Economy of Sweden
The economy of Sweden is a developed export-oriented economy aided by timber, hydropower, and iron ore. These constitute the resource base of an economy oriented toward foreign trade. The main industries include motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel. Traditionally a modern agricultural economy that employed over half the domestic workforce, today Sweden further develops engineering, mine, steel, and pulp industries that are competitive internationally, as evidenced by companies like Ericsson, ASEA/ABB, SKF, Alfa Laval, AGA, and Dyno Nobel.
Sweden is a competitive mixed economy featuring a generous universal welfare state financed through relatively high income taxes that ensures that income is distributed across the entire society, a model sometimes called the Nordic model. Approximately 90% of all resources and companies are privately owned, with a minority of 5% owned by the state and another 5% operating as either consumer or producer cooperatives.
Because Sweden as a neutral country did not actively participate in World War II, it did not have to rebuild its economic base, banking system, and country as a whole, as did many other European countries. Sweden has achieved a high standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. Sweden has the second highest total tax revenue behind Denmark, as a share of the country's income. As of 2012, total tax revenue was 44.2% of GDP, down from 48.3% in 2006.
The National Institute of Economic research predicts GDP growth of 1.8%, 3.1% and 3.4% in 2014, 2015 and 2016 respectively. A comparison of upcoming economic growth rates of EU countries revealed that the Baltic states, Poland, and Slovakia are the only countries that are expected to keep comparable or higher growth rates.
Sweden is an export-oriented mixed economy featuring a modern distribution system, excellent internal and external communications, and a skilled labour-force. Timber, hydropower and iron ore constitute the resource base of an economy heavily oriented toward foreign trade. Sweden's engineering sector accounts for 50% of output and exports. Telecommunications, the automotive industry and the pharmaceutical industries are also of great importance. Agriculture accounts for 2 percent of GDP and employment.
The 20 largest Sweden-registered companies by turnover in 2013 were Volvo, Ericsson, Vattenfall, Skanska, Hennes&Mauritz, Electrolux, Volvo Personvagnar, Preem, TeliaSonera, Sandvik, ICA , Atlas Copco, Nordea, Svenska Cellulosa Aktiebolaget, Scania, Securitas, Nordstjernan, SKF, ABB Norden Holding and Sony Mobile Communications AB, Sweden's industry is overwhelmingly in private control; unlike some other industrialized Western countries, such as Austria, Italy or Finland, state owned enterprises were always of minor importance. One important exception to this rule is LKAB, which is a state-owned mining company, mostly active in the northern part of the country.
Sweden is a world leader in privatized pensions and pension funding problems are small compared to many other Western European countries. Swedish labour market has become more flexible, but it still has some widely acknowledged problems. The typical worker receives only 40% of his income after the tax wedge. The slowly declining overall taxation, 51.1% of GDP in 2007, is still nearly double of that in the United States or Ireland. Civil servants amount to a third of Swedish workforce, multiple times the proportion in many other countries.
World Economic Forum 2012-2013 competitiveness index ranks Sweden 4th most competitive. The Index of Economic Freedom 2012 ranks Sweden the 21st most free out of 179 countries, or 10th out of 43 European countries. Sweden ranked 9th in the IMD Competitiveness Yearbook 2008 , scoring high in private sector efficiency.
Since the mid-1990s the export sector has been booming, acting as the main engine for economic growth. Swedish exports also have proven to be surprisingly robust. A marked shift in the structure of the exports, where services, the IT industry, and telecommunications have taken over from traditional industries such as steel, paper and pulp, has made the Swedish export sector less vulnerable to international fluctuations. However, at the same time the Swedish industry has received less money for its exports while the import prices have gone up. During the period 1995-2003 the export prices were reduced by 4% at the same time as the import prices climbed by 11%. The net effect is that the Swedish terms-of-trade fell 13%.
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