The Swedish Economic Model

This paper describes the remarkable success of Sweden over the past 15 years. The success has come after decades of sluggish growth, during which Sweden managed to lose its substantial lead in per capita income. This fits to the critique that welfare cost and high taxes reduce growth and endangers competitiveness. Since that however, Sweden engaged in a remarkable strategy of reforming the budget process, increasing the flexibility of the labour market and boosting investment into the future. Incentives are changed in the direction of promoting flexibility and to adapt to changes inferred by globalisation.