The Scandinavian Economic ModelΤο Σκανδιναβικό Οικονομικό ΜοντέλοΧαρίκλεια Βανέσα Τόσκα-Hariclea Vanessa Toska

Α.Μ. 290/12

Οργάνωση & Διοίκηση Επιχειρήσεων, Πανεπιστήμιο Μακεδονίας

Καθηγητής Δ. Μιχαήλ

DenmarkNorwaySwedenFinland

The admirable Scandinavian Model“Not about ideology but practices”

Scandinavian Economic Crisis

Financial Crisis 1980s-1990s

Social Expenses down:

•from 67% of GDP (1993)

•To 49% of GDP (2013)

•Lower social debt than France and soon than UK’s too

SWEDEN

Taxing Reforms

•Decrease in higher tax rate since 1983 up to 27% (57%)

•Discontinuation of taxes on wills and inherited property

•No housing taxation

•No taxations on donations

•Decrease in corporate tax rate from to 26.3% to 22% (2013)-Lower than in the U.S.

SWEDEN

Characteristics•Determined to show economic surplus during the financial cycles•Public debt down from 70% (1993) to 37% (2010)•From deficit of 11% to surplus of 0.3%•Small but “open” economy that overcame the economic storm (2007-2008)•Adaptive society, quick social and economic reforms (Ευελιξία αγορών, διαφάνεια και άμεση ανταπόκριση οικονομίας)

SWEDEN

Economic Crisis•1970s-1980s Sweden from 4th richest country in the world falls to 14th place•Average Swed was poorer than the average Brit or Italian•Unsuccessful “Tax and Spend” model•Tax rates had reached almost 100% per income for successful large corporations and entrepreneurs•Innovation and successful brands (Volvo, Ericsson)•However between 1980-1993 public expenses rose to 67% of GDP•The answer was somewhere between capitalism & socialism

SWEDEN

Getting out of the crisis

•Increase up to 2.7% in GDP annually (1993-2010)

•Productivity increase up to 2.1% annually

•Meanwhile other EU countries demonstrated an increase of 1.9% and 1% respectfully in the above measures

•Lower tax rates

•Market Competitiveness

SWEDEN

“Swedenisation”-Economic Competitiveness

• Governments work “under the harsh light of day”, meaning their behavior is controlled and accounted for by citizens

• Official Documents and data concerning the government or organizations are open to the public and easily accessed

• Politicians are humble and are “vilified” if for example they get off their bike to get into a fancy luxurious limousine

• All lobbies & vested interests are rooted out

• Transparency-ΔΙΑΦΑΝΕΙΑ

Competitive Advantageof Scandinavian Model

• Trust-Εμπιστοσύνη

• Equality-Ισότητα

• Corruption root out-Διαφάνεια

The Scandinavian ModelSocial Welfare System

• Higher Education Infrastructure

• Low unemployment-Equality

• Free and strong Health system system for all

SWEDEN

“Swedenisation”

•School Vouchers (Skolpeng), have parents selecting among private or pubic schools to send their children

•Result: Higher education system (Steve Jobs)

•Private for-profit sector competing with Public sector

•Despite large public sector, they do not protect home owned companies when in debt (Ex. The selling of bankrupt Saab and the buy-out of Volvo by Chinese Geely)

SWEDEN

Social Health Care System

•“Infrastructure” reforms that replaced a system based on set benefits by one based on set contributions•Dynamic systems & strategies considering the higher life expectancy rates•Competitiveness of Public & Private Healthcare services & hospitals•A Swed is more willing to pay his/her taxes than a Californian because of free healthcare system to all

Denmark

“Getting to Denmark”•As long as Public Services are efficient it is not a concern who runs them or who provides them•Private Corporations can run Public Hospitals•School “Top-Up” Vouchers have private schools competing with public schools•30% of workforce occupied by the public sector (OECD average 15%)•“Flexicurity” Makes firing easier but the state helps unemployed with support and education•Investment in domestic goods & service exports•The best place to be a woman

Finland

Population: 5 million

•Overcame the crisis with high industrialization

•Investments in innovation, services and renewable energy

•Venture Capital Networks help workforce and unemployed

•Small but flexible society

•“Bipolar” economy: Domestic production that meets needs in consistence with exporting or resources

The “Trojan horse” for the Nordic Model

• The model is not perfect by no means

• Public Debt will not be viable long-term

• High tax rates in comparison to the rest of the EU pushes Scandinavians to move or invest in other countries

• More working hours should be added during the week (Rasmussen)

• Slow Productivity increase

• Immigration Problem (Sweden, Denmark)

WHY should countries look to the Nordics?

• All Western countries and China will hit the wall when it comes to public debt like Sweden in the 1990s

• 7% of the world population lives in Europe but 50% of the worlds public expenses come from there

• Countries should use the Scandinavian example not for its ideology but for its practices

• Their Public sector is famous not for its size but for its effectiveness

• All countries should leave behind classic and outdated methods of the “Right” and “Left” to forge new ideas across the political & economic scene

SOURCES-ΠΗΓΕΣ

• Financial Timeshttp://www.ft.com/cms/s/0/65438762-6fef-11e4-a0c4-

00144feabdc0.html#axzz3TmkbPx7M • Kathimerini.grhttp://www.kathimerini.gr/480457/article/oikonomia/die8nhs-

oikonomia/stis-skandinavikes-xwres-xtizetai-to-montelo-toy-neoy-kapitalismoy

 • http://blogs.helsinki.fi/changingdynamics/files/2009/09/Oinas-

2005.pdf

Hariclea V. ToskaBSc. Business Administration & ManagementUniversity of Macedonia, Greece, March 2015Student No. 290/12

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