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Why is Sweden so rich? The Local answers Google’s questions 

Why is Sweden so rich? Why is Sweden so depressing? Why is Sweden called Sweden? In a new series of articles, The Local answers some of the most common questions that appear when you type "Why is Sweden..." into the Google search engine.

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Why is Sweden so rich? Let's find out. Photo: Google screenshot

Sweden is the world’s 16th wealthiest country. Its Gross Domestic Product (GDP) per capita is just below Germany’s in the OECD’s rankings

It’s a country of high-tech capitalism and extensive welfare benefits. The vast majority of enterprises are privately owned.

Daniel Waldenström at the Stockholm Research Institute of Industrial Economics says that Sweden’s economic success is due in large part “to our stable economic and political institutions, which allowed us to focus on producing wealth. That’s in addition to being in Europe, where the economic boom all started”.

So, how rich is Sweden, really? 

GDP is only one way of measuring wealth. It doesn’t tell the whole story. 

By all economic measures, Sweden is a relatively wealthy country, but this doesn’t necessarily trickle down to everyone.

Seven percent of working Swedes have an income below the EU’s at-risk-of-poverty threshold (although this is under the EU average of 10 percent). 

According to Statistics Sweden, 184,000 people were estimated to be in severe material deprivation in Sweden last year, meaning they couldn’t afford vital things like rent, a car, or telephone. This is still lower than nearly all other countries, but doesn’t square with the idea of folkhemmet, a welfare state for the people. Yet it has one of the world’s most extensive welfare systems, funded by government wealth (and debt). 

How did Sweden get so rich? 

Sweden only started to really accumulate wealth as it started to industrialise sometime in the mid-19th century. Before then, it was suffering from a period of relatively slow growth that forced more than one million Swedes to emigrate to the North America before the turn of the century. 

Through luck and well-placed geography, Sweden had the kind of natural resources (iron ore and wood) needed when countries like Britain and Germany industrialised.

“The industrial revolution made the iron in our ground very important,” Waldenström told The Local.  

The last time Sweden took part in a war was 1814. Benefitting from relative peace for more than 200 years, it also profited from exporting its iron and other raw materials to Germany during the Second World War. 

While Sweden struggled to rebuild along with the rest of Europe post-war, compared to the belligerent countries, Swedish industry was not destroyed. 

After the 1930s there was a long era of almost unbroken rule by Social Democratic governments, and according to a 2016 paper by Waldenström, this “paved the way for the emergence of one of the world’s most extensive welfare states”.

Benny Carlson, professor emeritus at the Department of Economic History at Lund University, describes Sweden’s modern-day economy as following “the middle way”.

“On the one hand the deals between well-organised employers and trade unions create fairly peaceful labour market conditions, on the other hand the welfare state guarantees social security and reasonable income equality,” he told The Local. 

Basically, Sweden is wealthy thanks to relative peace, social security, and a bit of luck. 

Member comments

  1. It is this timely distance to catastrophic events that lead to “lagom”. As an international expert who is trying to make a life for a family, it is surprising how little swedes work, to maintain this wealth. I would like to point out, that I am talking about innovation in Technology. This my and my peers experience.

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MONEY

How to avoid falling victim to tax scams in Sweden

Sweden's tax agency, Skatteverket, warns of an increase in scams when it's time for Swedish tax-payers to declare their taxes.

How to avoid falling victim to tax scams in Sweden

Anyone who earned more than 22,208 kronor last year received their tax returns digitally last week, marking the start of tax season.

That also means an expected peak in tax-related scams, Skatteverket warns.

Most of the scams are so-called phishing scams, meaning attempts to steal the victims’ personal information. Fraudsters may for example email a person, pretending to represent Skatteverket, and ask them for, among other things, their banking details.

“We’re seeing these in all channels. They use fake emails, SMS, letters and in some cases even phone calls. It is particularly common in tax declaration times – just when we’re about to send out the tax returns, the e-service opens and it’s possible to declare – but above all when it’s time for tax rebates,” Jan Janowski, a Skatteverket expert, told Swedish news agency TT.

A scam email might for example state that you’re entitled to a tax rebate and that you should click a link to receive it. Don’t click any links, open any attachments or reply to the message. Skatteverket advises that you immediately delete the email or text message.

Another common scam is that you receive a text message claiming to be from Skatteverket, telling you that you owe them money and you need to log in to calculate the amount. The website you’re urged to log in via does not belong to Skatteverket. Don’t click the link.

The agency stresses that it never asks people for their banking details. The exception is that you may be asked for your bank account information if you log into Skatteverket’s website to declare your taxes, but that always first requires you to log into the site.

To receive your tax rebate, you need to inform Skatteverket of your bank account number. You do this not by clicking a link in an email or SMS, but by logging into their website using a digital ID, for example BankID, and submitting your details. Only do this on your own initiative. If someone calls you and asks you to log in with your BankID during the phone call, don’t do it. That’s another common scam.

Skatteverket will also never call you to ask for your bank account or credit card number.

It will be possible to declare your taxes from March 19th. You’ll receive any tax rebate you’re owed by mid-April or early June, depending on when you submit your tax return. These are the dates when fraudsters are likely to attempt the most scams.

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