1.Labour market institutions and policies that provide:
- relatively low employment protection
- high unemployment protection (coupled with high income-support benefits)
- strict activation policies
- high degree of centralized wage coordination
2.Comprehensive social benefits and publicly provided social services and:
- large investment in education and research
- development financed by taxes
3.Openness to trade and competitive product markets
Together, these features offer:
- a collective mechanism for risk sharing
- play a key role securing the political acceptability of structural reforms
Labour markets are characterized by:
- high participation rates
- generally low unemployment
- a small incidence of long-term unemployment
- high job mobility.
Traditional commitment to free trade
- barriers to trade and investment are low (apart from agricultural products)
- measures of Nordic country participation in the international trading system are high
High tax burden
- needed to finance the comprehensive and generous social expenditures and spending on education
- tax revenue is put to efficient use
To what degree can the strong economic performance be attributed to the Nordic model?
Many attribute the combination of:
- solid economic growth
- well-performing labour market
- an equal distribution of income and social cohesion
Others recognize the recent good economic performance, but question:
- whether the incentives associated with high taxes and a generous social security system are compatible with long-term sustainability.
- a higher ability to cope with change
- education levels
- the quality and public confidence in the institutions of government
- and their strong innovation frameworks.
Is the Nordic approach sustainable?
Globalization has accelerated:
- emergence of new players in the international trading system, bringing additional workers ( 1 billion over the last decade).
- new relationships such as cross-border out-sourcing and in-sourcing.
The globalization of innovation:
- many OECD-based businesses are setting up R&D operations in China and India, attracted by their abundant supply of highly skilled scientists and engineers.
The Report’s authors note that the costs of funding the Nordic model are likely to rise faster than nominal GDP. This is due to:
Can elements of the Nordic approach be transferred?
- regulation does not buy security; in fact, the opposite appears to be true.
Dealing with the political economy of reform
The compatibility between reformism and capitalism
ETLA’s report “The Nordic Model – Embracing globalization and sharing risks” Read the book [PDF] ; Image: frontcover of the book
POLL: Does the Nordic model need to be reformed? (top of left column)
Other related posts:
Fed eyes Nordic Model
Manufactured Landscape - Landscape as Architecture
The Global Business
The current capitalist system