2013 Index of Economic Freedom

Sweden

overall score72.9
world rank18
Rule of Law

Property Rights90.0

Freedom From Corruption93.0

Limited Government

Government Spending21.0

Fiscal Freedom39.6

Regulatory Efficiency

Business Freedom93.2

Labor Freedom53.6

Monetary Freedom82.1

Open Markets

Trade Freedom86.8

Investment Freedom90.0

Financial Freedom80.0

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Quick Facts
  • Population:
    • 9.5 million
  • GDP (PPP):
    • $381.7 billion
    • 4.0% growth
    • 1.5% 5-year compound annual growth
    • $40,394 per capita
  • Unemployment:
    • 7.8%
  • Inflation (CPI):
    • 1.4%
  • FDI Inflow:
    • $12.1 billion
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Sweden’s economic freedom score is 72.9, making its economy the 18th freest in the 2013 Index. Its score has increased by 1.2 points since last year due to improvements in the management of government spending, monetary freedom, and freedom from corruption. Sweden is ranked 9th out of 43 countries in the Europe region, and its overall score is above the world and regional averages.

Recording a notable score improvement, the Swedish economy has become one of the world’s 20 freest economies for the first time in the history of the Index. Despite the high level of public spending on social programs, Sweden’s economic policies over the past decade have centered on transforming the public sector through downsizing and improved efficiency. Decisive tax reforms, which have made the corporate tax rate competitively low, have enhanced private-sector productivity.

Sweden’s economic resilience has long been sustained by solid foundations of economic freedom. The judicial system, independent and free of corruption, strongly protects property rights and upholds the rule of law. The economy is open to global trade and investment, and high levels of regulatory transparency and efficiency encourage vibrant entrepreneurial activity. Monetary stability is well maintained, and inflationary pressures are under control.

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Background

The center-right Alliance for Sweden coalition headed by the Moderate Party, led by Fredrik Reinfeldt, lost its absolute majority in September 2010 and currently leads a minority government. Sweden joined the European Union in 1995 but rejected adoption of the euro in 2003, and its public remains hostile to eurozone membership. Sweden’s economy was healthy before the international financial crisis but, being heavily dependent on European trade, experienced a downturn in 2009 that led to a slight increase in unemployment. Banks remained well capitalized, and Sweden has weathered the financial crisis better than other countries in Europe. 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 93.0 Create a Graph using this measurement

The rule of law is well maintained. Sweden’s judicial system operates independently and impartially, with consistent application of laws. Property rights and contract enforcement are very secure, and expropriation is highly unusual. Protection of intellectual property rights is consistent with world standards. Effective anti-corruption measures discourage bribery of public officials and uphold government integrity.

Limited GovernmentView Methodology

The top income tax rate is 57 percent, and the top corporate tax rate is 26.3 percent. Other taxes include a value-added tax (VAT) and a capital gains tax. The overall tax burden equals 45.8 percent of total domestic income. Government spending is equivalent to 51.3 percent of GDP. The budget balance has recorded a small surplus this year, and public debt is equal to a bit more than one-third of total domestic output.

Regulatory EfficiencyView Methodology

Sweden’s regulatory environment is highly efficient. In recent years, the minimum capital requirement for limited-liability companies was cut in half, making it even easier to establish a company. It takes only three procedures to start a business, compared to the world average of seven. Bankruptcy procedures are straightforward. Labor regulations continue to be among the most rigid in Europe. Monetary stability has been well maintained.

Open MarketsView Methodology

Trade policy is the same as that of other members of the European Union, with a common EU weighted average tariff rate of 1.6 percent. Additional non-tariff barriers increase the cost of trade. The modern investment regime is open and generally transparent, and regulations are applied consistently. The financial sector has regained much of its stability. 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
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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