2015 Index of Economic Freedom

Sweden

overall score72.7
world rank23
Rule of Law

Property Rights90.0

Freedom From Corruption89.0

Limited Government

Government Spending19.2

Fiscal Freedom43.0

Regulatory Efficiency

Business Freedom87.9

Labor Freedom54.0

Monetary Freedom85.5

Open Markets

Trade Freedom88.0

Investment Freedom90.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 9.6 million
  • GDP (PPP):
    • $396.8 billion
    • 1.5% growth
    • 1.3% 5-year compound annual growth
    • $41,188 per capita
  • Unemployment:
    • 8.0%
  • Inflation (CPI):
    • 0.0%
  • FDI Inflow:
    • $8.1 billion
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Sweden’s economic freedom score is 72.7, making its economy the 23rd freest in the 2015 Index. Its score has decreased by 0.4 point since last year, with improvements in four of the 10 economic freedoms outweighed by deteriorations in freedom from corruption, business freedom, and the management of government spending. Sweden is ranked 12th out of 43 countries in the Europe region, and its overall score is above the world and regional averages.

Despite its well-established welfare state and large government budget, Sweden has made marginal changes to improve its economic freedom and competitiveness. Over the past five years, economic freedom in Sweden has advanced by 0.8 point with gains in five of the 10 economic freedoms, including fiscal freedom, the management of government spending, monetary freedom, trade freedom, and investment freedom.

Sweden’s high-performing economy has built its success on openness to global trade and investment. Reforms over the past two decades reduced the role of government and introduced market mechanisms that set the foundations for today’s competitive economy. Sweden’s business freedom score is one of the highest in the world. Fiscal responsibility remains central to the new government’s policy proposals, but plans to reverse some of the previous government’s tax cuts in order to fund higher spending could hurt growth.

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Background

Sweden joined the European Union in 1995 but rejected adoption of the euro in 2003. The public remains opposed to eurozone membership. The economic downturn in 2009 led to a slight increase in unemployment, but unemployment levels appeared to be stabilizing in 2014. A general election was held in September 2014. After difficult negotiations, a new center-left coalition government consisting of the Social Democratic Party and the Green Party took office. Banks are well capitalized, and Sweden has weathered the financial crisis relatively well. Sweden’s economy is export-oriented; 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 89.0 Create a Graph using this measurement

Sweden is ranked 3rd out of 177 countries in Transparency International’s 2013 Corruption Perceptions Index. Effective anti-corruption measures discourage bribery of public officials and uphold government integrity. 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

Sweden’s top individual income tax rate is 57 percent, and its top corporate tax rate is 22 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals approximately 44.3 percent of the domestic economy. Public expenditures account for 51.9 percent of domestic output, and government debt is equal to 49 percent of gross domestic product.

Regulatory EfficiencyView Methodology

The regulatory framework facilitates entrepreneurial activity, allowing efficient business formation. The government generally takes a hands-off approach in sectors dominated by small businesses. The labor market is dynamic, although the non-salary cost of hiring a worker is high. Sweden has continued to lead the fight to eliminate all European Union farm subsidies while also limiting green energy support.

Open MarketsView Methodology

EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. Sweden generally treats foreign and domestic investors equally. The number of state-owned enterprises is relatively large. The modern and efficient financial system provides a wide range of financing instruments for foreign and domestic investors. Banks remain well-capitalized.

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 Download Charts

Regional Ranking

rank country overall change
1Switzerland80.5-1.1
2Estonia76.80.9
3Ireland76.60.4
4Denmark76.30.2
5United Kingdom75.80.9
6Lithuania74.71.7
7Germany73.80.4
8The Netherlands73.7-0.5
9Finland73.40.0
10Luxembourg73.2-1.0
11Georgia730.4
12Sweden72.7-0.4
13Czech Republic72.50.3
14Iceland72-0.4
15Norway71.80.9
16Austria71.2-1.2
17Latvia69.71.0
18Belgium68.8-1.1
19Poland68.61.6
20Cyprus67.90.3
21Spain67.60.4
22Slovakia67.20.8
23Armenia67.1-1.8
24Macedonia67.1-1.5
25Hungary 66.8-0.2
26Bulgaria66.81.1
27Romania66.61.1
28Malta66.50.1
29Albania65.7-1.2
30Portugal65.31.8
31Montenegro64.71.1
32Turkey63.2-1.7
33France62.5-1.0
34Italy61.70.8
35Croatia61.51.1
36Slovenia60.3-2.4
37Serbia 600.6
38Bosnia and Herzegovina590.6
39Moldova57.50.2
40Greece54-1.7
41Russia52.10.2
42Belarus49.8-0.3
43Ukraine46.9-2.4
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