Edward Hugh has already stolen my thunder, but as promised yesterday here is some more about the so-called 'Nordic model'. The Nordic countries are ranked among the most competitive countries in the world, have high living standards, and are home to quite a few successful multinationals. Yet they also have some of the highest rates of taxation and public spending, and lowest levels of inequality, in the world. How do they do it?
That question has been posed many times in recent years. The best recent work I am aware of on the Nordic model was published by the European Policy Centre as a working paper in September: The Nordic model: A recipe for European success? (PDF). Edited by Carlos Buhigas Schubert and Hans Martens, it includes quite a wide range of contributors and is over a hundred pages long. In their introduction, Schubert and Martens provide a good overview of what makes the Nordic model distinct - and successful. But they also point out that what may look to outsiders like a coherent approach contains significant differences:
When one looks at the situation in more detail, the Nordic model naturally divides into many sub-models. So although it has some clear overall characteristics, there are, of course, also differences. Norway is an oil economy. Sweden is still a manufacturing society to a significant extent. Finland is dominated by one company, Nokia, and is still suffering from losing its biggest trading partner – the Soviet Union. Denmark has a small, flexible economy which relies on pockets of high-tech and generally small and medium-sized businesses.
Can the Nordic model be replicated? Perhaps, but not easily. The authors also note that the Nordic countries have small populations, are very homogenous, "with a preference for equality, inclusion and collective action". Most also have a long history of political dominance by social democratic parties. Those cultural and political characteristics, and the institutional complementarities that go with the Nordic economic and social model, will make it harder to export key elements elsewhere, particularly in anglo-saxon countries.
Though recommended reading, I would add the caveat that you won't find much criticism within the EPC document. It was "produced with the generous support of the Nordic Council of Ministers", after all.
Also worth a look:
* The Nordic model - a model for Lisbon? (PDF), a 16 page paper prepared by Danish, Finnish and Swedish Social Democrat MEPs for a Socialist Goup discussion, May 2005.
* A new book by Olli Kangas and Joakim Palme, Social Policy and Economic Development in the Nordic Countries, Palgrave, July 2005 (though it is more about social policy than economic).
* The January 1999 Economist survey of the Nordic countries, Happy family? (Unfortunately, most is only available to subscribers only).
* A 1996 conference paper by Lars Mjøset, Nordic economic policies in the 1980s and 1990s (PDF).
* Papers given at a 2001 seminar on the Nordic alternative and the related Nordic model website.