Hopefully, the weaker trend during the period that began in the early 1970s has been reversed in the past few years. However, this cannot be taken for granted. One explanation for the recent stronger growth is that the deep recession left a reserve of unutilised resources that could gradually be taken into use. Nevertheless, potential GDP growth is now often said to be between 2% and 2.5%, since most analysts consider that the productivity trend has improved slightly in recent years. 1  BIS Review 137/1999  Figure 1. GDP growth during the 20th century  1. GDP-growth during the 20th century Annual average per decade 6 5 4  Average 3%  3 2 1 0 -1 1900 1910  1920  1930  1940  1950  1960  1970  1980 1990- 19941993 1999  Figure 2. The Swedish population  2. The Swedish population 10  8,9  Million inhabitants  8  7,0 5,4  6 4,2 4 2,6 2 0 1820  1870  1910  1950  2000  In both the 19th and the 20th century the Swedish population has roughly doubled. In 1820 it totalled 2.6 million; at the beginning of the 20th century, it was almost 5 million, and the figure today is almost 9 million. BIS Review 137/1999  2  These figures mean an average annual population growth rate of around 0.7%. That is not the case today; the current figure is closer to approximately half of this level.
7  BIS Review 137/1999  Employment was provided for more and more people, living standards rose and growth was among the highest in the world. Opinions about the causes of the pronounced change in the Swedish economy are not completely unanimous. An increasingly stable form of government presumably contributed. A series of constitutional reforms provided a guarantee of stability. The stable prices presumably played a part. When inflation is low or the price level is stable, those who have to plan for the longer run face less uncertainty. After a rather chaotic period in the history of the monetary system, the introduction of the silver standard in the early 1830s and subsequently the gold standard led to price stability. Another significant factor was probably the credit system’s development. Banks were established and the abolition of interest controls was followed by more financial expertise. That made it possible to exploit the inventions and finance investments in the emerging industries. Economic activities benefited from the abolition of trade guilds, freedom to trade and the reform of joint-stock companies. The reform of elementary education was, of course, another important step that ultimately promoted human capital. This catalogue is not intended to be a complete account of all the factors behind Sweden’s transformation from a poor country into a rapidly expanding industrial nation. The point I want to make is that a variety of institutional changes seem to have been needed to provide a stable framework for the subsequent process of industrialisation.