Rebalancing Balanced Growth

Abstract

Abstract This chapter argues that exports were the key driver of Swedish economic growth in the period from 1994 to 2008. In contrast to the German case, however, macroeconomic management and the system of coordinated wage bargaining served to boost domestic demand and to diffuse wage growth and productivity growth from the exposed sector to the sheltered sector. Over this period, the Swedish economy as a whole grew more rapidly than most OECD economies and exports became more diversified, with ICT products and high value-added business services assuming a more important role. We argue further that the Great Recession of 2008 to 2009 precipitated a shift toward a greater reliance of domestic consumption as a growth driver. Expansionary fiscal and especially monetary policy supported this shift, with construction and other sheltered sectors, characterized by lower profit shares than export-oriented manufacturing, becoming prominent actors within the dominant growth coalition.

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