Transcript Economic Geography of Sweden

Economic Geography of Sweden
Brett Christophers
15 October 2012
• Overview of the Swedish economy
• Historical development
• Composition of the economy today
• Geographies of the economy
A productive, wealthy country
GDP per capita 2009 (current US$) – top 20
Source: World Bank
Built on a unique, largely-cooperative,
tripartite system
• Strong, interventionist government
• Strong corporate sector
– Mainly in private hands
• Strong labour unions
– c.80% of the workforce
Where individuals pay relatively high taxes
Average income tax 2004 (on $40,000 income)
Average income tax & marginal tax rate
2004 (on $150,000 income)
Source: OECD
... but receive very high benefits
Source: OECD
... including low levels of inequality
Source: Wilkinson and Pickett (2009)
Exploiting a strong domestic resource
base
• Coniferous forests (spruce, pine and other
softwoods)
• Hydropower (supplying 15% of the country's
energy supply)
• Iron ore
• Uranium and other minerals
Benefitting from high R&D expenditure
R&D spend as % of GDP (2007) – top 20
Source: World Bank
And highly integrated into the global
economy
40
30
20
10
Source: World Bank
2008
2005
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
0
1969
– Exports = 53% of GDP in
2008
– Cf. 41% Euro area average
50
1966
• An increasingly exportoriented economy
60
1963
– KOF Index of Globalization
(economic, social, political)
Swedish exports as % of GDP
1960
• Joined European Union in
1995 (though not Euro)
• Ranked as world’s 5th most
globalized country in 2010
• Overview of the Swedish economy
• Historical development
• Composition of the economy today
• Geographies of the economy
Early and
midnineteenth
century
1880-WWI
WWI WWII
1950-1973
1973-1992
1992today
Agriculture to industry
• First half of 19th century
– >90% of population rural
– c.80% employed in agriculture (including some
exports, eg. of oats to the UK); most of remainder in
iron, timber, crafts
• Massive changes from 1850s / 60s
– Urbanization
– Modernization (banking system, railways and canal
construction, etc)
– Industrialization: production of basic manufactured
goods
“2nd industrial revolution”
• Profound structural change in Sweden’s industrial
economy
• Based on scientific knowledge and complex
engineering
– Electrical motor and combustion engine became key
• This period saw formation of many major Swedish
companies, eg:
–
–
–
–
–
AGA
Alfa Laval
ASEA
Ericsson
SKF
The inter-war years
• Another phase of structural adjustment in Swedish industry
• Towards the production of consumer goods
– But using many of the same innovations
• And stimulated by increased availability of capital and labour
– Lower mortality and emigration
• Another raft of high-profile Swedish companies date to this
era
–
–
–
–
–
Electrolux
IKEA
SAAB
Tetra Pak
Volvo
1950-1973
• Post-war boom: stronger growth (3% p.a., real) than
in most other developed countries
• Had escaped relatively unscathed from war
• Growth in production driven by:
– High levels of well-targeted public investment
– Increasing demand from overseas – leading to rapid
expansion of export sector
• And tax policy encouraged reinvestment in
production rather than distribution of profits to
shareholders
1973-1992
• A period of much slower growth: 1.1% p.a.
• Increased global competition
• Under-investment by the private sector – low
competitive intensity, low productivity
• Unproductive state subsidization
– Of unprofitable businesses (eg. shipbuilding)
– And of regions affected by ultimate closure of such
businesses
• Ending in disaster
– Bursting of real estate bubble
– Banking crisis and state rescue
– Recession
1992-today
• Economic recovery and resumption of strong growth
• Cuts in public spending
– Budget deficit had reached c.15% of GDP
• Regulatory reform leading to greater competitive
intensity and productivity gains
– Lowering of trade barriers (eg. entry into EU)
– Stricter competition law
– Deregulation of monetary policy
• “New economy” success as global demand increased
– Building on earlier (1980s) development of telecoms,
biotech, pharma sectors
• Overview of the Swedish economy
• Historical development
• Composition of the economy today
• Geographies of the economy
Primarily – and increasingly – a
services-oriented economy
Source: OECD
... with the public sector still accounting
for a large share of services provision
Source: OECD
Key commercial sectors
Manufacturing
Services

Metals and metal products

Wholesale and retail

Cars and trucks


Industrial and electrical
machinery and equipment
Transportation, storage,
communications

Finance and insurance

Pulp and paper


Chemicals
Business services
(consultancy, R&D, data
management)
... of which, key export sectors
Value of exports by type (2009)
Source: Statistics Sweden
Example 1: Cars and trucks
• Particular strength in heavy
vehicles (Volvo Trucks and
Scania)
• Historically accounts for c.15%
of Swedish exports
• Substantial productivity gains
since early 1990s
• But is the sector still
“Swedish”?
– Scania majority-owned in
Germany
– Volvo Cars in China
– Saab owned in Netherlands (and
now in receivership)
– Only Volvo Trucks is Swedish-held
Example 2: Retail
• High success in international
expansion (IKEA, H&M)
• Grocery retail remains highly
concentrated
Retail sector in different
countries (2003)
– “Big Three” (ICA, Coop, Axfood)
control >70% of market
• But retail sector remains small
by international standards
– Restrictive zoning laws
– High relative labour costs (esp.
evenings and weekend) – see
IKEA, H&M formats
– Low consumer demand for highvalue/labour-intensive retail
concepts
Source: McKinsey & Co.
Example 3: Banking
• Strong productivity gains since financial crisis of early 1990s
• Based on profound organisational and technological change
– Rapid adoption of Internet banking and other technologies
– Closure of branch networks
• Sector remains highly concentrated
– Big Four (SEB, Nordea, FSB, Handelsbanken) controlled 73% of
total deposit and lending volumes in 2004
• Significant internationalization since the early 1990s
– Inwards (eg Danske Bank, DnB) – before then, foreign banks
denied right of establishment
– And outwards (especially in the Baltic region)
• Overview of the Swedish economy
• Historical development
• Composition of the economy today
• Geographies of the economy
External geographies: trade links
Major trading partner shares of Swedish exports and
imports (2009)
100%
80%
3.1%
7.3%
3.8%
4.2%
China
17.9%
N America
10.2%
60%
24.4%
23.2%
Germany
40%
Scandinavia
20%
38.3%
41.8%
Other Europe
0%
Exports
Source: Statistics Sweden
Imports
Internal geographies: the regions
we are dealing with (21 län)
The economy, like the population,
is highly clustered
Source: OECD
... in three key regions
Source: OECD
Economic clustering increasing, not
decreasing
More and more of the nation’s economic output is generated in
Stockholm
Source: OECD
Different sectors dominate in the
three main economic centres
Indices of sector specialisation in key regions (2007)
Source: OECD / Statistics Sweden
What about Uppsala?
Proportion of employees in ”non-market” jobs (2007)
Source: Statistics Sweden
But despite all the clustering, productivity
differentials between regions remain low
Source: OECD