The Challenge to European Industrial Policy: Impacts of Redirected Military Spending by Bernard Udis

Author:Bernard Udis [Udis, Bernard]
Language: eng
Format: epub
Tags: International Relations, Political Science, General
ISBN: 9781000315219
Google: s6yhDwAAQBAJ
Goodreads: 49787911
Publisher: Routledge
Published: 2019-07-09T00:00:00+00:00

5

Sweden

Swedish Industrial Policy11

Sweden maintains a market economy and government ownership in industry has traditionally been small. However, industrial expansion has always been the objective of general economic policy. Apparently this policy was successful in encouraging the very rapid industrial growth which occurred during the 1950s and 1960s. Government programs in the housing, communications, defense, and energy sectors contributed to this development.

The 1950s and 1960s were characterized by a significant structural transformation in the Swedish economy, with labor migrating from agriculture and forestry to industry and the service sector. The healthy demand for Swedish exports helped to ease the transition. An important element in the government's economic strategy was the use of general economic policy and labor market policies to aid the transfer of resources from less competitive sectors to more viable ones. The structural transformation was speeded up by the system of centralized wage agreements. Swedish dependence on foreign trade also expanded through a sharp growth of dependence on imported oil. At the same time, its industry became more internationally involved through increased direct investment abroad.

The positive overall economic development was, however, accompanied by a large decline in population in the northern parts of the country. This led to the introduction of a comprehensive regional policy in 1965 which was principally aimed at industry. It has played an important role in changing the industrial structure particularly in the northern parts of the country.

In the late 1960s, changes in the world economy together with other factors, influenced the competitive posture of Swedish industry. The concept of industrial policy which included a more active government role, was adopted and in 1969 the Ministry of Industry was established.

The 1973- 1974 oil price increases, the subsequent prolonged worldwide recession, and growing competition from newly-industrializing countries, all had a strong effect on Swedish industry and on the direction of industrial policy. Certain traditionally important industries such as shipbuilding, iron and steel, and iron ore, were seriously hurt and support to such ailing industries became an important element of industrial policy. Aid to displaced workers and the affected communities also was viewed as necessary. In the late 1970s, government ownership of industry increased significantly as a result of the acquistion of companies in distress.

Counter to the experience in most other industrial states, industrial production in Sweden decreased slightly during the 1975-1982 period. Swedish industry suffered significant market share losses, capacity utilization and profitability dropped and the level of investment decreased.

Among the factors which contributed to this poor performance were the following:

rapid cost increases in the mid-1970s;

generally reduced world demand for investment goods;

negative developments in certain sectors where Sweden had held a traditionally strong position;

increased competition from newly industrializing countries; and

inability to benefit from developments in new markets.

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