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List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Elements of Inequality. Role of the Financial System. Legal Protections. Measuring Inequality. Theories Explaining Inequality. Models to Reduce Inequalilty. Table of Contents Expand. The Nordic Model. History Helps.
A Model for Other Nations? Politics and Controversy. The Bottom Line. These nations are known for high living standards and low-income disparity. The Nordic Model includes social benefits such as free education, free healthcare, and guaranteed pension payments. Challenges of the Nordic Model include an aging population and an increase in immigrants.
Article Sources. It is encouraging for them to know that they can rely to the support of the biggest market in the world. It is also a guarantee that goods and services producing in these countries will have a much bigger market in comparison with their own. It will not be an exaggeration to say that these are the countries with the lowest crime rate in the world.
Scandinavia is a region where people have very high confidence in the judiciary and police, which is a very good basis for development of stable society. Perhaps this is the right place to mention that in the Nordic countries alcohol consumption is quite limited due to the highly inflated prices.
And this is not only a question of ethnic and religious equality. It comes also to gender equality. Iceland on the other hand is first in the world according to important state positions in the country, occupied by women. There are probably hundreds of other reasons besides these for the welfare and prosperity of the Nordic countries.
Some factors are more important compared to others, but one thing with certainly is a fact — Sweden, Norway, Finland, Denmark and Iceland are among the richest countries. And while other states from all around the world face more and more ruthless and serious global competition, the Nordic states become richer and year after year increase their international influence, turning Scandinavia into one of the most significant figures in the global economy.
Probably many people have ever wondered why the Scandinavian states are so rich. Why is Australian Economy so Rich? These reasons cannot be described in a few sentences. However, we tried to offer the most important of them: 1st reason: One of the hallmarks of the Nordic countries is the combination of large area and small number of people living there. The considerable wealth of these countries is easily distributable among the sparse population.
This means that the population has very high GDP gross domestic product per capita. The long coastline favors the development of water transport. Not accidentally for centuries the Scandinavians have always been known as exceptional sailors. Norway is a global manufacturer of oil that is extracted from the bottom of the North Sea. The associated wealth is inexplicable within the economic complexity approach, which seems like a drawback.
This is what is reflected in this plot. It also drives the efforts of most of the Gulf monarchies to diversify their national business models, shifting away from resource extraction and moving toward services and technology-intensive branches. Further statistical analysis of the relationship between growth of real GDP per capita and ECI pictured in Figure 3 shows that it is a superb predictor of long-term growth.
In fact, countries who grew successfully in the post-Cold War era, e. China, massively tilted their export portfolio towards sophisticated products and consequently enjoyed a steep increase in income, which continues today. These portfolio differences are depicted in trade spectrum graphs Figures The products at the far left are the most sophisticated, while the simplest are at the far right; the height indicates the value exported. The much sparser spectrum of the Norwegian economy in comparison to the other Nordic countries, which is due to the natural resource effect mentioned above, is apparent.
The other three Nordics exhibit a strong and dense portfolio across the board with a visible emphasis on more complex products in Finland and Sweden remaining relatively stable between and and a more balanced spectrum in Denmark. The latter is easily explained by the fact that Denmark has a higher production and export volume of agricultural products than the other countries.
Their deep integration in world trade is also visible in the spectrum of imported goods Figures 6 and 7 , although it is not as clear as it is for exports. Here, the Nordics really shine, with the exception of Norway, as they are similarly if not more dependent on imports, but more than make up for it by exporting high-tech products.
Through the lens of economic complexity, the success of the Nordics is a result of favourable framework conditions facilitating the building of complex and diverse economies whose major products stem mainly from the sophisticated core of the product space. Those framework conditions enable the small Nordic countries to technologically compete with countries multiple times their size. To retain their leading position, the Nordics must invest in developing more sophisticated products than competing economies like Turkey.
This applies to all complex economies, but constitutes a greater challenge to the Nordic countries with their comparatively small populations.
To identify optimal targets for innovation, different data has to be employed. Research teams, e. Still, given the comparatively simple method, the insights generated by the economic complexity approach are remarkably helpful in mapping structural advantages and weaknesses of economies and identifying opportunities for development.
The method correctly points out the big structural weakness of Norway and Albania, namely their high dependence on natural resource exports. While the spectrum results are similar for Albania, differences in framework conditions such as administrational efficiency, enforcing the rule of law and containing corruption, will likely prevent a similarly favourable outcome there.
The economic complexity approach reframes these classical factors as enablers of successful development, with targeted development of the capabilities needed to produce sophisticated output being what constitutes the actual value.
Finally, there are small countries such as Israel, Singapore and Switzerland that exhibit institutional traits markedly different from those of the Nordics while enjoying a high level of prosperity and complexity.
Larger and more authoritarian countries also fare quite well economically without implementing the Nordic model of equality and welfare. The Nordic model is not the only blueprint to follow for economic prosperity; indeed, there are many which are compatible with the economic complexity approach.
It is, however, the one blueprint associated with the highest degrees of civil liberties and welfare, which is the core of its uniqueness and appeal. DOI: Show all results.
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