Road to Economic Success for Scandinavian Countries

From prehistoric times we have come to know man’s primary instinct is survival. Basic ingredients necessary for survival are mainly food, clean water and shelter. Man has forever sought out these resources to fulfill his basic needs. It is the nature of the earth that it is unevenly distributed and yet equally blessed. If there is a barren land that lacks vegetation then it has been blessed with black gold; oil and coal. If a land is laden with vegetation then it may lack in something else. It is the uneven distribution of nature’s resources and man’s sequential discovery of them that has led to migration from the beginning of time. It is also one of the causes of the dilemma of “developed nations” versus “developing nations”. This leads us to the main point. Scandinavian countries were once abandoned by their local inhabitants in favor of other countries that were perceived to have better resources, namely the United States. This was mainly because agriculture was the main source of sustenance for people at that point in history and fertile land for agricultural activities was quite scarce in Scandinavian countries at that particular time. As time moved on though, technology improved so the ability to discover and exploit the unique natural resources available to a country improved, hence Scandinavian countries began to flourish economically. The point to be proven is that discovery and efficient exploitation of a country’s unique natural resources can lead to staggering economic success.
A brief example of this is how Norway’s industry today is very oil rich and Sweden’s economy is very export dependent with a range of locally produced products such as home goods and appliances, making both these once poor countries into the world’s leading economic powers today. Before delving into any other matter a brief look must be taken at the economic history of Scandinavian countries.
History of Scandinavia:
The relevant portion of Scandinavian history starts for us from the mass emigration of the Scandinavian population to the United States. Dag Blanck, Director of the Swenson Center, mentions the following in his article “Swedish Immigration to North America “:
Immigration to the United States in the nineteenth and early twentieth centuries was a part of the economic and social transformation that affected both Europe and North America, when between 1850 and 1950 some fifty million Europeans settled in non-European areas. A strong population growth in Sweden increased the pressure on a society that was fundamentally agricultural in nature, and moving to North America provided the Swedish emigrants with economic opportunity not available in the homeland. Religious and political reasons played a much smaller role for the move to America, although it was decisive in some instances. (Dag Blanck)
Agricultural land that was of high quality and fertile was scarce in proportion to the population. Much of the land was too stony; hence a mass emigration to the United States was justified. However a change of fortunes came for Scandinavian countries and more particularly Sweden after the end of the World War Two. The following few pages will analyze the determinants of economic growth for three major Scandinavian countries- Sweden, Norway, and Denmark.

Determinants of Economic Expansion:
Sweden:
Erungor explains that Sweden chose to be neutral during World War Two and therefore emerged unharmed and experienced a tremendous economic growth until the early 1970s. He continues, “Sweden used to be a country of emigrants until the 1930s, but the demand for labor spurred immigration to Sweden. In the early 1970s, Sweden had one of the highest income levels in Europe.” So where does Sweden stand today? The article as mentioned in the article “Agricultural toward Industrial” tells us the following:
Sweden today is a highly competitive capitalist, developed export-oriented diverse economy. Timber, hydropower and iron-ore constitute the resource base of an economy preoccupied with foreign trade. Motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel are the main industries of Sweden and they are good enough to compete internationally, examples of these are LM Ericsson, ASEA/ABB, SKF, Alfa Laval, Aga, and Dyno Nobel.
Sweden is also very well known for its furniture IKEA which has branches in several nations around the globe. Another very well-known Swedish company is H & M which is perhaps the single most popular clothing brand internationally. Their strategy is to sell stylish up to date clothing at extremely affordable prices. However their furniture and clothing don’t last very long. All this economic progress is fine and dandy but what really lures in foreign immigrant population into the country are the welfare benefits of Sweden. Sweden’s generosity as a welfare state is mainly funded through its high income taxes. Sweden gains a large proportion of its revenue from high income taxes and is second only to Denmark in regard to total proportion of revenue to income tax.
Norway:
Norway, similar to Sweden, happens to be a mixed market economy. However Norway’s state owns many important strategic resources such as petroleum, hydroelectric power and fisheries. Unlike Sweden, Norway was not neutral during the 2nd World War. They opposed the Nazi Germans however they did not receive much damage to the country’s economy. Information compiled by Ola Grytten in the article “The Economic History of Norway” tells us the following:
Norway’s economy has seen growth since the industrial revolution era. Prior to the industrial revolution, Norway's economy was largely based on agriculture, timber, and fishing. Norwegians typically lived under conditions of considerable scarcity. As agricultural land became scarce, many agricultural families were facing poverty as tenant farmers, this is what served as the catalyst for emigration to North America. As the industrial revolution came along and industries were set up, they offered employment for a large number of individuals who failed to make a living from the agricultural sector. Wages from industry also exceeded those from agriculture, hence starting a long-term trend of reduction in cultivated land and rural population patterns. However Norway hit the real jackpot when it became clear to them that they had oil and gas reserves. Through the “2012 World Key Energy Statistics” printed by the International Energy Agency and the article “Norway- Energy and Power”, we come to know that in the year 2011, Norway became the eighth largest crude oil exporter, the 9th largest exporter of refined oils and the third largest natural gas exporter in the world with significant gas reserves in the North Sea. Denmark: Denmark is Scandinavia’s most densely populated country. The economical sources through which Denmark earns its revenue is slightly different from Norway and Sweden. Denmark is a market economy that features high-tech agriculture, up-to-date small-scale and corporate industry and a high concentration on foreign trade. The International Monetary Fund as of 2010 displays Denmark’s main export as follows: industrial production/manufactured goods 73.3% (of which machinery and instruments were 21.4%, and fuels, chemicals, etc. 26%); agricultural products and others for consumption 18.7% (in 2009 meat and meat products were 5.5% of total export; fish and fish products 2.9%)” [7]. All of these activities have resulted in a balance of payments surplus for Denmark. How has this worked out for the country and its citizens so far? Well Denmark has extensive government welfare programs and reasonably comfortable living standards. The stats table displayed in the web article “Eurostat Tables, Graphs and Maps Interface (TGM) Table” tells us that “As of June 2010 the unemployment rate is at 7.4%, which is below the EU average of 9.6%”. Not only this but Denmark also has the lowest level of income inequality in the world and has the highest minimum wage in the world [6]. Denmark’s welfare system ensures that all Danes receive tax-funded health care and unemployment insurance.
Conclusion:
Scandinavian countries were once abandoned for better alternatives such as the United States. This process dates back to the 1600s. People did this because at one point in time they had limited knowledge of the availability of resources and how to extract them. Their main focus was on agriculture and fertile land was quite barren in Sweden, Norway and Denmark at that point in time. However a careful analysis now reveals that Scandinavian countries did in fact have enough other resources to not only sustain people but allow staggering economic growth. Sweden’s economic expansion was achieved by using their natural resources such as timber, hydropower and iron-ore to set up industries that produce industrial machines, furniture and many more goods. These goods are then traded internationally to produce revenue for the country. Norway also is dependent on a natural resource, oil. It is what led it to become the richest country in the area and it also boasts of being a country with one of the highest GDP per Capita in the world. However Norway is now looking into other options such as tourism to produce revenue and create diversification from them in the future when profits from oil are no longer sufficient. In contrast Denmark chose the route of commercialism and service sector such as banking for growth. Denmark relies on commercial success from the industrial production of goods it exports to other markets.
To conclude however all three countries that were once abandoned, happen to be amongst the world’s leading economic power houses today. As time moved forward and technology improved, ability to discover the natural gifts of a country improved and so did the ability to extract and harness them to our advantage. This process when done efficiently, can lead a once abandoned country, a point of low for any country, to the highest peaks of economic success.