Why Swedish productivity has slowed down
Anders Åkerman and Horng Chern Wong, researchers in economics at Stockholm University, examine the slowdown in Swedish productivity growth in a new report. The report was presented last week at a seminar organised by SNS.
Anders Åkerman and Horng Chern Wong, Department of Economics at Stockholm University.
Declining economic dynamism is holding back productivity
Since the early 2000s, productivity growth in Sweden has weakened. In the report Swedish productivity: How well are our productive resources used?, the researchers analyse how effectively labour and capital are allocated across firms – a key determinant of the economy’s long-term development.
The findings show that resources are now less frequently reallocated from less productive firms to more productive ones. At the same time, both business start-ups and firm closures have declined, suggesting a slower pace of structural transformation in the business sector.
One important conclusion is that the most productive firms are often too small relative to their productivity levels. This may indicate that firms face barriers to expansion, such as regulatory constraints, taxation, or other market conditions. The number of high-growth firms has also decreased over time.
”Put simply, Sweden’s best firms are too small, and they appear to find it harder to grow than in the 1990s. This affects all of us as citizens and consumers in a negative way through lower wage growth, higher prices and fewer product choices,” says Anders Åkerman.
The report also shows that productivity could, in theory, increase if barriers limiting the mobility of capital and labour were reduced. At the same time, the researchers emphasise that certain regulations serve important social purposes, for example in areas such as workplace safety and environmental protection. The policy challenge is therefore to identify measures that hinder growth without generating corresponding societal benefits.
”The Swedish social model with stable real wage growth and a strong welfare state ultimately rests on a productive business sector. The results we find in our report should concern policymakers,” says Horng Chern Wong.
About the report
The report is part of the SNS project Productivity, Competitiveness, and Sustainable Growth, and was presented at a live seminar. Find out more:
Swedish productivity: How well are our productive resources used?
Anders Åkerman and Horng Chern Wong were also interviewed by Dagens industri in connection with the report’s release. You can read the interview here (in Swedish):
Forskarnas larm: Sveriges bästa företag är för små
More about the researchers
Anders Åkerman
Last updated: 2026-02-23
Source: Department of Economics