Explaining the Development of Capital Asset Volume in Swedish Local Governments

This paper investigates explanations of variation in the development of capital asset volume between Swedish local governments, 1999–2008. As a pre-study, four cases were performed, generating 7 suggested explanatory factors. Hypotheses were generated by combining the suggested factors with a new political economy framework, containing two general assumptions. A national dataset of Swedish local governments were used in a multiple linear regression analysis. The regression model indicates that four significant explanatory factors explain 42 per cent of the variation.

An increasing capital asset volume could be explained by population growth, a high capital asset volume per capita at the beginning of the period, high solidity at the beginning of the period and an increasing level of tariffs. A decreasing capital asset volume could be explained in the opposite way.

From a new political economy perspective, the major finding is that politicians tend to adjust the service capacity of capital assets to the given population size of the municipality. They tend to use all available resources for their capital investment activities to maintain or improve the services provided by the capital assets, as long as it complies with sustainable economic conditions.