The Turnaround of the Swedish Economy: Lessons from Large Business Sector Reforms

34 Pages Posted: 14 May 2019

See all articles by Fredrik Heyman

Fredrik Heyman

Research Institute of Industrial Economics (IFN)

Pehr-Johan Norbäck

Research Institute of Industrial Economics (IFN)

Lars Persson

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Date Written: 2019

Abstract

How can a country improve the productivity growth in its business sector and reach its growth potential? Sweden during the 1970–2010 period can serve as an example to help other countries understand how to efficiently reform a business sector. In the 1990s, Sweden implemented a reform package that ignited a successful reorganization of a business sector that had faltered for decades. To understand the economic forces behind this process, we first survey the industrial restructuring literature and then examine the reform package using Swedish matched plant-firm-worker data. The removal of barriers to growth for new and productive firms and increased rewards for investment in human capital were crucial to the success of Sweden’s reforms. We also discuss how the reform experience from a developed country such as Sweden can be useful for developing countries that are in the process of transforming their business sectors. We also discuss evidence from developing countries that have undergone similar micro-based business sector reform programs. Our findings suggest that policymakers have much to learn from country case studies and that the Swedish experience can be a valuable case study for developing countries that are attempting to promote growth by developing their business sectors.

Keywords: regulations, allocative efficiency, productivity, job dynamics, matched employer-employee data, industrial structure and structural change

JEL Classification: D220, E230, J210, J230, K230, L110, L160, L510

Suggested Citation

Heyman, Fredrik and Norbäck, Pehr-Johan and Persson, Lars, The Turnaround of the Swedish Economy: Lessons from Large Business Sector Reforms (2019). CESifo Working Paper No. 7627, Available at SSRN: https://ssrn.com/abstract=3387663

Fredrik Heyman (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://https://www.ifn.se/eng/people/research-faculty/fredrikh_1

Pehr-Johan Norbäck

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Lars Persson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
52
Abstract Views
375
rank
456,996
PlumX Metrics