Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 110: Resilience through Restructuring: Swedish Policy-Making Style and the Consensus on Liberalizations 1980–2000

Andreas Bergh () and Gissur Erlingsson ()
Additional contact information
Andreas Bergh: Ratio, Postal: P.O. Box 5095, SE-102 42 Stockholm, Sweden
Gissur Erlingsson: Ratio, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden

Abstract: In 1980, Sweden was a highly regulated economy with several state monopolies and low levels of economic freedom. Less than 20 years later, liberal reforms have turned Sweden into one of the worlds most open economies with a remarkable increase in economic freedom. While taxes and expenditure shares of GDP remain high, there has been a profound restructuring of Sweden’s economy in the 1980s and 1990s. Furthermore, the degree of political consensus is striking, both regarding the policies that characterized Sweden up to 1980, as well as the subsequent liberalizations. Since established theories have difficulties explaining institutional change in heavily institutionalized settings, we seek to understand how the Swedish style of policy-making produced this surprising political consensus on liberal reforms. Building on previous research, we underscore the importance of three complementary factors: (i) Policy-making in Sweden has always been influenced by, and intimately connected to, social science. (ii) Government commissions have functioned as ‘early warning systems’, pointing out future challenges and creating a common way to perceive problems. (iii) As a consequence from social science influence and the role of public investigations, political consensus has evolved as a specific feature of Swedish style of policy-making. The approach to policy-making has been rationalistic, technocratic and pragmatic. Thus, the political consensus in Sweden on substantial liberalizations is no more surprising than the political consensus on the development of the welfare state.

Keywords: Sweden; Welfare state; institutional change; globalization; policy-making; policy-style

JEL-codes: H10; H11; H83

31 pages, December 8, 2006

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