The Nordic Economic Model

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Case Details:

Case Code : ECON026
Case Length : 19 Pages
Period : 1950-2007
Pub. Date : 2008
Teaching Note :Not Available
Organization : --
Industry : -
Countries : Norway, Denmark, Finland, Iceland, and Sweden

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

The Nordic economic model was characterized by high taxes, a large public sector, and moderate market regulation. These countries were welfare states, with healthcare, education, and other social services provided free for all citizens.

Negating the commonly held belief that high tax rates curtailed growth, the Nordic countries showed growth despite high taxes mainly because they were able to achieve efficiency and bring about innovation in the public sector. Besides, with the Nordic economies being only slightly less liberal than Anglo-Saxon economies such as the UK and Ireland, foreign investment was high in these countries.

Also, these economies had benefited from the absence of corruption and red tape.

However, there were challenges. With globalization, immigration, and aging populations, there was increasing pressure on the welfare model.

The Nordic countries had responded by introducing reforms in pension and healthcare in the early 2000s.

As of 2007, though the Nordic economies were among the best performers globally, reforms to sustain growth and support government expenditure were still being conceptualized and implemented.

Background Note

Though 'Nordic countries' or 'Nordic region' traditionally referred to all the countries of Northern Europe, with the establishment of the Nordic Council in the 1950s, the term came to refer to the five countries of Denmark, Finland, Iceland, Norway, and Sweden, and their associated territories - the Faroe Islands, Greenland, and Åland7 (Refer Exhibit I for a map of the Nordic region, Exhibit II to know more about the countries, and Exhibit III for some statistics)...

Excerpts >>

7] The Faroe or Faeroe Islands, located between the Norwegian Sea and the North Atlantic Ocean, have been an autonomous region of the Kingdom of Denmark since 1948. Åland, an archipelago in the Baltic Sea, is a Swedish-speaking autonomous region of Finland. Greenland, located between the Arctic and Atlantic Oceans, is a self-governing Danish province.


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