The September 2007 issue of Reader's Digest, a general interest magazine, ranked 141 countries on the basis of quality of life. The Nordic countries topped the list, with Finland taking the first place followed by Iceland, Norway, and Sweden. Denmark was placed tenth. The ranking was based on statistics derived from the Human Development Index⁵ and the Environmental Sustainability Index⁶.

The Nordic countries had consistently figured at the top of such lists during the previous decade. Economists credited these countries' economic model for their success as measured by important social and economic indicators such as per capita GDP, employment levels, etc.

The Nordic economic model was characterized by high taxes, a large public sector, and moderate market regulation. These countries were welfare states, with healthcare, education, and other social services provided free for all citizens.

Negating the commonly held belief that high tax rates curtailed growth, the Nordic countries showed growth despite high taxes mainly because they were able to achieve efficiency and bring about innovation in the public sector. Besides, with the Nordic economies being only slightly less liberal than Anglo-Saxon economies such as the UK and Ireland, foreign investment was high in these countries.

Also, these economies had benefited from the absence of corruption and red tape.

However, there were challenges. With globalization, immigration, and aging populations, there was increasing pressure on the welfare model.

The Nordic countries had responded by introducing reforms in pension and healthcare in the early 2000s.

As of 2007, though the Nordic economies were among the best performers globally, reforms to sustain growth and support government expenditure were still being conceptualized and implemented.

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