The Nordic economic model, characterized by market-based economies and generous welfare systems, seemed to be working well, with the countries in the region figuring at the top of various lists that ranked countries on the basis of human development, per capita income, economic freedom, etc.

The case discusses the history of the Nordic economies over the years. It then explains the main features of the Nordic economic model and goes on to examine some of the reasons behind the global competitiveness of the Nordic economies.

The case also recounts some challenges that these countries face as well as the criticisms of the welfare model adopted by these countries. The case ends with a brief discussion on the outlook for these countries.

“The top rankings of Switzerland and the Nordic countries show that good institutions and competent macroeconomic management, coupled with world-class educational attainment and a focus on technology and innovation, are a successful strategy for boosting competitiveness in an increasingly complex global economy.”¹

- Augusto Lopez-Claros, Chief Economist and Director, Global Competitiveness Network², in 2006

“The Nordic countries maintain their dynamism despite high taxation in several ways. Most important, they spend lavishly on research and development and higher education. All of them, but especially Sweden and Finland, have taken to the sweeping revolution in information and communications technology and leveraged it to gain global competitiveness.”³

- Jeffrey D. Sachs, Director, The Earth Institute⁴, Columbia University, and Special Advisor to UN Secretary-General

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Issues

The case is structured to achieve the following teaching objectives:

	Understand the evolution of Nordic economies.
	Analyze the reasons behind the competitiveness of the Nordic economies.
	Evaluate the sustainability of the welfare policies adopted by Nordic economies. .
	Analyze the future of the Nordic region in the light of challenges such as aging populations, globalization, etc.

Contents

Introduction

Background Note

The Main Features of The Nordic Economic Model

What Makes The Nordic Region Competitive?

Criticisms and Challenges

Outlook

Exhibits

Keywords

Nordic economic model, Welfare state, Competitiveness of Nations, Government policy, High tax rates and economic growth, Pension reforms, Aging population, Denmark, Norway, Sweden, Finland, Iceland

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