Impact of Different Variables on the Economic Growth of Sweden - Dissertation Example

This paper has conducted comprehensive research on finding out the effects of tax policies, employment, and wages on the level of economic growth of Sweden. Using empirical data, it has been found that the economic growth of Sweden does not depend on tax policy, employment status, and wages. I. INTRODUCTION Sweden is a very economically significant country in the world. Although it is a very small country, it experiences significant economic growth. A very interesting thing to note about the Swedish economy is the dispute over the character of the economic system of Sweden.

Its economic system can not be characterized as complete socialism or pure capitalism. In Sweden private sector dominates in all production areas. In fact, around ninety percent of total production in this country is produced in the private sector. Looking at the dominance of the private sector, it seems that there prevails full corporatism in Sweden. But the interesting thing is that the majority of production in the private sector, around fifty percent, is exposed to state controls. Looking at this nature of the Swedish economy, it is sometimes characterized as a system of welfare state socialism.

Some, however, like to view this system as welfare state corporatism.Government undertakes various policies relating to tax, employment, and wages. Tax accounts for a major place in fiscal policies. While on one hand, tax is an important source of revenue to the government, on the other hand, it also reduces consumer purchasing power by reducing disposable income. Hence, changes in tax policy will definitely affect consumer purchasing behavior, and therefore, on aggregate demand of the economy and consequently on GDP of the country.

Employment and economic growth have a strong association as well. In fact, there is a cyclical relationship between employment and economic growth where both are dependent on one another. While the level of employment of a country is dependent to a large extent on the level of economic growth, economic growth is also affected by various employment policies. The economic growth of a country is also related to wage level.