Changes in Comparative Advantages and Paths of Structural Adjustment and Growth in Sweden, 1975-2000

Bergman, L. & Ohlsson, L. (1980). Changes in Comparative Advantages and Paths of Structural Adjustment and Growth in Sweden, 1975-2000. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-80-105

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Abstract

The purpose of this study is to identify possible future development paths for the Swedish economy in a context where both world market conditions and domestic factor accumulation and technical change are explicitly taken into account. The main analytical tool used in the study is a general equilibrium model of the Swedish economy. World market prices and trade flows as well as domestic factor accumulation and productivity change are exogenous to the model. The sectoral allocation of capital and labor as well as domestic consumption, foreign trade, and the domestic price system are endogenously determined variables.

The study's projections indicate that Sweden is entering a period with considerably slower economic growth than during the earlier part of the postwar period. Underlying this result is an assumed slowdown of the rate of productivity growth. The assumed rates of productivity change do not differ significantly between the sectors. Consequently reallocation gains can be achieved only through a reduction of the intersectoral differences in the marginal productivity of capital, characterizing the initial year of the project period.

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