When and Why Did Sweden Lag Behind? 'Eurosclerosis' Revisited

The conventional view is that Sweden transformed its economy and institutions more slowly than other countries after the structural crisis of the late 1970s, and this is held as an explanation for Sweden’s poor economic growth thereafter. This paper questions that view in several aspects. First, it points out that Sweden has performed comparatively well since the end of the EMS crisis. Second, Swedish and European economic growth is put in a perspective of convergence over the whole twentieth century. Third, the paper highlights cases where Swedish transformation of industry and institutions were swifter than in other Western European countries. Fourth, it suggests that the Solow Productivity Paradox gives a key to an explanation that comprises both the slow-down 1975-93, and the recovery of growth since 1994. Fifth, the paper discusses that explanation in the framework of a shift-share analysis of structural change and productivity.