Does The Welfare State Damage Economic Growth?
The Importance Of A High Profile Swedish Controversy

There is a growing consensus among policy-makers and some economists that the welfare state is bad for economic growth. One of the most influential bodies to argue for this was the Lindbeck Commission, many of the members of which are also on the Nobel Prize Committee on Economics, part of the Swedish Academy of Science.

In 1993, the Commission prepared a wide-ranging analysis of the options for the future of the Swedish economy. Many of the report’s recommendations on reform of the welfare state have subsequently been implemented by the Swedish government.

Sweden is an interesting case because it has often been taken as one of the ideal ‘Nordic’ models of the welfare state. If the welfare state is problematic for Sweden, it is likely to be even more problematic for countries such as Italy and the United Kingdom.

But is the Swedish welfare state really a problem? Since the Lindbeck Commission reported, a high profile debate has raged in Sweden, the key positions of which are outlined in the three accompanying media briefings, summaries of articles published in the latest issue of the Economic Journal.

The are two key questions at stake, both of great relevance to the rest of western Europe: first, has Sweden’s recent economic performance been poor relative to that of other economies? Second, how is this related to the welfare state: has the welfare state caused ‘Swedosclerosis’, a particularly virulent form of Eurosclerosis?

ENDS

For Further Information: see attached media briefings or contact RES/ESRC Media Consultant for Economics Romesh Vaitilingam on 0171-878-2919 or mobile 0468-661095.