Why Sweden is So Tough; Those who think that the Swedish welfare model is too soft to survive in the global era miss the point. Yes, we are more generous than most, but we are far more competitive, too.

Byline: Goran Persson (Persson is the prime minister of Sweden.)

The economic success of the Scandinavian countries is surprising, perhaps, for some. It is often said that in the era of globalization, countries with generous welfare policies cannot be competitive. It is claimed that countries with high taxes and large public expenditures cannot be successful growth nations. The rapid development of the Scandinavian countries during the past decade is a powerful argument against this logic.

True, we live in times of sweeping change. The last 10 years have taken us on a great journey, full of rapid and fascinating developments. The overall prosperity of the world is growing. People are rising out of hunger, oppression and illiteracy. More countries have become democracies. Research and new technology offer new opportunities. Medicines are becoming cheaper and more widely accessible. At the same time new threats--in the form of terrorism, infectious diseases and climate change--spread fear around the world.

But change itself is nothing new for an open, trade-oriented country like Sweden. For us, all this is challenging, but also exciting. Our economic growth is largely a product of continuous structural adjustments. We have encouraged those changes, and continue to do so. Our openness and innovative climate has helped us to build a number of successful international companies such as Saab, IKEA, Volvo, Ericsson and Asea.

What is new is the pace of change. The globalization of economies and markets affects people's everyday lives. For society as a whole, the continuous shift of labor into new, more productive areas is of great benefit. But for individuals, these changes can carry great costs. Workers in the most- developed countries face competition from workers with lower wages and less secure working conditions. Businesses face tougher pressure on prices and a rapid increase in efficiency demand. At the same time, more jobs require high education and specific skills, and an increasing number of jobs are emerging in the service sector.

Along with the other Scandinavian countries, Sweden has been coping well with this fast-changing environment. Our country has had higher growth over the past 10 years than the EU and Organization for Economic Cooperation and Development (OECD) average. Sweden is held to have the world's most internationalized economy after Ireland. We have been designated the most creative country in the world and the best climate for innovation in the EU. Sweden is third in the World Economic Forum's ranking of growth prospects, and invests more in education than any other OECD country except Denmark. Sweden is also in the lead at balancing growth and environmental concerns.

International studies confirm it time and again: Sweden is one of the world's most modern ...