Swedish Lessons for Post-Socialist Countries

Sweden experienced exceptionally fast economic growth during the century-long period 1870-1970. This illustrates that a decentralized market economy, highly open to international transactions, may be quite conductive to sustained productivity growth if the government fulfills its "classical" functions well. The subsequent period of centralization and large government, 1970-1985/90, was characterized by considerable social achievements. But that rate of economic growth was quite low as compared to other developed countries. The last period discussed in the paper, after about 1985/90, may be characterized as a "period of transition" away from the centralized and highly interventionistic system of the 1970s and 1980s. A number of transition problems are discussed in the paper.