By Steve Kelman

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Why Sweden's economy is thriving

I left Boston for Stockholm on Friday night, ahead of the hurricane, to give a talk at a European conference on government procurement. Bizarrely, it has been quite windy in Stockholm, for reasons that I assume have nothing to do with Irene, but I've been surprised to see how many tourists are in the middle of the city so late in the summer, with European vacations having more or less come to an end. The Central Station, near my hotel, is being dug up for construction of a new underground commuter train line, and the signs outside show an irony and low-key sense of humor that is not typical of the Swedish, proclaiming the station "the messiest in the world" and presenting an excuse for the harried passenger: "Sorry I'm late — I got held up in the chaos of the Central Station."
(There was an unusual comment about tourism in an editorial in Sweden's leading daily Dagens Nyheter about the upcoming Danish elections. Noting the 25 percent increase in tourism to Sweden since 2000, compared with a 25 percent decline in Denmark, the editorial suggested this was due to Denmark's bad reputation as an anti-immigrant and racist country compared with Sweden. This seems implausible, but who knows?)
Those who think about the Swedish economy at all — probably not a huge group, especially when you subtract the people who believe they are thinking about the Swedish economy but are actually thinking about Switzerland — probably associate it with Volvo, niche engineering industries similar to Germany's, and perhaps Spotify, the Swedish file-sharing company.

It turns out that one of the reasons the Swedish economy is doing well —which it is — is a huge increase in exports of iron ore from the arctic north of Sweden to China. China’s also been importing iron ore from Australia and Brazil. I have learned an amazing thing about these exports on this trip. The center of the iron ore industry in Sweden is the city of Kiruna, right next to the old iron mine. It turns out they have found more iron ore under the city itself, and, in order to be able to exploit it, the entire city, with its 20,000 inhabitants, is being moved so that a new mine can be dug where the city used to be. This was actually democratically agreed to locally, though the main beneficiaries will be the children of current residents, not today’s Kirunans.
I also gave a talk at the Stockholm Harvard Club, and at dinner afterward the topic of China came up. It turns out that the Swedish media — I am guessing this is not so different from a number of other countries — has been presenting the story that, with the U.S. debt crisis, America is in decline and is close to being replaced by China. Apparently (and this did surprise me) the Swedish media say very little if anything about the problems of the Chinese economy, and, for example, the issues surrounding the recent high-speed rail accident, covered quite extensively in the U.S., were not mentioned in the Swedish media. One person told me that many Swedes saw the purchase of Swedish car maker Volvo by a Chinese company, after it had been owned by Ford, as symbolic of a passing of the power torch.
Finally, I heard about the new Swedish currency that is about to come into circulation. What is amazing is who will be pictured — no ancient heroes or old statesmen, but rather the actress Greta Garbo; the film director Ingmar Bergman; and Astrid Lindgren, the author of the Pippi Longstocking children's books.

I'm not sure if this is "very Swedish," but it's certainly very unusual.

Posted on Aug 30, 2011 at 12:09 PM


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