By the early '90s, Sweden's once vaunted GDP per capita had fallen behind Italy's and the U.K.'s. Our report indicates that performance was strongly correlated with competitive intensity. Where competition thrived, Swedish industry was world class.
Since 1970, Sweden's per capita GDP has fallen behind the major European countries and the U.S. as well. While manufacturing has kept pace with international competition, market and nonmarket services, which employ four times as many workers as manufacturing, have dragged the entire economy down.
The purpose of the study is to identify productivity and performance differences at the industry level between Sweden and selected major economies across the world as well as the causes for these differences. This study uses a case study approach to identify the barriers to higher productivity and employment in key sectors.
In 1980, Sweden's auto plants were as productive as those in the U.S. and Japan. By 1993, they were 20 to 30 percent less productive. Japan's entry into the luxury market provided stiff competition to Sweden, which was slow to adopt global best practices such as lean production.
Sweden's computer industry thrived thanks to low government regulation and high competitive intensity. Sweden created more jobs in software and distribution - and lost more jobs in hardware - than any of the compared countries.
Product market regulation and low competitive intensity resulted in high costs and low productivity in the construction sector. Subsidies and tax deductions were the only reason that employment levels stayed high.
Sweden has been slow to deregulate the TV industry. The resulting lag in industry development, along with high labor costs, were the main reasons Sweden created fewer jobs in the film/TV/video industry than the U.S. did.
High labor costs have stifled job creation in general merchandise retailing, where Sweden has been slower than the U.S. in developing innovative and productive formats.
Regulatory changes have bred new entrants to challenge the established retail banks. Heightened competitive intensity will likely bring higher productivity and employment performance in the years ahead.
By changing the economic environment, policymakers can spur changes in the performance of corporations. Improved product market competition represents the best opportunity for improved economic performance.
Removing Barriers to Growth and Employment in France and Germany The main barriers to growth have been product market regulations that stifled innovation and high minimum wages that discouraged hiring. Read more
Boosting Dutch Economic Performance Despite impressive growth in employment after 1985, the Netherlands still trailed many Western European economies in terms of GDP per capita. Read more
