Sweden is one of the most highly industrialized countries in the world. It is the industrial giant of Scandinavia, and its output of manufactured goods is only slightly less than that of Norway, Finland, and Denmark combined. Although Sweden does not have a wide range of natural resources, it has an abundance of iron ore and plentiful water-power reserves; its extensive forest reserves equal those of Finland. Less than 10 percent of the land is arable and most farms are small, but agricultural output is quite high because of scientific farming methods and soil conservation.
The most northerly of Sweden's major regions is Norrland, a vast, sparsely populated area extending from beyond the Arctic Circle to the Dalälven (Dal River). It makes up more than half of Sweden's total area but has less than one fifth of its population. With its immense wealth of coniferous forests and long rivers, which have been harnessed to produce electricity, Norrland resembles northern Finland. Sweden's oldest and most developed economic regions lie south of Norrland, at Stockholm and on the shore of Lake Mälaren at the eastern end of the lake-filled lowlands, in the Göta valley at the western end of the central depression, and on the southern coastal plain facing Denmark.
First among the economic regions of Sweden are the plains around Lake Mälaren and Stockholm. Its industries include printing, publishing, clothing manufacture, and food processing, but the most important industry of the Stockholm area is electrical engineering, especially the manufacture of household appliances, telephones, and radio and television parts.
Stockholm is bordered on the west by a semicircle of important industrial towns. Gävle and Sandviken to the north have iron and steel plants and some of the largest sawmills in Sweden. Immediately to the west of Stockholm, on the shores of Lake Mälaren, are smaller cities dominated by Eskilstuna, a leading producer of precision tools, and Västerås, the center of the electrical industry; its factories produce transmission line equipment and machinery for hydroelectric stations. The semicircle of industrial towns is completed by Örebro and scattered manufacturing centers to the south around Norrköping, Sweden's one-time leading producer of textiles.
Sweden's second economic region evolved during the 19th century in the Göta valley. Pulp and paper mills are based on the water-power sites along the Göta River. The main industries of Göteborg, the regional capital of western Sweden, are automobile assembly, and the manufacture of ball bearings. Along the northern shore of Lake Vänern, pulp and paper mills process the immense forest resources of the lake's northern hinterland and take advantage of Göteborg's ice-free harbor for exporting their products.
The economic core of southern Sweden is formed by towns and cities facing the Kattegat. Malmö is the regional capital; two other important cities are the ferry ports Hälsingborg and Trelleborg. The submarine yard is a key enterprise in Malmö, which is also noted for its sugar mills, breweries, and soap and margarine factories; these enterprises are ideally situated near the rich agricultural hinterland of the Kattegat and benefit from the extensive trade of its ports.
The narrow coastal plains of southern Sweden and the central lowland between Göteborg and Stockholm contain not only the chief cities and industries of the country but also the main agricultural areas. Fertile marine clays and the longer growing season of the south explain the importance of farming in the regional economy. A large area in the south-central part of the peninsula is filled with extensive coniferous forests, peat bogs, and heath. Only 3 percent of the land of this province, Småland, is cultivated. Two small industrial regions, centered on the cities of Jönköping and Huskvarna, have evolved on the flanks of this wilderness. On the southeastern edge of Småland are located plants engaged in glassmaking, an industry founded in this region in the 18th century. Kosta and Orrefors, the chief centers of the glassmaking industry, produce most of Sweden's household glass as well as artistic objects that enjoy a world market because of their beauty.
To the north of the great lakes of central Sweden another industrial region, Bergslagen, lies between the valleys of the Klar and the Dal rivers. Here the mining of iron and copper dates to the 13th century.
Thinly populated wildernesses of forest and tundra extend from the Dal River to beyond the Arctic Circle. Here the great primary resources of the country¾mineral ores, timber, and water power¾are exploited. Clusters of small industrial settlements line the coast of the Gulf of Bothnia, where the northern rivers enter the sea from forests in the interior. Sundsvall, at the mouth of the Indals, and Härnösand and Kramfors, at the mouth of the Ångerman, are among the chief centers of timber processing; these towns have sawmills, pulp and hardboard factories, and cellulose plants.
In the northernmost provinces, Västerbotten and Norrbotten, the main economic activity is mining. In the Skellefte district important deposits of copper, lead, and zinc ores have been recently exploited. The iron ore fields of Lapland, centered on Gällivare and Kiruna, provide an immense source of exports and also supply an integrated steel plant at the port of Luleå on the Gulf of Bothnia.
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Although most industries are privately owned,
the government owns and operates a wide range of enterprises. In the 1960's
and 1970's it owned 10 to 15 percent of all industry through partial or
complete control. A state-owned bank held 10 percent of all bank assets.
In the mid-1980's government began slowly to reduce its stake and its subsidies.
In terms of value added, government subsidies ranged from 6 to 11 percent
of industrial output in 1978 to 1983 but fell to less than 2 percent by
1991. Still, state-owned enterprises employed 300,000 people in the early
1990's, about 12 percent of the business sector. Most of these worked in
mining, steel, forestry, and shipbuilding.
Private ownership of corporations is somewhat more concentrated in Sweden than in other advanced nations. In the early 1990's 14 corporations dominated the Swedish economy; three of them accounted for about two thirds of all private-sector sales and employees. Holdings of the Wallenberg family reached into companies representing roughly one third of the market value of all Swedish shares. Privatization of state enterprises, and the move toward EC-style antitrust standards and foreign ownership were being effected gradually.
Sweden has a strong cooperative movement made up of consumer and producer cooperatives, which handle roughly one fifth of all retail trade. Consumer cooperatives were first formed at the end of the 19th century. The largest, the Cooperative Union, owns supermarkets, travel agencies, and factories. It has about two million members. The Federation of Swedish Farmers, to which almost all farmers belong, is the basic producer cooperative. It owns enterprises such as dairies, meat-packing houses, and fertilizer and farm-equipment factories. It accounts for all sales of butter, cheese, milk, and more than half the sales of wool, eggs, grain, and meat animals.
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In 1991 Sweden's gross domestic product (GDP)¾the
total output of marketable goods and services¾was valued at 1,347
billion kronor. This was equivalent in purchasing power to $145 billion,
or $16,896 per person, compared to $16,033 in Norway and $21,449 in the
United States. Government spent 27 percent of GDP and consumers 54 percent.
A comparatively large share was invested in physical assets, 19 percent.
GDP rose at an average rate of 3.6 percent a year in the 1950's, 4.4 percent
a year in the 1960's, 1.8 percent a year in the 1970's, and the same in
the 1980's. It rose 0.4 percent in 1990, fell 1.1 percent in 1991, and
fell another 3.6 percent in 1992 as Sweden endured its worst recession
since the 1930's.
The share of total income from agriculture fell from 12 percent in 1950 to 3 percent in 1990. All industry contributed 35 percent of GDP in 1980 and 32 percent a decade later, as the manufacturing sector fell to less than one fifth of GDP in 1991 for the first time in the modern era. Services of all kinds made up 65 percent of GDP in 1990. The rate of inflation was higher than European averages throughout the period. Consumer prices rose an average 7.6 percent a year in 1980-1990, by 9.3 percent in 1991, and by 1.8 percent in 1992.
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Agriculture has declined dramatically in importance in Sweden during the 20th century. The number of people working on the land was about 2 million in 1940; by 1991 the number had fallen to 143,000.
Another basic feature of Swedish farming in the 20th century is the widespread abandonment of land and the concentration of agriculture in the most favorable areas of the country. Almost 1 million acres (400,000 hectares) of land were withdrawn from cultivation between 1960 and 1975, and another 425,000 acres (170,000 hectares) by 1990. As small farms became deserted on the death of their owners, the government has intervened to compel the amalgamation of the property into larger units. Consequently the number of farms of less than 12 acres (5 hectares) each declined from 96,000 in 1951 to 15,000 in 1990.
Although only 3.2 percent of the labor force held agricultural jobs in 1990, compared with 29 percent in 1940, agricultural output has not declined. Output has increased, despite the reduced area of farmland, because of an agrarian revolution that began in the 19th century with the final dismemberment of the open-field system. Field drains, striking experiments in plant breeding for northern latitudes, widespread use of fertilizers, cooperatives for marketing agricultural commodities, and dissemination of technical information on farming have all contributed to increased yields. The effects of a rapidly diminishing number of farm workers have been offset by extensive use of machinery; for example, in 1938 only 18,000 tractors were used on Swedish farms, but in 1986 about 184,000 tractors were being used. The largest amount of farm machinery is used in the most productive areas of lowland around Lake Mälaren and on the rich plains of Skåne, which faces the Kattegat.
As in the other Scandinavian countries, the principal agricultural activities in Sweden are raising livestock and growing fodder crops. Sweden in the early 1990's had about 1.7 million head of cattle, including about 500,000 dairy cows. There has been a sharp increase in the proportion of beef to dairy cattle. Raising pigs to supply the bacon factories of southern Sweden is an important agricultural activity in Skåne.
Because of the importance of livestock, three quarters of the land under cultivation is devoted to fodder crops. More than half of this cultivated area is sown to rotation grass, a high-yielding combination of rye grass, timothy, and clover; most of the grass is converted into hay for the indoor feeding of livestock in winter, which lasts from 5 to 7 months. Cereals are the second most important crop. The production of rye has been surpassed by wheat since the 1920's. The main wheat-producing areas are the central lowlands and Skåne, though spring wheat is grown at favorable sites in Norrland's valleys as far north as the Arctic Circle. Oats grow extensively on the western coastal plains. Barley is an important fodder crop in southwest Skåne.
Farming varies from the profitable large units of the south to the marginal farms of the forested north, where a farmer's economic survival depends upon his holding additional tracts of woodland and pursuing a part-time winter job in the logging camps or the timber industries. In the south, where the growing season lasts for more than 250 days, farming resembles that of Denmark and the north German plain. In Skåne almost 80 percent of the land is under cultivation. Cultivated land declines to 30 percent of the total area in the depression of lakes in central Sweden, where the growing season is only 200 days. Nevertheless, this region, close to the country's largest urban markets, has developed a highly efficient commercial farming. Northward from the depression, forests predominate; less than 2 percent of the area of Norrland is used for farming.
After the long decline in its relative economic importance, agriculture in Sweden was sustained by government programs of price supports and incentives for rationalization. Swedish agricultural policy had as its prime objective the maintenance of an 80 percent level of self-sufficiency in basic foodstuffs. However, subsidies were to be greatly cut back as Sweden integrated with the EC.
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The mining of iron and copper has been important since the Middle Ages. An enormously rich copper mine at Falun, in the Bergslagen region, which lies northwest of Lake Mälaren, was exploited continuously for more than 650 years, until it was almost exhausted. In 1991 Sweden stood ninth among the world producers of iron ore, of which it mined 19.3 million metric tons. Until the last quarter of the 19th century the main iron mines were those in Bergslagen. But today the main source of iron ore is the remote northernmost part of Norrland. The output of this region comes from a vast deposit at Kiruna and a smaller deposit at Gällivare. The deposits of Swedish Lappland became significant only after the development of the Gilchrist-Thomas process in 1878, which allowed the smelting of iron ores with a high phosphorus content. The construction of a railroad from Luleå to the Gällivare orefield in 1892 and its extension in 1902 through Kiruna to the Norwegian ice-free port of Narvik provided facilities for transporting iron ore from the north. In the 20th century Narvik has handled a majority of exports of Swedish ore.
Iron ore is also still mined in Bergslagen, where some mines are more than 2,000 feet (610 meters) below the surface. Their ores are extremely pure, with a phosphorus content of less than 0.3 percent. Bergslagen supplies most of the ore for the iron and steel manufacturing. Its most important mining center, Grängesberg, supplies the integrated iron and steel plant at Oxelösund on the Baltic coast.
Sweden ranked 15th among world copper producers in 1991, when it mined ore with a metal content of 80,000 metric tons. A new orefield was found in the early 1900's along the Skellefte River in Norrland. The main centers of copper mining are at Kristineberg, Boliden, and Adak, with some production still in Bergslagen. Zinc, of which Sweden ranked ninth in world production in 1991 with 158,000 metric tons, comes from a number of sites in both the north and south. Nickel, lead, silver, and gold are also mined in the Skellefte region. Significant uranium deposits supply the nuclear-power industry.
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Sweden's forests and timber industries are as important as those of Finland. Forests cover 50 percent of Sweden. The deciduous species common in temperate Europe occur only in the southernmost provinces of Skåne, Halland, and Blekinge. About 40 percent of these forests consist of deciduous hardwoods, particularly beech. Throughout the central part of the country and much of Norrland valuable coniferous softwoods predominate. In the northernmost parts of Norrland and toward the timber line between 1,500 and 2,000 feet (460-600 meters) on the border with Norway, pine and spruce forests give way to extensive birch woods. The richest forests are located north of the central lowlands between the long valleys of the Klar and Dal rivers. Here pine and spruce grow three times more rapidly than in the harsher climate of northern Norrland.
About half of Sweden's forests are privately owned by small farmers or form parts of larger estates, mainly in south and central Sweden; in the south and southwest about 90 percent of the woodland is privately owned. A quarter of the remaining area of forests belongs to the state, the church, and local communes. The rest is owned by big sawmilling and pulp corporations. The company forests, which are among the best managed in the country, were acquired in the great scramble for timber resources toward the end of the 19th century. They lie mainly in the sparsely populated north.
The annual cut of timber in Sweden rose after World War II, from 34 million cubic meters in 1950 to 65 million cubic meters in 1971, then leveled off around 52 million cubic meters in the late 1980's. Among the Scandinavian countries Finland is Sweden's closest rival, with a cut of 43 million cubic meters in 1990.
Wood is Sweden's most important raw material. Besides being a resource for manufactures such as paper, pulp, woodfiber boards, and a wide range of chemical extracts, the forests are an important source of fuel and building materials. Jobs in lumbering, the transport of timber, and the woodprocessing industries employ about a quarter of a million workers. The most important timber industry is sawmilling¾the production of planks and boards. Its output reached a peak in the early 20th century and has stagnated since the 1930's. Sawmills are located in the small ports of the Gulf of Bothnia, particularly at the mouths of the Ljungan, Indals, and Ångerman rivers. The port of Sundsvall boasts the largest concentration of wood-processing industries in the world. Sawmills located on the northern shore of Lake Vänern export cut timber through Göteborg.
Since 1920 the pulp mills have become the greatest consumer of Sweden's timber. Timber is converted into pulp either by grinding (mechanical pulp) or by boiling and solution (chemical pulp). About 70 percent of Sweden's pulp is now produced by chemical processes. The industry is concentrated mainly in the ports of southern Norrland, especially around Örnsköldsvik, and on the northern shore of Lake Vänern, where Skogshall is an important center. Sweden produced 10.1 million metric tons of pulp in 1990. The most rapidly expanding branch of the industry produces sulfate pulp.
The paper industry is located mainly in central and southern Sweden within reach of the shipping facilities of Göteborg and the national market in Stockholm for the newspaper and publishing industries. Norrköping and Halsta have important newsprint plants. Wrapping paper and cardboard are made in the Göta valley and on the northern shore of Lake Vänern. From 1966 to 1992 Sweden's output of newsprint almost tripled to 2 million metric tons, making it the fourth ranking producer in the world.
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Imported oil provided about 52 percent of Sweden's energy requirement in the late 1980's. Other sources were water power, 19 percent; wood, coal, and coke, 10 percent; and uranium, 19 percent. Swedish governments in the 1960's and 1970's devoted major resources to development of nuclear generating capacity, making Sweden in 1992, with 12 nuclear power plants, by far the world's largest producer of nuclear energy per person. A referendum in 1980 overwhelmingly endorsed phasing out nuclear power by 2010, but the plan was postponed in 1990. In that year nuclear power provided 51 percent of the nation's electricity, at one of the lowest unit costs in the world.
Water power has played an important role in the economic development of Scandinavia. In 1990 hydroelectricity production in Sweden was 72.2 billion kilowatt-hours, an amount surpassed in Europe only by Norway. Water power accounted for about half of Sweden's total generating capacity of 33.5 million kilowatts in the late 1980's. Two thirds of the water-power potential has been utilized. For environmental reasons no new rivers may be dammed unless alternative energy sources prove too expensive. Three quarters of the water power comes from long, powerful rivers in Norrland, while the chief area of consumption is in the cities of the central lowlands and the south. Thus one of the main problems in the use of water power has been the development of economical means of transmission over the long distance from north to south. In 1936 the first 200,000-volt power line connected southern Norrland with the lowlands. In 1956 a 400,000-volt line tapped the huge power stations at Stornorrfors and Harsprånget on the Ume and Lule rivers respectively.
Manufacturing. In 1991 manufacturing employed 890,000 people, down 13 percent in a decade. Metallurgy and engineering employed 48 percent of all manufacturing workers. The timber, pulp, and paper industries followed with 21 percent, the food and beverage industry with 9 percent, and the chemical industry with 8 percent.
The making of iron and steel products is one of Sweden's basic industries. This industry is located mainly in Bergslagen. The hundreds of small charcoal furnaces and forges in Bergslagen that became obsolete toward the end of the 19th century have been replaced by a few modern large-scale iron and steel plants. These plants use the latest electrical smelting processes that dispense with metallurgical coke. The largest iron and steel works is at Domnarvet. In the mid-20th century two large plants were set up for the first time at coastal sites, a location allowing the easy import of coke and scrap metal, as well as the export of semifinished goods for engineering industries in the port cities of northern Europe. Steel output rose from about 2 million metric tons in 1957 to about 5.9 million in 1974, but fell to 4.7 million in 1989.
Engineering is the oldest and most highly developed manufacturing industry in Scandinavia. In Sweden, it accounts for about 40 percent of the earnings from exports and produces a wide range of goods, including machine tools, precision gauges, generating equipment, ball bearings, beacon lights, automobiles, and jet fighters. Its various branches are scattered throughout the central lowlands between Stockholm and Göteborg. The plants are often grouped in regional clusters, particularly around the shore of Lake Mälaren and in the Göta valley. Malmö and the towns of southwestern Skåne are another important core of engineering industries.
Sweden was a world leader in shipbuilding for half a century, until this industry went into rapid decline in the late 1970's. Worldwide overcapacity (particularly in oil tankers), two prolonged international recessions, and fierce competition from low-wage countries like South Korea and Brazil caused the total output of Swedish shipyards to fall from 2.5 million gross registered tons in 1975 to about 300,000 tons in 1982 to 40,000 tons in 1990. From 1978 through 1982 subsidies to shipbuilding cost Swedish taxpayers some $3.6 billion, a sum exceeding Sweden's total export earnings from shipbuilding during those years.
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Domestic freight in Sweden is moved mainly by road and rail. Trucks carry about one half of the freight and dominate short-distance haulage. Railroads, built by the state from 1854 on and until the 1960's the principal means of freight transport, carry one third of the freight and dominate long-distance haulage; they also move ores within the north, to Narvik and Luleå. Shipping, chiefly of building materials, accounts for about one sixth of the freight. About 90 percent of the passenger traffic is by car and bus. In 1990 there was 1 car for every 2.4 persons. Plans for a 10-mile (16-km) road and rail link from Malmö to Denmark was agreed to in 1991.
Sweden's merchant fleet was less than 4 million gross registered tons in 1980, and half that in 1990. Oil tankers accounted for about half the tonnage. Göteborg has the largest import trade, and Luleå the largest export trade. Other ports of regional importance are Stockholm, Hälsingborg, Malmö, and Norrköping.
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Sweden is very dependent on foreign trade. In 1991 Sweden's exports and its imports of goods and services each represented about 30 percent of its GDP. Exports of merchandise earned $55 billion and imports of merchandise cost $49.5 billion. During the 1970's and 1980's foreign trade expanded much faster than production.
Sweden's exports are dominated by the products of its forests and engineering shops. In 1991 machinery and electrical equipment provided 26 percent of its export earnings, and transportation equipment provided 17 percent; lumber, pulp, paper, and cardboard provided 18 percent. Chemicals accounted for 9 percent. The principal imports by cost were machinery and transportation equipment, 37 percent; other manufactured items, 16 percent; chemicals, 10 percent; and fuels, chiefly oil, 9 percent.
In 1991 Sweden's leading markets for exports were western Germany, 15 percent of the total; Great Britain, 9 percent, and Norway, the United States, Denmark, and Finland, each taking 6 to 8 percent. Leading suppliers were western Germany, 19 percent of total imports; and the above-named five nations, each supplying 7 to 8.5 percent of total imports. About 55 percent of all trade was with EC nations and 19 percent with EFTA nations.
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Currency and Banking
The unit of currency is the krona. It is issued by the Bank of Sweden (Sveriges Riksbank), the oldest central bank in the world, founded in 1668. The government-owned Investment Bank finances investments aimed at restructuring and developing industry; it may hold shares in other companies. Commercial banks may not hold corporate shares, but they do exert much influence on trade and industry. Agricultural credit societies provide checking facilities and short-term loans for farmers. Savings banks invest the small savers' money in long-term loans for housing, agriculture, and small-scale industry.
In 1989-1990 central government operating
revenues were equivalent to $100.6 billion and expenditures $93.8 billion.
The main sources of revenue were social security contributions, 31 percent;
taxes on income and wealth, 22 percent; general sales (value added), 17
percent; and motor vehicles and other excise taxes, 12 percent. The main
expenditures were on social welfare and housing, 56 percent; education,
8 percent; defense, 6 percent; and interest on national debt, 11 percent.
The national debt amounted to $88.1 billion in 1991, of which 14 percent
was held abroad.
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