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What Have Changes to the Global Markets for Goods and Services Done to the Viability of the Swedish Welfare State?

What Have Changes to the Global Markets for Goods and Services Done to the Viability of the Swedish Welfare State?

Chapter:
(p.285) 9 What Have Changes to the Global Markets for Goods and Services Done to the Viability of the Swedish Welfare State?
Source:
Reforming the Welfare State
Author(s):
Edward E. Leamer
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226261911.003.0010

This chapter presents correlations between the product mix of different countries' exports in 1987 and 1999 that reveal dramatic changes in the competition between high-income and low-income countries. In 1987, the correlation between the export product mix of high-income countries and low-income countries in the U.S. and European markets was low, because capital-rich countries specialized in capital-intensive products, while labor-rich countries specialized in labor-intensive products. By 1999, this had changed. Product mixes in all countries had become more similar. The chapter concludes that the key issue is to invest in human and physical capital to avoid direct competition with low-wage countries.

Keywords:   global markets, Sweden, welfare state, exports, European markets, high-income countries, low-income countries

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