Alyson JK Bailes
The secrets of the Nordic model that has appeared immune to the crisis engulfing the rest of Europe
This has been achieved without swingeing budget cuts or reneging on social obligations. These countries still exhibit the combination of efficient production, high tax and high living standards that has been called a 'third way' or 'Nordic model' in the past, and which is now seizing attention again for its apparent crisis-busting properties.
The misfortunes of
By their own reserved, consensus-loving standards, the Nordics have experienced major dramas since 2008.
In economic terms, too, the Nordics' fast rebound after 2009 now shows signs of slowing. Swedish growth for instance fell from 5.7 per cent in 2010 to 4.2 per cent in 2011, while
Differences of 'model'
Even so, enough evidence remains of Nordic economic robustness --
Where the contrast seems undeniable is in the fact that Nordic taxes are not only high, but also effectively collected: and in the productivity of labour. The GDP added per individual hour worked ranges from
Fundamental structural differences, however, also matter. The Nordics have small populations (between 4 million and 9 million) and internal markets, combined with large industries and some large service sectors, for example Norwegian shipping and insurance. Only a small percentage work in agriculture and have all the mechanization they need, as well as collectivized marketing. Small and medium-sized enterprises are relatively unimportant. All this surely favours productivity and steady technological progress, while supporting external competitiveness. The share of exports in GDP ranges from 39 per cent to 58 per cent for the five Nordics as against 24 per cent to 35 per cent for the southern Europeans.
Geography and geopolitics
Yet good exports mean nothing without good customers, and here we come to factors less under human control. With the exception of
In wider geopolitical terms, the Nordic states benefit from some of
Corruption apart, it is not easy to pinpoint common Nordic political features. The countries range from being highly
centralized to highly devolved, from those that respect central authority -- especially in crises -- to those that distrust it. Public-private sector togetherness is rather weak in
There is a theory that all small states share at least a certain flexibility and ease of changing course adaptively. That might help explain the Nordic ability to ride out the storm. But probably more important is that none of the Nordic states faced the 2008 crash unprepared.
If this makes sense, longer-term prospects for the whole eurozone may depend less on specific economic or political models, and more on what the nations manage to learn, how quickly and how resolutely. Some of those lessons may certainly draw upon Northern examples. But short of towing
Alyson JK Bailes served as deputy head of mission in
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