Swedish economic model 'is the one to watch'
Published 06/02/2014 | 09:00
Northern Ireland needs to look to countries like Sweden to sharpen its economic performance as the Scandinavian powerhouse soars to the top of an international economic premier league index.
Sweden was at the top of business adviser PwC's latest Escape Index, which ranks countries on economic, political, social, technological and environmental factors.
As well as strong home-grown business with an emphasis on engineering and public-private partnership ventures, Sweden also attracts high levels of inward investment.
In bad news for Northern Ireland, its two main trading partners Ireland and the UK have dropped in the index, which took a snapshot of international prosperity in 2012.
The UK has been downgraded to 19th place – down six places on its 2007 position and seven places below its placing in 2000.
And Ireland is at 13, seven places below its 2007 position.
As Northern Ireland's neighbours falter, the league's top positions have been taken by Switzerland and Singapore as well as Sweden – with Ireland and the UK joining Italy, Portugal and Spain in a slide towards the doldrums.
John Hawksworth, chief economist at PwC and co-author of the report, said: "The UK continues to score well as an easy place to do business and recent sharp falls in unemployment show the flexibility of its labour market.
"But the UK was hit hard by the global financial crisis – since then it has had relatively low GDP per capita growth and high inflation, although both measures improved significantly during 2013."
Dr Esmond Birnie, PwC's chief economist in Northern Ireland, said that while Northern Ireland was not eligible for the PwC index, its economy had been ranked 42 out of 145 countries in the Northern Ireland Competitiveness Index, which was produced for the Economic Advisory Group.
The UK was ranked at number eight, and the Republic at 27.
Dr Birnie said Sweden and Singapore's economic models were among six studied as part of an independent review of economic policy, because of their status as "relatively small but highly competitive global economies".
The review pointed to Sweden and Finland having levels of business expenditure on research and development five to six times higher than Northern Ireland.
And in Sweden, spending on research and development accounted for 3.7% of GDP – compared to 0.5% of GVA (gross value added) in Northern Ireland.
Sweden had relatively high levels of foreign direct investment, at 64%, while exports represented 54% of GDP.
Dr Birnie also pointed out that Swedish design has also been the envy of the world – along with its record of withstanding global economic turbulence. But he added: "How transferable that is is debatable, given that as far back as the 1930s people have been citing Sweden as an economic ideal as unemployment remained low despite the Great Depression."