2014 Index of Economic Freedom

Sweden

overall score73.1
world rank20
Rule of Law

Property Rights90.0

Freedom From Corruption92.3

Limited Government

Government Spending21.4

Fiscal Freedom42.9

Regulatory Efficiency

Business Freedom91.1

Labor Freedom52.9

Monetary Freedom82.5

Open Markets

Trade Freedom87.8

Investment Freedom90.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 9.5 million
  • GDP (PPP):
    • $393.0 billion
    • 1.2% growth
    • 1.0% 5-year compound annual growth
    • $41,191 per capita
  • Unemployment:
    • 7.9%
  • Inflation (CPI):
    • 0.9%
  • FDI Inflow:
    • $13.7 billion
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Sweden’s economic freedom score is 73.1, making its economy the 20th freest in the 2014 Index. Its score has increased by 0.2 point since last year, with improvements in fiscal freedom and trade freedom outweighing combined small declines in business freedom, labor freedom, and freedom from corruption. Sweden is ranked 10th out of 43 countries in the Europe region, and its overall score is above the world and regional averages.

Over the 20-year history of the Index, Sweden has advanced its economic freedom score by 11.7 points, the second best improvement among developed economies. Substantial increases in eight of the 10 economic freedoms, including financial freedom, the management of public spending, business freedom, and investment freedom, have enabled the economy to advance from “moderately free” to “mostly free.” In the 2014 Index, Sweden has achieved its highest economic freedom score ever.

Openness to global trade and commerce has propelled economic dynamism, and Sweden has rebounded relatively quickly from the global recession. The financial system remains stable, and prudent regulations allowed banks to withstand the global financial turmoil with little disruption. Sweden has long benefited from institutional strengths that include strong protection of property rights and minimum tolerance for corruption.

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Background

Sweden joined the European Union in 1995 but rejected adoption of the euro in 2003, and its public remains hostile to eurozone membership. The center-right Alliance for Sweden headed by the Moderate Party, led by Fredrik Reinfeldt, currently leads a minority government. There were riots in the largely immigrant suburbs outside of Stockholm in May 2013. Sweden’s economy was healthy before the international financial crisis, but a downturn in 2009 led to a slight increase in unemployment. Banks are well capitalized, and Sweden has weathered the financial crisis relatively well. Principal exports include automobiles, telecommunications products, construction equipment, and other investment goods.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 92.3 Create a Graph using this measurement

Corruption rates are generally low, and anti-corruption measures discourage bribery of public officials and uphold government integrity. However, Sweden was admonished by the OECD in 2012 for insufficient enforcement of its foreign bribery laws. The rule of law is well maintained. The judicial system operates independently and impartially, with consistent application of laws. Property rights and contract enforcement are very secure.

Limited GovernmentView Methodology

The top individual income tax rate is 57 percent, and the top corporate tax rate has been cut to 22 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The overall tax burden is 44.5 percent of GDP. Public expenditures make up about half of GDP, and public debt is below 40 percent of GDP. The government is attempting to expand investment in infrastructure and research while reining in welfare spending.

Regulatory EfficiencyView Methodology

It takes three procedures and 16 days to incorporate a business, but completing licensing requirements can be time-consuming and costly. Bankruptcy procedures are straightforward. Labor regulations continue to be rigid, with the non-salary cost of hiring a worker considerable. Sweden’s agriculture minister has led a courageous fight to eliminate all European Union farm subsidies and let the markets dictate food prices.

Open MarketsView Methodology

EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to trade. Sweden generally treats foreign and domestic investors equally. The economy includes several state-owned enterprises. The well-developed financial sector accounts for about 4 percent of GDP and continues to fare quite well, with stability firmly in place. Banking regulations are sensible, and lending practices have been prudent.

Country's Score Over Time

Bar Graph of Sweden Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Sweden to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81.60.6
2Ireland76.20.5
3Denmark76.10.0
4Estonia75.90.6
5United Kingdom74.90.1
6The Netherlands74.20.7
7Luxembourg74.20.0
8Germany73.40.6
9Finland73.4-0.6
10Sweden73.10.2
11Lithuania730.9
12Georgia72.60.4
13Iceland72.40.3
14Austria72.40.6
15Czech Republic72.21.3
16Norway70.90.4
17Belgium69.90.7
18Armenia68.9-0.5
19Latvia68.72.2
20Macedonia68.60.4
21Cyprus67.6-1.4
22Spain67.2-0.8
23Poland671.0
24Hungary 67-0.3
25Albania66.91.7
26Slovakia66.4-2.3
27Malta66.4-1.1
28Bulgaria65.70.7
29Romania65.50.4
30Turkey64.92.0
31Montenegro63.61.0
32Portugal63.50.4
33France63.5-0.6
34Slovenia62.71.0
35Italy60.90.3
36Croatia60.4-0.9
37Serbia 59.40.8
38Bosnia and Herzegovina58.41.1
39Moldova57.31.8
40Greece55.70.3
41Russia51.90.8
42Belarus50.12.1
43Ukraine49.33.0
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