Foreign Direct Investment and Politics: The Swedish Model

WPS66-9/95

Posted: 28 Apr 1998

See all articles by Magnus Blomstrom

Magnus Blomstrom

Stockholm School of Economics - Department of Economics; National Bureau of Economic Research (NBER), at New York; Centre for Economic Policy Research (CEPR)

Ari Kokko

Stockholm School of Economics; National Bureau of Economic Research (NBER)

Date Written: Undated

Abstract

Sweden is home to remarkably many large, prosperous multinationals. We argue that this is partly the result of industrial policies that have been biased in favor of large firms, and an institutional setting where regulations and controls have facilitated investment abroad by Swedish firms, while impeding foreign direct investment in Sweden. A particularly important feature of the institutional environment is that Swedish labor unions have supported Swedish investment abroad, but opposed foreign investment in Sweden. The paper outlines the development of Swedish foreign investment policies, describes the traditional Swedish model of industrial policy, and discusses the attitudes of the Swedish labor movement. The implications for long run growth of the Swedish industrial policy are also discussed. We argue that the large multinationals have been supported at the expense of small and medium sized firms, and that the non-multinational sector is therefore less dynamic in Sweden than in many other countries.

JEL Classification: F23, F21, J51

Suggested Citation

Blomstrom, Magnus and Kokko, Ari, Foreign Direct Investment and Politics: The Swedish Model (Undated). WPS66-9/95. Available at SSRN: https://ssrn.com/abstract=4132

Magnus Blomstrom (Contact Author)

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9265 (Phone)
+46 8 342 818 (Fax)

National Bureau of Economic Research (NBER), at New York

365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ari Kokko

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
Sweden
+46 8 736 9365 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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