Swedish Economic Growth : A Favorable View of Reform

Walter Korpi argues in a previous issue of Challenge (March/April 2000) that Swedish economists' claim that Sweden's growth performance has been inferior to that of other industrialized countries is at odds with the facts. Since Sweden has not grown slowly relative to other countries, there is no basis for the claim that "the Swedish model", characterized by a large public sector and comprehensive redistributive policies, could be growth impeding. Moreover, Korpi maintains that the discussion reveals a lack of objectivity among Swedish academic economists. In this article Magnus Henrekson argues that Korpi is wrong regarding Sweden's relative growth performance. Available data indicate that Sweden was lagging behind during the 1970s and 80s, and this tendency is further strengthened when the time period is extended. Then it is clear that the lagging behind began in the mid 1960s and continued through the mid 1990s. As a corollary, examining the factors behind Sweden's slow growth must be considered an important research issue. Finally, Henrekson maintains that the available evidence, if anything, demonstrates that Walter Korpi is the one who has been lacking in scholarly objectivity