Transcript A globalised Swedish economy

Development forces and adaptive capacity
A globalised Swedish economy
Pontus Braunerhjelm
(FSF, KTH)
Camilo von Greiff
Helena Svaleryd (IFN)
Final report from
the Globalisation
Council’s Secreteriat
What changes can we expect?
• New industrial nations are increasingly
integrated
• Increased competition among older
industrial nations
• Large potential boost to prosperity due to
specialisation and new markets
• Knowledge an increasingly important
component for continued growth and for
maintaining or strengthening prosperity
The starting point for Sweden
• Stable macroeconomic platform
• Acceptance of internationalisation
• Historically good development
forces and adaptive capacity
• Dynamics on the micro-level?
Reforms are necessary to ease
transitional stages and promote
developmental forces
• Sweden as a knowledge nation
• The Swedish labour market
• The private sector’s capacity for
renewal
• Taxes and social insurance
Sweden as a knowledge nation
Education – adaptation, decreased
income differences, specialisation
•
Consider introducing an obligatory pre-school year.
•
Increase education using English in primary
schools.
•
Enable participation in an international project as
part of the schooling.
•
Raise teachers’ starting salaries and increase the
opportunities for a well-paid career.
Sweden as a knowledge nation
Education – adaptation, decreased
income differences, specialisation
•
Introduce the possibility of fees for higher
education and raise student loan levels
correspondingly, consider deductions for expenses,
more autonomy.
•
Increase government appropriations to R&D.
•
Establish a ”Nobel fund” where universities can
apply for grants to recruit top international
researchers.
The Swedish labour market
Strengthen adaptive capacity through:
•
Improving the safety net for the unemployed by
raising the ceiling for unemployment insurance
and making it obligatory.
•
Reforming the Protection of Employment Act
(LAS) in order to increase adaptive capacity in the
economy and lower the barriers to labour-market
entry.
The Swedish labour market
Strengthen adaptive capacity through:
•
Improving retraining and educational
opportunities during working life by increasing
labour market training programmes and making
them more flexible.
•
Allow pension savings to be used for education,
increase the opportunities for deductions for
individual savings.
•
Raise the retirement age and index it to the
average life length.
•
Use severance pay programmes funded by
labour market coalitions to a greater extent.
The private sector’s capacity for
renewal
Innovation drives growth and
developmental force
•
Strengthen competition, increase the
authority of the Swedish Competition
Authority, forbid public actors on markets with
functioning competition, learn from the
deregulation of the 1990s, investigate
deductions for health insurance.
•
Strengthen intellectual property rights,
promote EU patents and reasonable costs for
seeking patents, introduce a venture capital
deduction and broaden the opportunities for
profit-sharing loans.
The private sector’s capacity for
renewal
Innovation drives growth and
developmental force
•
Strengthen the possibilities of obtaining
international marketing support for SMEs
within the framework for current support.
•
Promote the ability of strong clusters to grow
in strong urban and regional areas.
Taxes and social insurance
•
Phase out the austerity tax and lower national
tax levels so that the maximum tax bracket is 50
percent as a first step in order to increase job
supply, attract foreign labour and encourage
education.
•
Lower the tax on capital to 25 percent, tax
options and simplify or phase out the paragraph
3:12 rules.
•
Broaden the tax base to the greatest extent
possible.
•
Clarify the difference between taxes and social
insurance premiums/fees.
Taxes and social insurance
•
Introduce a single VAT rate of 25 percent, return
to the earlier form of property tax but impose
interest charges on capital gains deferments.
•
Appoint a commission of enquiry on taxes and
social insurance.
Stabilisation policies
•
Sweden should now take the third step
towards EMU cooperation and convert to the
euro.
•
The Riksbank’s role as an inflation fighter
must be communicated in a trustworthy way.
•
The Riksbank should consider introducing
new variables for fighting inflation, such as
credit growth.
•
The Riksbank should more clearly explain
how price change sources (the economy’s
supply side or demand side) affect key
interest rates. The decreased persistence of
price changes increases the opportunity for a
more flexible monetary policy.
Stabilisation policies
•
Investigate a merger of the Financial
Supervisory Authority and the Riksbank.
•
Capital requirements increase and inverted
capital requirements are used to reduce
procyclicality in the current system.
•
A larger international coordination of fiscal
measures are motivated due to increased
import leakage
•
A greater fiscal preparedness should be
available in order to put employment growth
measures in place in the short term.