V.

Economy

As in most developed nations, services—including communications and transportation, finance, education and health care, and tourism—are Sweden’s most important economic activities as a share of gross domestic product (GDP). An extensive range of services in Sweden are provided by state-owned enterprises, which are funded by one of the highest levels of taxation in Europe. They include health care, housing for the needy, education, and child care for working parents.

Sweden is also an industrial giant. Sweden’s output of manufactured goods is only slightly less than that of Norway, Finland, and Denmark combined. Sweden lacks a wide range of natural resources, but it does have rich deposits of iron ore, abundant waterpower resources, and extensive forest reserves. Through technological innovation and efficient work processes, Sweden has used its resources to become one of the world’s leading manufacturing and exporting nations. Traditional exports include paper and pulp and steel (Iron and Steel Manufacture). In recent decades newer industries, including information technology, biotechnology, and pharmaceuticals, have grown in importance. Industrial diversification has helped stabilize Sweden’s economy by moderating the effects of fluctuations in international demand. Sweden promotes a liberal trade policy and was a founding member of the European Free Trade Association (EFTA, established 1960). In 1995 Sweden became a full member of the European Union (EU), at which time it withdrew from EFTA.

Since the 1930s Sweden has operated a mixed economy (often referred to as the “Swedish model”), a system that has created an unusual degree of economic equality among citizens and a highly developed infrastructure. Although more than 90 percent of Swedish industry is privately owned, the government exerts substantial control over economic life to promote full employment, economic development, and the provision of generous social welfare benefits. Nearly 80 percent of Swedish workers belong to labor unions, one of the world’s highest rates of unionization. Labor-management relations are generally excellent, and strikes are rare. The high level of unionization has created a comparatively high minimum wage, even for low-skill jobs. For many decades the Swedish model has proved remarkably successful, providing Swedes with low unemployment and one of the world’s highest per-capita standards of living.

A severe recession in the early 1990s—the worst to hit Sweden since the Great Depression of the 1930s—raised concerns about Sweden’s ability to maintain its mixed economy. Both the budget deficit and unemployment soared. The Swedish government quickly responded with austerity measures that included tax reforms, a reduction in civil service employment, cuts in some social-welfare programs, and the partial privatization of some state-owned enterprises (particularly in postal services, telecommunications, and railroad transportation). The moves, which resulted in a modest reduction in the public sector, helped restore confidence in Sweden’s economy and promoted an economic recovery that only slowed with the global economic downturn of 2001. The episode refocused Swedish attention on economic growth and marked the emergence of a broad consensus underlining Sweden’s commitment to egalitarian policies while limiting unwise public spending.

A notable feature of Swedish economic life is the cooperative movement. Consumer and producer cooperatives handle a substantial share of all retail trade. Consumer cooperatives were first formed in the 19th century. The largest, the Swedish Cooperative Union, owns supermarkets, department stores, and other retail outlets, and claims about 3 million members. The Federation of Swedish Farmers, to which almost all farmers belong, owns dairies, meat-packing plants, and fertilizer and farm-equipment factories. It oversees most sales of goods such as butter, cheese, milk, eggs, grain, meat, and wool.

A.

Agriculture

Just 7 percent of the land in Sweden is cultivated. Nevertheless, agricultural output is quite high. Scientific farming, including intensive fertilization and mechanization, makes possible good crop yields despite generally poor soils, rugged topography, and a short growing season. Agriculture is intensively developed in the southern lowlands, especially in the plains of Skåne. Most agricultural production is for domestic consumption.

Agriculture dominated Sweden’s economy until the 1930s, but today less than 2 percent of the total work force earns a livelihood by farming. Modern Swedish farms vary in size from large estates to small holdings of a few hectares. In recent years, many small farms have been combined into larger units. After World War II, dairy farming, traditionally an important sector of Swedish agriculture, declined compared to the production of cereal grains and vegetables. The leading farm commodities remain livestock and livestock products, especially dairy products. The major crops are wheat, barley, oats, potatoes, canola, rye, and sugar beets. Sweden is also a leading producer of fur pelts, particularly mink.

B.

Forestry and Fishing

Sweden has the largest timber reserves in western Europe and is its largest producer of timber products (see Forestry). Forest products account for a substantial portion of Sweden’s yearly industrial output and exports. Timber production in 2007 was 77.2 million cubic meters (2.7 billion cubic feet). Most timber is used for lumber and for making pulp and paper. The most productive timber areas are in the lower slopes of Norrland, a region encompassing the northern two-thirds of the country. Swedes use a network of rivers, channels, and chutes to float logs down to the coast on the Gulf of Bothnia, where sawmills and pulp and paper factories are concentrated. The Småland region is also a significant source of timber.

Fish provide an important part of the Swedish diet, and much of the annual catch is consumed locally. In 2007 Sweden’s fish catch totaled 276,800 metric tons. Herring made up about two-thirds of the annual catch. Other fish caught include sprat, cod, and whiting. Göteborg is an important fishing port.

C.

Mining

The mining of iron and copper has been important in Sweden since the Middle Ages. A famously rich copper mine at Falun, in central Sweden, was exploited continuously for 650 years until it was nearly exhausted. Mineral production remains very important for both domestic use and foreign trade. Extensive high-grade iron-ore deposits are located in central and northern Sweden, notably around Kiruna and Malmberget. The country also contains an estimated 15 percent of the world’s uranium reserves, which supply fuel for Sweden’s nuclear power industry.

In 2006 mineral production included 15 million metric tons of iron ore, 268 metric tons of silver, 85,500 tons of copper, and 76,800 tons of lead. Zinc, gold, petroleum, and pyrite also were produced.

D.

Manufacturing

Sweden’s highly skilled work force has used the nation’s mining, timber, and waterpower resources to build a diversified and exceptionally modern industrial base. Metallurgical and engineering industries, followed by the lumber, pulp, and paper industries, have long dominated Sweden’s export-oriented manufacturing sector. Sweden produces goods such as iron and high-grade steel, ball bearings, automobiles, agricultural machinery, airplanes, machine tools and precision gauges, appliances, and telecommunications equipment. The Swedish automobile companies Volvo and Saab are widely respected for their well-engineered products. Sweden is also home to vigorous chemical and pharmaceutical industries.

Other important manufactured goods that have earned Sweden a worldwide reputation include furniture of modern design, glassware, textiles, countless handicraft items, cutlery, and processed foods. Important manufacturing centers include Stockholm, Göteborg, Linköping, Malmö, and Trollhättan.

E.

Energy

Sweden is endowed with significant waterpower resources, and 44 percent of its electricity is produced in hydroelectric facilities. Some 46 percent is generated in nuclear power plants. After the 1986 Chernobyl’ nuclear disaster in the Union of Soviet Socialist Republics (USSR) (see Chernobyl’ Accident), the Swedish government decided to phase out nuclear power plants in the country by the early 21st century. However, Sweden’s deep economic recession in the early 1990s resulted in the postponement of the program, and numerous nuclear power plants remain in operation. Total annual electricity output in 2006 was 138.6 billion kilowatt-hours.

Because of strict environmental regulations, heavy exploitation of available waterpower sources, and the desire to phase out nuclear power, Sweden is working to develop alternative sources of energy, including biofuel, wind, and solar power.

F.

Currency and Banking

The basic monetary unit of Sweden is the krona, or crown, which is divided into 100 öre. The central bank of Sweden is the Sveriges Riksbank, or Bank of Sweden (1668). It issues currency and determines monetary policy in cooperation with government officials. In 2003 Swedish citizens voted down a referendum calling for Sweden’s adoption of the euro, the common currency of the European Union (EU), choosing instead to retain the krona. Sweden has more than 20 commercial banks with many branches, in addition to about 90 savings banks and a few other types of banking and loan organizations. Sweden’s main stock exchange is in Stockholm.

G.

Foreign Trade

Foreign trade is important to Sweden’s heavily export-oriented economy. In 2007 exports earned $168.1 billion and imports cost $150.4 billion. Leading purchasers of Swedish goods are Germany, the United States, the United Kingdom, Norway, Denmark, and Finland. Leading suppliers of goods to Sweden are Germany, the United Kingdom, Denmark, Norway, Netherlands, the United States, and France.

H.

Transportation

Sweden’s transportation facilities are excellent and well developed. Most roads, railways, and canals are concentrated in the southern third of the country. Sweden has about 424,947 km (about 264,050 mi) of roads, of which 14,577 km (9,058 mi) are national roadways. Railroad trackage totals 9,821 km (6,102 mi), much of which is state owned. Inland waterways include the Göta Canal, which connects the east and west coasts of Sweden. Although the canal is important chiefly as a tourist route, it serves some local commerce. Stockholm and Göteborg are the leading seaports. Numerous ferries ply the waters between Sweden and its neighboring countries. In 1999 work was completed on a bridge and tunnel linking Sweden and Denmark. The 16-km (10-mi) link, called the Øresundsbron (Öresund Bridge), connects the Swedish city of Malmö with the Danish city of Copenhagen via an artificial island. The bridge and tunnel opened to traffic in July 2000.

The Scandinavian Airlines System (SAS AB), operated jointly with Denmark and Norway, is the leading carrier in Scandinavia and provides international and domestic service. The principal international airports are at Arlanda (near Stockholm), Landvetter (near Göteborg), and Sturup (near Malmö).

I.

Communications

Swedes are great readers, and nearly all households subscribe to a daily newspaper, making Sweden one of the world’s top consumers of newspapers. Influential dailies include Expressen, Aftonbladet, Dagens Nyheter, and Svenska Dagbladet, all published in Stockholm; Göteborgs-Posten in Göteborg; and Sydsvenska Dagbladet in Malmö.

Until recently, publicly operated radio and television services held a virtual monopoly over Sweden’s airwaves. Commercial television broadcasts began in 1992 and were followed a year later with the first commercial radio broadcasts. The state-owned broadcasters Sveriges Radio and Sveriges Television continue to serve consumers, but today there are a wide variety of commercial broadcasters to choose from. Digital television broadcasts first began in 1999.