"Challenges and competitiveness for Sweden"

Mr. Nuder opened with an interesting note on the choice of venue for the event, explaining that the building had housed the US mission to Sweden during World War II and that it was here that the American agents enlisted the support of Raoul Wallenberg in rescuing Jews from Nazi-controlled Hungary.

The focus of Mr. Nuder's ensuing talk was on the challenges Sweden faces in building and maintaining its competitiveness in international trade.

Three revolutions

He began by outlining what he referred to as the three revolutions of recent decades that have set the stage for international commerce today.  The first involves the growth of democracy around the world.  In 1989, there were 69 democracies in the world, while today there are 120.  For Mr. Nuder, whose father was a refugee from the Soviet invasion of Estonia, the Baltic States provide a good example of this development.

The second revolution has been technological development.  Today, with smartphones and the internet, we are more connected than ever.  National and regional boundaries have become blurred and people have an increasing awareness of and access to news and other information.

The third revolution that Mr. Nuder mentioned was the emergence of the market economy as the dominant economic model and the failure of planned economies to deliver on their promises.  As a result, some 600 million people in China have been lifted out of poverty, although, at the same time, it could be argued that this sowed the seeds of the financial crisis.  As Mr. Nuder explained, when Deng Ziaoping introduced market economics to China, he changed the lives of millions for the better but also removed many of the safety nets previously provided by the communist state.  As Chinese people grew wealther, they began to save, to effect that money was exported to the US and a global imbalance gained a foothold.

Current situation in the US

According to Mr. Nuder we are now witnessing the "post-financial crisis" and he is deeply concerned about the political and economic situation in the US.  The overlap between the Republicans and the Democrats regarding economic issues is gone and the parties now appear to be diametrically opposed.  To address the current global imbalance, the US needs to regain its strength as an exporter of goods and services while it would be necessary for China needs to do the opposite.  For China, this would be relatively easy, since it remains a politically communist state with the power of decision firmly in the hands of its leaders.  For the US, the task is much more difficult because the country is a democracy in which only the President has a national mandate.  Other representatives have a regional mandate of one kind or another and reconciling the differences in such a large and diverse country is difficult.

Europe - a sad story

Mr. Nuder's view of the situation in Europe seemed no more encouraging.  Discrepancies between the member countries make the situation complicated and numerous macroeconomic features paint a worrying picture.  In assessing the economic prospects of Europe as a whole and of its members, Mr. Nuder considers three principlal criteria: GDP composition, national economic discipline and household debt.  On the first of these he gave Spain as an example - is the country truly part of the global economy when its exports to Portugal outstrip its exprts to all of Latin America?  Not surprisingly, perhaps, Mr. Nuder said the situation is worse the further south you go in Europe, with the Greek situation being particularly difficult to resolve. He foresees some form of controlled default for Greece and called on the many lawyers in the audience to consider the constitutional aspects involved.

Where is Sweden?

Since the mid-1990s, Sweden has outperformed the EU, the OECD and the Euro zone on aspects including unemployment, inflation, etc.   What gives the country its competitive advantage?

Mr. Nuder gave eight criteria that he feels play a particularly important role in Sweden's ability to hold its own so strongly in the international context, despite it being such a relatively small country.

1. Free traders - Sweden has a long trading tradition and few countries of its size can boast as many internationally recognizable brands.
2. A tight rein on public expenditure, which has been maintained despite the very strong arguments of lobbyists from all sides.
3. Strong tradition of research and development, and education, with investment in these areas outstripping that in many other countries.
4. Gender equality - one of the highest female participantion levels in the world's most generous parental leave system.  Sweden has shown that a national welfare system can be designed competitively.
5. Early to introduce a green dimension.
6. Internal conflicts between labor and capital are resolved in a mature manner, which is critical for companies' competitiveness.
7. A fairly good relationship between the electorate and its representatives - trust in institutions is important for competitiveness and in combatting corruption.
8. Last, but not least, the free trade "gene" is strong in Swedes, even among blue collar workers and Swedes place the protection of the individual above protection of jobs.  Social bridges are developed between old and new jobs and a culture of lifelong learning is nurtured.

In conclusion, Mr. Nuder suggested that if there's one place to be in the current highly turbulent situation, that place is Sweden.

Written exclusively for AmCham by Bryan Mosey, Battison & Partners
Photos: Alexander Farnsworth