions applied. Sweden accepts ordinary individuals to hold foreign currency at any time. All foreign currency must be converted for the Swedish Krona, in order to conduct business, leaving the Swedish fiscal and monetary policies very effective. However, small-scale business in foreign currency (Norwegian, Danish, and Finnish) is conducted on the borders.

    Sweden. The Riksbank. Safeguarding the Value of the Money. 24 Nov. 2000. 2 Dec. 2000 < http://www.riksbank.com/>. United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 3 Dec. 2000.

    12. Border Control (1.0)

    After Sweden became a member of the European Union, the borders became very difficult to control, since the Union emphasizes on open borders. Simultaneously the Swedish government allocated less money for border control, leaving the Swedish borders very weak. The Swedish government and businesses are yearly losing billions of dollars primary on loss of taxes and incomes from alcohol and cigarettes due to the weakened border control.

    Personal Experience

    13. Cultural and Language Homogeneity (3.0)

    Sweden has always been a country very generous in accepting refugees and immigrants. In 1998, Sweden had 522,049 immigrants out of a total population of 8,325,576 people, or 6.27%. Most of the immigrants are from Asia and other European countries. Foreigners in Sweden are free to practice their cultural customs as long as they do not interfere with the constitution. All citizens in Sweden have, according to the constitution, the same rights as natives. Unfortunately, the immigrants are not very well treated. Immigrants are forced to change names in order to even get to an interview, and most of the foreign physicians, engineers and lawyers work as postal workers. According to CIA, 78% of the Swedish inhabitants are Lutherans. Religion differences are well respected, and do not impose any threats towards the country or its inhabitants.

    Statistics Sweden. Årlig befolkingsstatistik. 28 Nov. 2000. 2 Dec. 2000 . United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 1 Dec. 2000 .

    14. Political Effectiveness (5.0)

    Sweden has general elections every fourth year. County councils, school boards, and municipal elections take place at the same time. The local bodies are independent from the central bodies, making the system very effective. The local bodies can report problems to the central government, which decides whether or not to imply the regulations all across the nation, and the central government has an easy access to the small communities.

    Personal Experience

    15. Institutional Stability (5.0)

    Every now and then, Sweden experiences political instability. However, compared to the instability in for instance Russia or Italy, it is minimal, and usually based on small party inconsistency. The rare-occurring instability does not pose any threats to the country as a whole. General elections are held every fourth year with the most recent election held in 1998. Political instability due to out-of-term elections is extremely seldom in Sweden.

    Personal Experience

    16. Honest Government (4.0)

    Sweden has comprehensive laws on corruption, which are fully implemented. It is in the process of ratifying the 1997 OECD anti-bribery convention. However, even though the sitting government appears to be honest, indirect corruption and bribery exist on a small scale. Political leaders are very privileged, as in many other countries, and employ their children as consultants for the government. But compared to many other countries in the world, the corruption in Sweden is considered non-existent.

    Tradeport. Sweden Investment Climate Statement. 3 Sep. 1999. 2 Dec. 2000 .

    17. Common Laws (5.0)

    The Swedish legal system is primary based on the common law, and on precedents. The legal system is absolutely fair and equal both to the citizens and to different regions of the country. The legal system is also very reliable and is a great asset for companies. The system is fast and has an excellent collection unit. To change a constitutional law, the constitution requires three elections with one governmental election in between. In order to change a common law there has to be a consensus within the government. The highest judicial power in Sweden is the Supreme Court (Högsta Domstolen).

    United States. CIA. The World Fact Book 2000. 1 Jan 2000. 2 Dec. 2000 .

    18. Central Bank (5.0)

    As the central bank, the Riksbank, the world’s oldest central bank (1656), is responsible for Sweden’s monetary policy. The policy objective is price stability, which amounts to keeping inflation (the average rate of price increases) low and stable. This is specified as keeping inflation at 2 per cent, with a deviation interval of ±1 percentage point. That is the Riksbank’s way of safeguarding the value of money. The Riksbank’s three major responsibilities are to promote a safe and efficient payment system, to issue banknotes and coins, and to managing the gold and foreign currency reserve. New laws to strengthen the independence of the Riksbank were approved by the government (Riksdagen) on 25 November 1998 and came into force from the beginning of 1999. The new laws also spell out monetary policy’s objective. Overall, the Swedish Central Bank is a stable and reliable entity.

    Sweden. The Riksbank. Safeguarding the Value of the Money. 24 Nov. 2000. 2 Dec. 2000 < http://www.riksbank.com/>.

    19. Domestic Budget Management (1.0)

    Even though Sweden has always been considered a rich country, its domestic budget management is a catastrophe. Sweden never participated in World War I, and instead of wasting money on weapons during World War II, Sweden declared itself “neutral” and made tremendous amounts of secret money by providing Hitler-Germany with coal, steel, iron, and paper. As payment, Sweden received gold stolen from Jews. This not only made Sweden to one of the wealthiest country in the world, but also taught Swedes not to accept anything but the best. But as WW II ended, and Sweden suddenly became a country without any major income. The only way to maintain the rigorous standard was to borrow money from international creditors, which eventually undermined the entire economy. The current situation is Sweden is a vast budget deficit (55% of GDP) and (close to) deflation, which in turn made it expensive for companies to invest (inflation makes money worth less, making it cheaper to borrow money). Fortunately, the EU forced the Swedish Central Bank to lower the interest from an average of 15-20% to 5-6% during late 1990s. Still, the unemployment is approximately 14%, but 10% are “hidden” by the government in student and trainee programs, costing the government enormous amounts. When Sweden joined the EU in 1995, the country had lived on credits for almost 50 years, and suddenly had to pay back. Over a night, the currency plunged over 30% and the interest rates skyrocketed to 750%.

    Personal Experience

    20. Government Debt (1.0)

    Aided by peace and neutrality for the whole twentieth century, Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. In recent years, however, this extraordinarily favorable picture has been clouded by budgetary difficulties, inflation, high unemployment, and a gradual loss of competitiveness in international markets. The budget debt is approximately US$100 billion, mostly owned to outside creditors, leaving Sweden in the same economical league as Greece and Turkey. Sweden also runs with a great budget deficit (55% of GDP). However, the situation has not always been as bad for the Swedish economy as it is today. During the 1980s, the Social Democrats basically “played around” with the Swedish currency. With an inflation of over 10% and frequent devaluations between 15-20%, the Swedish economy was running with a huge deficit that was paid off through the game of inflation-devaluation. But as Sweden joined the European Union in early January 1995, Sweden suddenly had to follow the EU regulations, revealing all the weak points, and leaving the Swedish economy tremendously weak.

    United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 2 Dec. 2000 .

    21. Private Property (5.0)

    As a member of the European Union, Sweden adheres to a series of multilateral conventions on industrial, intellectual, and commercial property. Sweden is a signatory to various multilateral conventions on the protection of copyrights, including the Berne Convention of 1971, the Rome Convention of 1961, and the WTO's Trade Related Intellectual Property (TRIPS) convention, leaving Sweden as a very secure country to conduct business in. Sweden's present membership in the European Union (EU), have drastically changed the investment climate and attracted foreign investors to the country. According to recent OECD statistics Sweden takes the second place in the world in inflow of foreign direct investments as a percentage of GDP. The Swedish authorities have also implemented reforms to improve the business regulatory environment that will benefit investment inflows and are seeking ways to ensure wider ownership in Swedish industry, which they feel will increase competitive pressures and lead to greater efficiency. Since 1980, foreign ownership in Sweden has doubled and foreign-owned firms employed 10% of the work force in the private sector or 246,000 workers in 1995.

    United States. ITA. Country Information Sweden. 3 Nov. 1999. 2 Dec. 2000 .

    22. Economic Statistics (5.0)

    Sweden has as many other Western countries an excellent statistics over basically everything that can be measured. Statistics Sweden, SCB (Statistiska Centralbyrån) was established in the mid 1850 in order to measure population. Except for some minor inadequacies, it has proven itself to be a very reliable source of information.

    Statistics Sweden. About Statistics Sweden (SCB). 1 Dec. 2000. 1 Dec. 2000 .

    23. Protection of Public Health and Safety (4.0)

    The protection of health is extremely good in Sweden. The waste management is handled with very high precision and food inspection is highly sophisticated. There are no epidemics in Sweden, except for the yearly flu, and there are less than 2000 individuals infected with HIV. The birth rate in year 2000 has so far been 10.01 per 1000 inhabitants. The life expectancy is at a healthy 76.95 for male and 82.37 for women. However the Swedish population is diminishing because young couples tend to prioritize their career or simply because the households cannot afford a(nother) child(ren). The infant mortality rate is down at record low 3.49 deaths per 1000 births, and the total fertility rate is 1.53 children per woman. However, Sweden has a problem with its suicide rate. Swedes tend to be depressed because of the dark climate and therefore producing the highest suicide rates in the world. Stress and cardiovascular related deaths are also significant in Sweden compared to disease-related deaths. This is, however, not a threat to the economy whatsoever. Sweden has in many aspects the best health care in the world. Equipment tends to be exchanged even before it has been used. The problem is, however, that there is no money to pay the doctors to use it. State-of-the art surgery equipment is simply not used because the hospital cannot afford to use it.

    United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 1 Dec. 2000 . WHO. Number of Deaths and Death Rates Sweden 1996. 1996. 1 Dec. 2000 < http://www- nt.who.int/whosis/statistics/whsa/whsa_table1_process.cfm?path=evidence,statistics,whsa,whsa_table1,endpoint&language=English>.

    24. High Wage Policies (3.0)

    The Swedish labor force consists of 4.3 million people, almost half of the entire population. The Swedish government does not have any direct wage ceilings, but indirectly forces companies to keep wages low with an extensive tax pressure. The vast taxes (highest in the world) leave Sweden as one of the lowest paid countries in Western Europe. Only the previously Soviet-dominated satellite states in Eastern Europe, Greece and Turkey have lower incomes. But in contrast to Sweden, the former Soviet satellites strongly emphasized on education. A physiotherapist earns US$1700 per month after 25 years in the profession, and an orthopedist makes US$3500 per month after as many ears in the profession. The average wage for a middle-aged electrical engineer is approximately US$3000 per month. The US$25,000 per year is considered as a high income and a >50% tax bracket is automatically applied. However, even though tremendous amounts of taxpayers’ money is wasted by the Swedish government, the Swedish middle class can still afford a reasonable car (5 years old; Swedish cars are the oldest in the entire Europe), and afford a relatively comfortable life (food, clothes, and consumer goods) often based on subsidies.

    Personal Experience.

    25. Environmental Protection (5.0)

    Sweden is a 450,000 km2 (285,000 sq. m.) large territory half covered with forests and dotted with nearly 100,000 lakes. The most threatening environment hazard is acid rain from Central and Southern Europe. Based on the environmental goals adopted by the Swedish Parliament (Riksdagen), the Swedish Environmental Protection Agency and the National Chemicals Inspectorate have focused their efforts on combating the following 14 environmental threats. Among the goals are to prevent: the greenhouse effect, depletion of the ozone layer, acidification of water and soils, photochemical oxidants and ground-level ozone, and urban air pollution and noise. In order to fulfill all the goals, the government had imposed heavy taxes on everything possible associated with the environment. For instance, 80% of the $5 per gallon the gas costs is tax. Trucks and busses are heavily taxed, and oil-heated households are also imposed with high taxes. The sound environmental policies have lead to a very clean environment.

    Sweden. Embassy of Sweden United Kingdom. Swedish Facts. Mar. 1996. 1 Dec. 2000 .

    26. Strong Army (1.0)

    The Swedish Ministry of Defense, elected by the Parliament, Riksdagen, organizes the Swedish Armed Forces. The force’s chief task is to protect and defend Sweden and its inhabitants from outside attacks. The force’s secondary task is to actively participate in international peacekeeping and humanitarian missions through sending units and other resources. The armed forces must also be able to support the community in times of distress in peacetime, for example accidents and disasters. Sweden has a similar defense system as its neighboring countries, such as Norway, Finland, and Denmark. For the fiscal year of 1998, Sweden spent 2.1% ($ 5 billion) of its total Gross Domestic Product (GDP) on defense, which is slightly higher than its neighbors Norway (2.1%), Finland (2.0%), and Denmark (1.7%). The United States spent 3.2% of its total GDP in 1999. But even though Sweden spends more on defense than its neighboring countries, the Swedish defense is in a crisis. This is, again, due to very poor governmental management- a common situation in Sweden. The situation of Sweden’s bad defense is, however, not a threat towards the country. Sweden has during the modern history profiled itself as a neutral country, but with close contact to NATO. In addition, Sweden has not experienced any threat in the modern history, leaving it as probably one of the most secure countries to live in the entire world.

    Sweden. Swedish Armed Forces. The Defense of Sweden. 9 Mar. 1998. 1 Dec. 2000 . United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 1 Dec. 2000 .

    27. Foreign Trade Impact (1.0)

    Foreign trade has a very large impact on the Swedish economy; nearly eighty-four percent of the total Gross Domestic Product (GDP) has to do with either import or export. It is far more than the thirty percent required for earning a good grade in this section. The numbers indicate that Sweden is a country highly dependent upon other countries, mainly Germany, leaving Sweden very vulnerable to outside forces. In fact, Sweden’s dependability of other nations is often cited with, “Sweden is doing well when Ericsson and Volvo are doing well.”

    United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 12 Nov. 2000 . Varuexport/import, handlesnetto. Statistics Sweden. 26 May 2000. 13 Nov. 2000 .

    28. Protection of Foreign Currency Earning Enterprises (1.0)

    In opposition to encouraging start-up companies to develop through subsidies, the Swedish government tries to squeeze every single coin in revenue possible from the large corporations. Heavy taxes, worker regulations, and until recently governmentally owned monopolies, are just a few of all the few obstacles the large corporations have experienced. As a result, corporations such as Ericsson and Volvo have moved out and left Sweden. Ericsson recently moved its headquarters from Stockholm, Sweden to London, following many other companies, simply to escape the outraging tax pressure from the Swedish government. Another completely unreasonable action by the Swedish government was to forcefully discontinue the use of nuclear power plants, in order to save the environment, even though Swedish power plants have a reputation for being the most secure in the world. The Swedish government based its decision on a vote from 1979. The discontinuance was forced even though Sweden is unable to supply itself with enough power with using all its nuclear power plants at 110%. As a result, one of the most power-intensive companies, also being one of Sweden’s most important industry, the steel industry, is forced to pay extensive rates for their basic production resource. Besides the disadvantage for the Swedish industry, Sweden is now importing its energy from what the Swedish government says is Finland. In reality the energy is imported directly from Ukraine and Belarus through Finland.

    Personal Experience

    29. Management of Foreign Currency Budget (2.5)

    The difference between exports of goods and services and imports for 1999 was a positive number of US$17.8 billion. According to the CIA statistics, EU was Sweden’s largest exporting region, counting for 57% of the export. However, these numbers are dependent upon a few companies’ orders, such as Volvo, SAAB, and Ericsson. As of September 30, 2000, Sweden has a larger foreign currency surplus (US$12 billion). This numbers is, however, somewhat misleading because of the foreign interest in Swedish high-tech companies, counting for a large part of the surplus. These numbers also confirm that Sweden is dependent upon a few companies. If Ericsson or Volvo has a bad year, it will directly affect the foreign currency balance.

    Sweden. Sveriges Riksbank. International Reserves and Foreign Currency Liquid. 10 Nov. 2000. 12 Nov. 2000. United States. CIA. The World Fact Book 2000. 1 Jan. 2000. 12 Nov. 2000 .

    30. Layers of Collective Action (5.0)

    Sweden is a parliamentary monarchy with ordinary general elections to the Riksdag every fourth year. County council, school board, and municipal council elections take place on the same date. Sweden is divided into 29 constituencies. A normal-sized constituency returns between 10 and 12 members to the Riksdag, but there are big differences, with the constituency of the County of Stockholm, returning 38 members of the Riksdag and the County of Gotland (the smallest constituency) only 2. To adjust the inequality the remaining 39 out of the 349 are proportional adjustment seat. The locally elected bodies are independent from the central government, and work very effectively, since they are close to the community. The local government receives semiannual funds from the central government, which they allocate in the best possible way. This system makes it very easy to allocate funds to each individual municipality. However, the money is often not spent as initially proposed by the central government, but instead on consultants that are friends of the sitting councils.

    Sweden. The Swedish Parliament. The Basis of Democracy. 11 Nov. 2000 http://www.riksdagen.se/arbetar/demgrund/index.htm.

    31. Pro-Business Climate (4.0)

    Sweden was, and still is in the process of becoming one of the most pro-business countries in Europe. What makes Sweden a paradise for small start-up is the generosity of subsidies from the government. As of January 1, 1995, Sweden became a member of the European Union giving small start-up companies access not only by the Swedish government generous grants, but also access to EU’s infinite supply of start-up support. The only requirement is that the entrepreneur has a good idea that possibly can generate future jobs. The grants are very common and offer in addition to heavy tax-relives, region-allocated grants, rent and interest cut, and paid-for work force for up to six consecutive months.

    As a result of all those actions, Sweden has become the most computer literate and hi-tech friendly country in the world. Currently, the Stockholm suburb, Kista, is being transformed into the high-tetchiest area in Europe, represented by companies, such as Sybase, Oracle, Microsoft, Nokia, Ericsson, Alcatel, and Siemens-Nixdorf. However, even though most of the Swedes would probably enjoy a leadership position with a high social status, the general public does still not accept people making a lot of money. The “phenomenon” was developed during the 1960-70s, and has forced many wealthy people to leave Sweden for more acceptable countries.

    Personal Experience

    32. Government Enterprises (1.0)

    From the era in which almost all companies had governmental influence, there are only three companies left, Systembolaget, Vin & Sprit AB, and the pharmacy retailer, Apoteket AB. All three companies are governmentally operated entities. Furthermore, the way they are operated is directly unfavorable for the economy by limiting competition, restraining efficiency, and therefore wasting monetary recourses. While Vin & Sprit AB is generating a huge profit, manly from its highly popular product, Absolut Vodka™, Systembolaget, on the other hand, is generating a huge loss, even though it has a monopoly in selling alcoholic beverages. Systembolaget was created during the early 20th century in order to cope with a nation’s alcoholism. The most ironic part about the situation is that the way the loss is covered is by starting out in year 2000; the Systembolaget is kept open on Saturdays and has issued its own credit card system. Finally, concerning the Apoteket AB, it is the same sad story as with Systembolaget. Instead of privatizing the pharmaceutical retailing, and releasing the governmental monopoly, a closing down of pharmacies around the country is presently covering Apoteket’s huge loss. Similarly to Systembolaget, Apoteket has issued its own credit card system, letting especially the elderly to “afford” their medication. The sad part is that this was how all the governmentally owned entities generally worked. This, remember, in a country with a 65% income tax bracket.

    Personal Expereince

    33. International Security Agreements (3.0)

    In early January 1999, the Swedish government reaffirmed its neutrality regarding participation in NATO and the Western European Union (WEU). Swedish politicians, however, are still deeply divided on the issue of neutrality, as to whether Sweden should be playing a more active role in the European Union (EU). As it is today, Sweden participates extensively in NATO’s Partnership for Peace program, including drills, without officially being a member country. Even though the conservative party in Sweden, Moderaterna (M), insists that Sweden should become a full member of NATO, the currently leading party in Sweden, the Social Democrats (SAP), are heavily opposed of a full membership in NATO mainly because of the increased costs for the defense it would bring. The Swedish neutrality regarding NATO does not impose any threats whatsoever towards Sweden, mainly because NATO’s initial purpose was to protect the members against attacks from The Soviet Union.

    Radio Free Europe / Radio Liberty. Expanding NATO RFE/RL’s Continuing Coverage. Jan. 1999. 12 Oct. 2000.

    34. Protection of Domestic Enterprises From Government Mandated Costs (2.0)

    Rating Sweden’s economy as being perfectly competitive is still difficult because of the influence from the government on the private sector. The situation has, however, changed tremendously throughout the 1990s. From being a country, in which almost all areas were strongly influenced by a socialist government, most of the government-regulated companies now are parts of the free market. Sweden has always been a country earning its income from heavy industries with a strong working middleclass sympathizing with the Socialist Party (SAP). SAP has held the majority within the Swedish politics ever since it was started in early 20th century, and forced companies to apply often-unreasonable benefits for their employees, such as impossibilities of firing workers, twenty-five days paid vacation, broad worker safety regulations, and extensive environmental taxes. All the fees, regulations, and restrictions have made it very difficult to operate a large company in Sweden. Regarding imports the general European Community regulations are applied. Taxes vary dramatically depending on the nature of the merchandise, but also from which continent the merchandise is imported. For instance, clothes from Asia and cars imported from the US became more expensive as a result of Sweden’s entrance into the European Union in 1995, benefiting the (Swedish) car industry. In contrast, products and services, such as telecommunication, transportation, food, and merchandise imported from member countries of the European Union have become more available in Sweden, forcing the government to give up its strong control of the market.

    General Information about Sweden. Department of Informatics. 15 May 1997. Umeå U. 16 Oct. 2000.


    All the information and conclusions in each country analysis are solely the responsibility of the individual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.

    To learn more about other countries, click to other files here:

    Return to MIEPA's Home Page


    Return to MIEPA's Home Page list of country studies

    Introduction and Policy Recommendations

    Winning Essays: There Are Alternatives Project (TAA)

    Essay: Balanced Trade: Toward the Future of Economics

    Moral Economics


    Web address: http://www.mkeever.com


    To contact MIEPA, please send an email to this email address:


    Please place the acronym MIEPA in the subject line.