Economic Geography of Sweden Brett Christophers 15 October
Economic Geography of Sweden Brett Christophers 15 October 2012
• Overview of the Swedish economy • Historical development • Composition of the economy today • Geographies of the economy
A productive, wealthy country GDP per capita 2009 (current US$) – top 20 Source: World Bank
Built on a unique, largely-cooperative, tripartite system • Strong, interventionist government • Strong corporate sector – Mainly in private hands • Strong labour unions – c. 80% of the workforce
Where individuals pay relatively high taxes Average income tax 2004 (on $40, 000 income) Average income tax & marginal tax rate 2004 (on $150, 000 income) Source: OECD
. . . but receive very high benefits Source: OECD
. . . including low levels of inequality Source: Wilkinson and Pickett (2009)
Exploiting a strong domestic resource base • Coniferous forests (spruce, pine and other softwoods) • Hydropower (supplying 15% of the country's energy supply) • Iron ore • Uranium and other minerals
Benefitting from high R&D expenditure R&D spend as % of GDP (2007) – top 20 Source: World Bank
And highly integrated into the global economy – KOF Index of Globalization (economic, social, political) • An increasingly exportoriented economy – Exports = 53% of GDP in 2008 – Cf. 41% Euro area average Swedish exports as % of GDP 60 50 40 30 20 10 0 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 • Joined European Union in 1995 (though not Euro) • Ranked as world’s 5 th most globalized country in 2010 Source: World Bank
• Overview of the Swedish economy • Historical development • Composition of the economy today • Geographies of the economy
Early and midnineteenth century 1880 -WWI WWII 1950 -1973 -1992 today
Agriculture to industry • First half of 19 th century – >90% of population rural – c. 80% employed in agriculture (including some exports, eg. of oats to the UK); most of remainder in iron, timber, crafts • Massive changes from 1850 s / 60 s – Urbanization – Modernization (banking system, railways and canal construction, etc) – Industrialization: production of basic manufactured goods
“ 2 nd industrial revolution” • Profound structural change in Sweden’s industrial economy • Based on scientific knowledge and complex engineering – Electrical motor and combustion engine became key • This period saw formation of many major Swedish companies, eg: – – – AGA Alfa Laval ASEA Ericsson SKF
The inter-war years • Another phase of structural adjustment in Swedish industry • Towards the production of consumer goods – But using many of the same innovations • And stimulated by increased availability of capital and labour – Lower mortality and emigration • Another raft of high-profile Swedish companies date to this era – – – Electrolux IKEA SAAB Tetra Pak Volvo
1950 -1973 • Post-war boom: stronger growth (3% p. a. , real) than in most other developed countries • Had escaped relatively unscathed from war • Growth in production driven by: – High levels of well-targeted public investment – Increasing demand from overseas – leading to rapid expansion of export sector • And tax policy encouraged reinvestment in production rather than distribution of profits to shareholders
1973 -1992 • A period of much slower growth: 1. 1% p. a. • Increased global competition • Under-investment by the private sector – low competitive intensity, low productivity • Unproductive state subsidization – Of unprofitable businesses (eg. shipbuilding) – And of regions affected by ultimate closure of such businesses • Ending in disaster – Bursting of real estate bubble – Banking crisis and state rescue – Recession
1992 -today • Economic recovery and resumption of strong growth • Cuts in public spending – Budget deficit had reached c. 15% of GDP • Regulatory reform leading to greater competitive intensity and productivity gains – Lowering of trade barriers (eg. entry into EU) – Stricter competition law – Deregulation of monetary policy • “New economy” success as global demand increased – Building on earlier (1980 s) development of telecoms, biotech, pharma sectors
• Overview of the Swedish economy • Historical development • Composition of the economy today • Geographies of the economy
Primarily – and increasingly – a services-oriented economy Source: OECD
. . . with the public sector still accounting for a large share of services provision Source: OECD
Key commercial sectors Manufacturing Services n Metals and metal products n n Cars and trucks n Industrial and electrical machinery and equipment n n Pulp and paper n n Chemicals n Wholesale and retail Transportation, storage, communications Finance and insurance Business services (consultancy, R&D, data management)
. . . of which, key export sectors Value of exports by type (2009) Source: Statistics Sweden
Example 1: Cars and trucks • Particular strength in heavy vehicles (Volvo Trucks and Scania) • Historically accounts for c. 15% of Swedish exports • Substantial productivity gains since early 1990 s • But is the sector still “Swedish”? – Scania majority-owned in Germany – Volvo Cars in China – Saab owned in Netherlands (and now in receivership) – Only Volvo Trucks is Swedish-held
Example 2: Retail • High success in international expansion (IKEA, H&M) • Grocery retail remains highly concentrated Retail sector in different countries (2003) – “Big Three” (ICA, Coop, Axfood) control >70% of market • But retail sector remains small by international standards – Restrictive zoning laws – High relative labour costs (esp. evenings and weekend) – see IKEA, H&M formats – Low consumer demand for highvalue/labour-intensive retail concepts Source: Mc. Kinsey & Co.
Example 3: Banking • Strong productivity gains since financial crisis of early 1990 s • Based on profound organisational and technological change – Rapid adoption of Internet banking and other technologies – Closure of branch networks • Sector remains highly concentrated – Big Four (SEB, Nordea, FSB, Handelsbanken) controlled 73% of total deposit and lending volumes in 2004 • Significant internationalization since the early 1990 s – Inwards (eg Danske Bank, Dn. B) – before then, foreign banks denied right of establishment – And outwards (especially in the Baltic region)
• Overview of the Swedish economy • Historical development • Composition of the economy today • Geographies of the economy
External geographies: trade links Major trading partner shares of Swedish exports and imports (2009) 100% 80% 3, 1% 7, 3% 3, 8% 4, 2% China 17, 9% N America 10, 2% 60% 24, 4% 23, 2% Germany 40% Scandinavia 20% 38, 3% 41, 8% Other Europe 0% Exports Source: Statistics Sweden Imports
Internal geographies: the regions we are dealing with (21 län)
The economy, like the population, is highly clustered Source: OECD
. . . in three key regions Source: OECD
Economic clustering increasing, not decreasing More and more of the nation’s economic output is generated in Stockholm Source: OECD
Different sectors dominate in the three main economic centres Indices of sector specialisation in key regions (2007) Source: OECD / Statistics Sweden
What about Uppsala? Proportion of employees in ”non-market” jobs (2007) Source: Statistics Sweden
But despite all the clustering, productivity differentials between regions remain low Source: OECD
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