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The new economic-policy regime in Sweden in the 1990s included deregulation, central-bank independence, inflation targets and fiscal rules but also active labour market policy and voluntary incomes policy. This article describes the content, determinants and performance of the new economic policy in Sweden in a comparative, mainly Nordic, perspecti...
Contexts in source publication
Context 1
... the emergence of a large public deficit and public debt was a sufficiently strong argument per se to conduct a very restrictive fiscal policy in the mid- 1990s. Persson was even prepared to ignore recommendations by academic economists who suggested that most of the restrictive fiscal measures might be postponed until the crisis was over (SOU, 1993a, pp. 16, 188). Moreover, economic experts in the Ministry of Finance later declared that they had preferred a somewhat less restrictive fiscal policy than Persson. It seems also that Persson was the initiator of the fiscal rules, although these were developed in close contact with his successor as a Minister of Finance (A ˚ sbrink) and top officials ...
Context 2
... ambiguous stabilization-policy outcomes in Sweden in the 1998-2007 period justify a comparison between Sweden and other countries in terms of the Phillips curve, that is, the trade-off between inflation and unemployment. The Phillips-curve comparisons (Figs. 1-3) are based on CPI, on the ILO measure of standardized unemployment and on an equal weighting of unemployment and inflation (annual data). Sweden had a better Phillips curve than the EMU countries on average (Fig. 1) and also than Finland in the 1998-2007 period. The country had a similar (negatively sloped) Phillip curve as the other ...
Context 3
... it is striking that Sweden climbed down the Phillips curve to a larger extent than the other Nordic countries in the 1998-2007 period if Finland is excluded. Sweden's move downwards along a similar Phillips curve is also obvious in comparison with the small open Western European countries less Finland on average and with the United States (see Figs. 2 and 3). ...
Context 4
... in the 1998-2007 period, Sweden had more low-inflation points than the EMU countries (on average) on their respective Phillips curves (Fig. 1). And Sweden moved downwards along a similar Phillips curve to a larger degree than other small open European countries and also than major OECD countries outside Europe (Figs. 2 and 3). By international standards, the Swedish Central Bank pursued a restrictive monetary policy in 1998-2007. ...
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Citations
... When we turn our focus on services, relevant changes become evident. As stated by several authors (Baccaro and Pontusson, 2016;Erixon, 2011), explanation of the good performance of Sweden's export sector requires the consideration of services, particularly those related to the Information and Communication Technologies (ICT) sector. Once considered both services and goods, ICT services have been the main sector in the export mix since at least the mid-1990s, and its share grew from 6.78% in 1995 to 16% in 2019 (reaching a maximum of 21.83% in 2016, according to the Atlas of Complexity Index). ...
In the literature on financialized growth, two models are often presented as complementary but opposing: some countries drive their domestic demand through debt, while others grow on the basis of exports. In this research, we identify Sweden as a country that in the midst of the financial euphoria preceding 2008 combined these two models simultaneously. By identifying this “debt&export-led” growth model, we add richness and taxonomic complexity to the literature on financialized growth models. That said, this research contributes especially to the debate on the Swedish growth model, revealing a “hybrid” model that resulted from the interaction of two sets of factors: i) the presence of a successful exports sector, driven by a commensurate regulatory framework in a context of strong international demand; and ii) the manner in which financialization operated in Sweden, through a historic increase in private debt levels simultaneous with a partial dismantling of the welfare state.
... The forms and functions of the highly developed welfare state that evolved in Sweden from the 1950s have been fundamentally changed by political-economic events in more recent decades. Tendencies towards market liberalisation that had started even earlier were amplified by the restructurings that followed the severe economic crisis in the early 1990s (Erixon, 2011;Schön, 2007). The welfare state has since been under continuous pressure to reform and retreat, in line with the prerogatives of neoliberal ideology and fiscal conservatism. ...
... More specifically, what we are seeing is how historical events are rendered intelligible to actors through ideas of good governance, which are then used to forge coalitions of influential actors to form hegemonic and counter-hegemonic blocs (Parsons, 2016). The neoliberal hegemony in Sweden is premised partly on post-Cold-War triumphalism, but even more on the experiences of the 1990s economic crisis (Erixon, 2011;Sverenius, 1999). The ideas of good governance that emerged from the crisis still unite large segments of the Swedish economics profession, transport planning agencies and, perhaps most importantly, Finance Department officials, regardless of political affiliation. ...
... We can see the emergence of eco-Keynesian ideas within Swedish transport discourse as the result of influential actors becoming discursively marginalised. While fiscal conservatism may have served certain business interests to a degreefor example, by maintaining downward pressure on wagesit has also led to underinvestment in transport infrastructures that are crucial for Swedish industry (Erixon, 2011;Eriksson, 2016). Once industry identifies decarbonisation as a business possibility and/or necessity, its material interests become increasingly detached from ideas of fiscal conservatism and state retreat. ...
The paper traces a discursive shift in Swedish transport decarbonisation discourse, by which neoliberal hegemony has been increasingly challenged through the emergence of an eco-Keynesian discourse coalition encompassing trade unions, business and industry, and green and left-wing members of parliament. The investigation testifies to the importance of political ideas in effecting discursive change, and in restricting subject positions within discourses. The Swedish case is informative for transport decarbonisation in general for the tensions it harbours between classic Social Democratic industrial policy and neoliberalism, and between historical continuity and radical discontinuity. In particular, it reveals how the return to a specific historical idea of the state determines the subject positions of actors within the new discourse coalition.
... The failure to decouple wages in the exposed and sheltered sectors in turn put pressure on manufacturing firms to invest in new technologies and incentivized capitalists to diversify their holdings. The manufacturing firms that spearheaded the export-led recovery of the 1990s were firms that had invested heavily in ICT-related innovations over the previous decade (Erixon 2011). Beyond traditional manufacturing, business services emerged as a leading export sector in this period and, as documented by Thelen (2019), key groups in the Swedish business community also diversified by taking advantage of opportunities created by the privatization of education and publicly-financed care services. ...
... In the 1990s, the new trade pattern consolidated: pharmaceutical products and electrical machinery became more important, while exports prevalent in the previous pattern (pulp, paper and wood) continued a trend of marginalisation (see Fig. 2 and Table 4). As Baccaro and Pontusson (2016) pointed out, the leading role in the post-crisis expansion was undoubtedly played by the growing importance of trade in knowledge-intensive and high value-added goods and services related to the ICT sector, such as consultancy and data processing services, optical and electronic products, and most especially the telecom industry (see also Erixon, 2011). This industry was responsible for about two-thirds of the labour productivity growth in Swedish manufacturing during the 1990s, both directly, by itself, and indirectly, by affecting other firms (Erixon, 2011). ...
... As Baccaro and Pontusson (2016) pointed out, the leading role in the post-crisis expansion was undoubtedly played by the growing importance of trade in knowledge-intensive and high value-added goods and services related to the ICT sector, such as consultancy and data processing services, optical and electronic products, and most especially the telecom industry (see also Erixon, 2011). This industry was responsible for about two-thirds of the labour productivity growth in Swedish manufacturing during the 1990s, both directly, by itself, and indirectly, by affecting other firms (Erixon, 2011). The country could continue to export some of its traditional basic goods, albeit in a lower proportion, thanks to the diversification of its trading partners, starting with China (Erixon, 2011). ...
... This industry was responsible for about two-thirds of the labour productivity growth in Swedish manufacturing during the 1990s, both directly, by itself, and indirectly, by affecting other firms (Erixon, 2011). The country could continue to export some of its traditional basic goods, albeit in a lower proportion, thanks to the diversification of its trading partners, starting with China (Erixon, 2011). In this way, some products have remained important throughout the entire period for which we have data (Fig. 2). ...
In this article, we analyse the relationship between the foreign sector and the ‘Swedish model’ of welfare state since the 1960s. The initial hypothesis is that the old relationship between the foreign sector and the Swedish welfare state during the expansion phase of the latter was mainly complementary, almost symbiotic, thus adhering to the compensation thesis. We ascertain that the different reforming waves of the late twentieth century transformed this relationship into one where the foreign sector became a source of distress, creating certain incomplementarities in the model. After reviewing the historical links between both, we examine their evolution over recent decades, paying special attention to transformations prompted by the process of globalisation. We conclude that the efficiency thesis best explains the current links between the foreign sector and the welfare state in Sweden.
... In terms of methodology as well as substantive argumentation, our analysis of the Swedish growth model and its evolution over the period 1994-2020 combines Pontusson's (2016, 2021) emphasis on balance between domestic and foreign demand drivers with Erixon's (2011) emphasis on the leading role of export-oriented manufacturing firms and the importance of productivity growth. In due course, we will also engage with the contention by Belfrage and Kallifatides (2018) that Sweden transitioned to a "finance-dominated growth model" in the time period covered by our analysis. ...
Over fifty years ago Andrew Shonfeld wrote a book, Modern Capitalism, which initiated a new field of inquiry about ‘comparative capitalism.’ His focus was the politics of the mixed economy and its national variants. At the basis of that politics was not just a concern with ‘who gets what’ in a static sense, but also how the various hybrid forms of capitalism were able to address problems of accumulation and growth more effectively than in previous phases of capitalist development. Fifty plus years later, at the end of the neoliberal era, modern capitalism faces problems far different from Shonfeld’s period. Growth has slowed down considerably, generating a host of new problems, from financial instability to the collapse of mainstream parties. What happens when growth – the main mechanism of capitalist legitimation – is harder to come by and less broadly shared? And how should we think about capitalist diversity in the context of global stagnation? In this volume we address these questions by bringing together a number of comparative and international political economists with expertise in different countries and regions. The chapters are inspired by a common theoretical framework about ‘Growth Models,’ articulated in the introduction, and contribute to develop it further, going beyond the methodological nationalism of much comparative research. The outcome is a new theoretical perspective to help social scientists, policymakers, and opinion makers understand the politics of growth and stagnation, and a set of state of the art empirical analyses at the country, regional, and global level.
... The failure to decouple wages in the exposed and sheltered sectors in turn put pressure on manufacturing firms to invest in new technologies and incentivized capitalists to diversify their holdings. The manufacturing firms that spearheaded the export-led recovery of the 1990s were firms that had invested heavily in ICT-related innovations over the previous decade (Erixon 2011). Beyond traditional manufacturing, business services emerged as a leading export sector in this period and, as documented by Thelen (2019), key groups in the Swedish business community also diversified by taking advantage of opportunities created by the privatization of education and publicly-financed care services. ...
This article develops a framework for studying the politics of growth models. These, the authors posit, are sustained by ‘growth coalitions’ based in key sectors. Their members are first and foremost firms and employer associations, but fractions of labor are also included, if their interests do not impair the model’s functionality. There is no guarantee that a growth coalition and a winning electoral coalition coincide. In normal times, a growth coalition effectively insulates itself from political competition, and mainstream political parties converge on key growth model policies. In moments of crisis, however, the coalition shrinks, favoring the emergence of challengers that fundamentally contest the status quo. The way governing parties respond to electoral pressures can also play an important role in the recalibration of growth models. The authors illustrate the argument by examining the politics of ‘export-led growth’ in Germany, ‘construction-led growth’ in Spain, and ‘balanced growth’ in Sweden.
... The remedy prescribed by the economic expert consensus, and adopted across the political spectrum, was strict focus on fiscal discipline and austerity measures that were uniquely harsh in an OECD context (Erixon, 2010). These were followed and sometimes accompanied by equally severe and uniquely wide-ranging (de)regulations aimed both at limiting public spending and at privatisation (Erixon, 2011). The subsequent reversal of economic fortunes for Sweden forms a key thread of the storyline that thus casts Sweden in a role as a miracle of productivity, but one that exists as such on pain of severe punishment from global markets that are ready to strike at the first sign of fiscal laxity. ...
... It is a storyline, therefore, that stresses the importance of sound finances over efforts to stimulate the demand side of the economy. As such, it is perhaps not surprising that it has tended to marginalise Swedish business, which has seen its influence over the political establishment become curtailed, though not to the same degree as that of the trade unions (Erixon, 2011). More surprising, perhaps, is the extent to which this storyline has come to dominate industrial policy in a country famous for its active state. ...
... The result is that material dependency upon the existing transport infrastructure is reinforced, as participants of the deflationary coalition are always forced to justify an investment against the horizon of scarce material and monetary resourceswhich are abstracted by the dominant storyline into one and the same thing. At the same time, the storyline highlights the successful 'sanitisation' of Swedish economy in the 1990s as being dependent on minimising state influence over the economy (Erixon, 2011;Jerneck, 2020; see also Power et al., 2019). ...
In contrast to its successful decarbonisation of the electricity system, Sweden has failed to achieve momentum in its attempts to decarbonise transport. This paper examines the reasons for this failure by investigating the discourse around investment in Swedish transport infrastructure. Our analysis focusses specifically on discussions about establishing high-speed rail (HSR) spanning 25 years. We identify three central discursive themes: the issue of financing, the role of the state in socio-technical change, and fatalism. We then trace these themes to storylines within the HSR discourse that each tell a story about good transport governance, informed by a specific interpretation of Swedish modernisation. Four storylines converge in a ‘‘deflationary’’ discourse coalition, characterised by ideas of sound finance and depoliticised governance, that reinforces material dependencies on existing transport infrastructure. A competing, ‘‘Weberian’’ discourse coalition is united through a contrasting storyline that instead highlights state capacity as evidenced by Swedish modernisation.
... Anxo & Niklasson, 2009), several authors have interpreted these various changes as signaling the onset of a markedly new growth model (e.g. Buendía & Palazuelos, 2014;Erixon, 2011;Schnyder, 2012), chiefly characterized by the dominance of private over public activity as the main growth engine; the establishment of price stability over the attainment of full employment as the main policy priority; an increasing financialization of Sweden's productive structure and society (Belfrage, 2008), and a broad commitment to budgetary stability (Bergman, 2011). ...
... This shift into the ICT sector was in turn favored by a notable expansion of tertiary education during the 1980s and 1990s (Pontusson, 2011), a conscious governmental effort to increase average computer literacy levels among the population (Thelen, 2019), and by the extensive use of Active Labor Market Policies in the immediate aftermath of the early 1990s crisis (Anxo & Niklasson, 2009). Moreover, such an expansion of the ICT sector also had indirect spillover effects to other sectors of the economy, insofar as it supported sustained labor productivity increases in the economy as a whole (Erixon, 2011). ...
... The onset of the Great Recession in 2008 had a brief, albeit very intense, effect upon the Swedish economy. While the Swedish banking system was virtually unaffected by the US subprime mortgage crisis, it was nonetheless heavily exposed to the Baltic countries, where the effects of the global crisis were compounded by the collapse of their domestic real estate markets (Erixon, 2011). However, the rapid recovery undergone by the Baltic economies, together with the absence of serious credit losses derived from domestic companies' bankruptcies, avoided any serious harm to the Swedish financial system. ...
... In line with Schumpeter's (1942) classic study on crisis, innovation and "creative destruction", which indicates that crises tend to prompt accelerated restructuring and technological change as old firms and modes of production run out of business and are replaced by new companies and production technologies (see also Freeman and Louçã, 2001;Perez, 2002), several of the Nordic countries saw significant reindustrialization and growth in advanced services during the recovery after the crises of the 1990s. The development of new ICT-related industries and servicesespecially in Sweden and Finland -came along with rapid growth in labour productivity (Erixon, 2011;Dølvik et al., 2017). At the same time, this period of growing ICT production and digitalization was marked by solid employment growth ( Figure 2.1), indicating that rising incomes from the export industries were to a large extent channelled into demand-enhancing investment and consumption in other industries, including labour intensive services. ...
... Not only have the constraints of globalization -in terms of tax-funding sizable public sectors -proven less unequivocal than originally foreseen, but also, contrary to predictions, the Nordic countries have managed to steer a course that has fostered solid job growth in both private and public sector services over time while, at the same time, broadening the tax base, curbing the rise in taxation levels and maintaining international competitiveness. Moreover, as pointed out in Chapter 2, Sweden and Finland especially underwent information and communication technologies (ICT)-driven reindustrialization in the late 1990s and early 2000s, accompanied by rising exports of advanced producer and business services with high wages and value added (Erixon, 2011;Vartiainen, 2011). Similar developments of advanced services have been seen in Denmark, for instance, related to windmill technology (Goul Andersen, 2011), and in Norway related to e.g. the maritime sector and sub-sea extraction of natural resources. ...
... In line with Schumpeter's (1942) classic study on crisis, innovation and "creative destruction", which indicates that crises tend to prompt accelerated restructuring and technological change as old firms and modes of production run out of business and are replaced by new companies and production technologies (see also Freeman and Louçã, 2001;Perez, 2002), several of the Nordic countries saw significant reindustrialization and growth in advanced services during the recovery after the crises of the 1990s. The development of new ICT-related industries and servicesespecially in Sweden and Finland -came along with rapid growth in labour productivity (Erixon, 2011;Dølvik et al., 2017). At the same time, this period of growing ICT production and digitalization was marked by solid employment growth ( Figure 2.1), indicating that rising incomes from the export industries were to a large extent channelled into demand-enhancing investment and consumption in other industries, including labour intensive services. ...
... Not only have the constraints of globalization -in terms of tax-funding sizable public sectors -proven less unequivocal than originally foreseen, but also, contrary to predictions, the Nordic countries have managed to steer a course that has fostered solid job growth in both private and public sector services over time while, at the same time, broadening the tax base, curbing the rise in taxation levels and maintaining international competitiveness. Moreover, as pointed out in Chapter 2, Sweden and Finland especially underwent information and communication technologies (ICT)-driven reindustrialization in the late 1990s and early 2000s, accompanied by rising exports of advanced producer and business services with high wages and value added (Erixon, 2011;Vartiainen, 2011). Similar developments of advanced services have been seen in Denmark, for instance, related to windmill technology (Goul Andersen, 2011), and in Norway related to e.g. the maritime sector and sub-sea extraction of natural resources. ...
