According to the new SNS report Regional Dynamics in Sweden: Historical Trends and Future Challenges, regional economic disparities in Sweden are now greater than at any point in nearly 100 years. At the same time, the previous dominance of major cities has weakened, while regions rich in natural resources have grown rapidly. The green transition, digitalization, remote work, and changing migration patterns are driving this development.
Since the 1980s, economic growth has primarily benefited expanding cities and metropolitan areas. Sweden has experienced a “double divergence,” where certain parts of the country have pulled ahead both in population density and in prosperity. However, since 2015, this trend has begun to level off. In the report Sweden’s Regional Dynamics by Kerstin Enflo, Martin Henning, and Hans Westlund, three underlying factors are highlighted: increased investments in the green transition, digital development and remote work, and altered migration patterns as a result of the pandemic.
– The major cities are no longer the undisputed economic engines of Sweden. Since 2015, the three metropolitan regions’ share of Sweden’s GDP has remained stable. Meanwhile, Norrbotten has risen from a mid-range position to second place in terms of regional GDP – so-called gross regional product – per capita over the past two decades, states Kerstin Enflo.
The report emphasizes that traditional regional policy – support aimed at equalizing regional disparities – has a negligible effect on economic development. Instead, global phenomena are driving regional change.
– The positive economic development in parts of the country that were previously characterized by depopulation and difficulty keeping up economically is due to increased European and global demand for natural resources and Swedish products – not traditional regional policy, comments Martin Henning.
The researchers argue that the growing importance of regionally bound resources increases the need to consider a different kind of tax policy.
– As ‘green industrial investments’ become increasingly significant, there are strong reasons to discuss whether the current Swedish tax model and fiscal equalization system can be reformed to better reflect the contributions of regional resources to Sweden’s economy, concludes Hans Westlund.
about the report
The report Regional Dynamics in Sweden: Historical Trends and Future Challenges is part of SNS Analysis. The aim of SNS Analysis is to make research accessible to decision-makers in politics, business, and public administration, and to help ensure that research reaches the media. Financial support has been provided by the Jan Wallander and Tom Hedelius Foundation. The authors are solely responsible for the analysis, conclusions, and proposals.
about the authors
Kerstin Enflo is Professor of Economic History at Lund University
Martin Henning is Professor of Economic Geography at the School of Business, Economics and Law at the University of Gothenburg
Hans Westlund is Professor of Urban and Regional Studies at KTH Royal Institute of Technology and Professor of Entrepreneurship at Jönköping International Business School