Conference turris::scandia

276.0. "Sweden - a bridge to Soviet economic reform?" by TLE::SAVAGE (Neil, @Spit Brook) Fri Jul 01 1988 10:42

    According to an article in the Christian Science Monitor by Thomas
    Naylor, Professor of Economics at Duke University, Mikhail Gorbachev
    will be using Sweden as a model in restructuring the Soviet economy. 

    Why Sweden? Here are excerpts from that article that explain why. 

    Sweden has one of the highest living standards in the world, one of the
    lowest unemployement rates, and almost no poverty. In 1987, it had the
    lowest misery index (inflation plus unemployment) in the West. 

    Because it has the highest taxes in the West, one of the largest public
    sectors, the narrowest wage differentials, the most highly unionized
    workforce, and not particularly well-paid corporate executives, Sweden
    is often viewed as a socialist country. Nothing could be further from
    the truth. Ninety-two percent of its industry is privately owned, and
    it has an abnormally large number of successful multinational
    corporations, such as Volvo, Electrolux, and Saab-Scania, which derive
    75 percent of their revenues abroad. 

    Beginning with a 16 percent currency devaluation, Sweden embarked on a
    painful industrial restructuring process in 1982 aimed at reducing
    unemployment and inflation by increasing exports and investment. The
    gross domestic product grew twice as fast between 1983 and 1987 as in
    the 1970s. The rate of inflation declined by four percent. 

    To improve productivity, quality, and capital utilization efficiency,
    Swedish industry has persued an unremitting strategy of innovation and
    investments in research and development rather than more traditional
    investments in plant and equipment. A shift in economic policy and
    government incentives for job retraining and mobility also contributed
    to the rapid recovery of Swedish industry from the cost inflation,
    industrial crises, and anti-business attitudes of the 1907s. 

    A striking change has been the abandonment of "sunset" industry
    subsidies. The shipbuilding industry which employed 28,000 in the
    mid-1970s has been phased out over ten years, leaving no unemployment
    behind. 

    Referring to Sweden's experience with participatory management, Swedish
    Opinion Research Institute Chairman Bo Ekman has said that the real
    transition has taken place on the shopfloors and in offices and
    warehouses: "Without the involvement and support of the individual
    employee, no real change in competitiveness could have taken place." 

    Here are contrasts between the two countries that could present
    stumbling blocks for basing Soviet economic reform on the Swedish
    model: 

    o Sweden has 8.4 million people with a strong base of shared societal
      values; the Soviet Union has 280 people spread over 15 heterogenous
      socialist republics 

    o The Swedish approach has been decentralized, market-oriented; the
      tradition in the Soviet Union has been centralized and inflexible. 

    But here are some of the more salient match ups: 

    o The Soviets have a serious technological gap with the West; Sweden is
      NOT a member of the Consultative Group Coordinating Committee, which
      tries to block the flow of Western technology to the Soviets. 

    o Although highly skilled at basic research, the Soviets have
      difficulty in translating it into consumer goods; converting technology
      into marketable products is a Swedish strong point. 

    o The retraining of Soviet managers and workers reprents a monumental
      challenge to the Soviets; the Swedes have had prodigious success in
      retraining smokestack industry employees and helping them reenter the
      workforce. 

    o As a way of injecting new life into the economy, Soviet law now
      provides new flexibility to some 20,000 business cooperatives including
      restaurants, auto repair shops, and private medical clinics; the Swedes
      have a lot of experience with cooperatives.