The importance of trade for Sweden's development

Sweden has a strong and competitive economy from a global perspective. Having previously been one of the poorest countries in Europe, Sweden is now one of the richest countries in the world. This is a development that would not have been possible without international trade – and policy initiatives that ensure that the effects of trade benefit everyone.

Sweden is one of the most prosperous countries in the world, compared to the global average. Most people in Sweden take for granted having a home, food on the table, access to healthcare and access to schools. But our way of life is entirely dependent on imports and exports – global trade.

Imports and exports create a positive balance

Sweden is a small country and needs international trade to create growth and prosperity. We import goods and services either for consumption, or for further processing and export. Examples of imported goods are oil, car parts, food and electrical and telecom equipment. Sweden is also dependent on exports. Vehicles, mineral oils, medical products, paper and iron are examples of important exports for Sweden. Sweden has exported more goods and services than it has imported.

How Sweden's trade generates growth

It is not only trade that creates growth in Sweden, but trade is a prerequisite. Over time, a positive correlation can be seen between Sweden's trade development and our economic growth. Exports benefit companies, consumers and the economy in general by generating income and contributing to increased specialisation and large-scale production. Imports, on the other hand, give us access to more goods and services and lower prices. It allows Swedish companies to buy inputs – such as raw materials and components – at a favourable price from abroad. In this way, companies can produce goods more cost-effectively and become more competitive. This, in turn, creates jobs. In Sweden, more than one in four jobs depend on the ability to trade, in one way or another (according to OECD statistics).

OECD statistics

From Europe's poorest to record growth

Sweden has not always had a strong economy. In the 19th century, Sweden was one of the poorest countries in Europe. We had plenty of natural resources and labour, but almost no technology, low levels of education and poor infrastructure in the country. But several things helped to change this over the next hundred years. In the first half of the 19th century, the Industrial Revolution reached Sweden. Industries were mechanised, infrastructure was built and productivity increased. People moved from agriculture and the countryside to the cities. Soon afterwards, Sweden's external tariffs were reduced. The State went from controlling enterprise and trade to encouraging them. More than a hundred years of record Swedish economic growth began. During these years, the foundations were laid for many of the multinational companies that Sweden is associated with today, such as ABB, Volvo, Ericsson and IKEA. These companies are entirely dependent on Sweden's open approach to trade.

Regulations and agreements that have favoured trade

In the mid-1950s, Sweden joined GATT – the General Agreement on Tariffs and Trade – which later became the World Trade Organization. This made us part of a common, global regulatory framework for trade. But the most important step was taken in 1995, when Sweden joined the EU and gained access to the EU's internal market – the world's largest single economy. Through the EU, Sweden has gained access to a large number of free trade agreements, which facilitate cross-border trade. Over the past 50 years, Sweden's openness to the world has more than doubled (measured as foreign trade as a proportion of GDP) and other EU countries have long been Sweden's main trading partners in terms of both imports and exports. Around 75 per cent of total Swedish goods imports and 65 per cent of goods exports now take place with the internal market as their counterpart.

Competition has changed Swedish trade

All countries change over time, but open trade can speed up change. In Sweden, increased competition has caused some sectors to grow and others to shrink. For example, the Swedish shipbuilding industry, which was a significant part of the Swedish economy for centuries, disappeared in the 1970s. It could not cope with competition from countries like South Korea and Japan. Instead, Sweden's economy has become increasingly focused on services and modern technology. Among other things, we have a large IT sector, where companies such as Spotify, King and Klarna are well-known global brands. This development has benefited Sweden as a whole, but with the transformation it is inevitable that some groups have lost out. These are disadvantages that a successful trading nation must be able to deal with.

Policy collaboration ensures equitable distribution of wealth

Sweden's efforts in research, innovation and new technologies have benefited trade and growth. But our political system has also played an important role. Protecting those who lose out from global trade requires policy initiatives that complement trade policy. In Sweden, different policy areas work closely together to provide multiple perspectives on trade issues. Every trade policy decision passes through several other ministries, such as the Ministry of Finance or the Ministry of Climate and Enterprise. This is one of Sweden's strengths. Political cooperation has given us a well-developed social safety net that provides support if jobs disappear when sectors are subjected to competition. Those affected are supported through training programmes, infrastructure initiatives and subsidy schemes. These are examples of how Sweden has worked to distribute the trade surplus in an equitable way, and thereby succeeded in creating prosperity.

The role of the National Board of Trade Sweden

Sweden has good experience of how trade can create prosperity. But we also have experience of tough times and how trade can help to overcome them. This is knowledge that is valuable for countries with challenges similar to those faced by Sweden. The National Board of Trade Sweden works to create favourable conditions for developing countries to participate in international trade and contribute to sustainable development. We do this through long-term cooperations, training initiatives and export promotion activities. Our cooperations include many examples of how.