Country Analysis and Solutions

Macroeconomic is a study of economy, which involves the study of a nation and all its determinants. Since it deals with one nation and has vast sense of correlation to various factors, therefore, macroeconomic is a lot more complicated than the study of a single corporation as in microeconomics. The analysis of macro economy in a country will encounter particular characteristics since every single country has particular resources, culture, and spending behavior, as components that shape a country’s economy among others.

For example, a country may have distinctive characteristics as they experience large amount of producer and consumer subsidies and misaligned currency as well, which becomes the underlying reasons behind the decreasing savings rates. In addition, as parts of the national effort to increase countries’ or organization welfare, leaders might take various policies that stimulate economic growth including policies to increase full employment, policies that encourage the use of technological to drive more output/products, and many other policies.

Moreover, policies to increase the full employment level of employment (e. g. , population growth, increasing labor force participation or decreasing frictional and structural unemployment) can increase potential GDP in the long run. Under such circumstances, a government might reduce income tax rates to include increasing take-home pay for all employees. In turn, the greater wages will drive the people to spend on leisure and encourage people to supply more labor (either work longer hours or enter the labor force). The long run supply of labor will shift to the right, reducing equilibrium wages and increasing potential GDP

Another approach to stimulating economic growth is technological change. Technological change refers to new production techniques that increase the output produced by any combination of capital and labor. Interestingly, as technology maturity takes some years, it suggests that at each stage will results in different number of outputs. Concerning the economic situation of a country, this paper will discuss the analysis of economic situation in Sweden that exhibit particular characteristics in politics, natural resources, country’s competitive advantages and also federal debt.

2. Country Background Sweden (officially known as the Kingdom of Sweden) is one of Nordic countries in Northern Europe, which become the most visited country among Nordic countries with over 5. 2 million visitors in 2007. The country that has population about 9. 2 million people occupies the area of 449,964 km2 (173,732 sq mi), which considered being the largest country in Northern Europe and fourth largest in Europe. The country is member of European Union since January 1, 1995. One contributing factor that shapes a country’s economy is war.

Fortunately, the country’s last war happen almost two centuries ago, in 1814, when the country by military means forced Norway to unite with Sweden although it was found that the union only lasted until 1905. Since 1814, Sweden continues maintaining peace by adopting a non-aligned foreign policy in peacetime and neutrality in wartime. The favorable peace and neutrality that Sweden experiences during the whole 20th century, the country is able to achieve the proper standard of living by mixing the high-tech capitalism and extensive welfare benefits.

In addition, the country also possesses modern distribution system, special internal and external communications, and a competent labor force (Central Intelligence Agency (CIA), 2008). From the natural resources point of view, the country is gifted to process iron, develop hydropower, take benefits of timber that become the competitive advantage for Sweden in trading internationally. Moreover, from the sector point of view, agriculture contributes only 1% of GDP and 2% of employment (CIA, 2008).

As part of stimulating the further economy growth, recently, Swedish government announce their plant to divest about $31 billion of state assets within the next three years in order to pay down the federal debt (Central Intelligence Agency, 2008). The Swedish government also pays attention to the social welfare by spending large amount of GDP on the sector compared to other developed countries (Figure 1). Figure 1 Spending on social welfare Source: BBC, 2008 3. Economic Profile 3. 1 GDP

In terms of GDP, Sweden has one of the highest GDP among Nordic countries. The country produces $455. 3 billion (GDP in official exchange rate) in 2007 and $338. 5 billion of GDP (purchasing power parity). In addition, the country also has the GDP per capita exceeded $37,500 in 2007 (CIA, 2008). In terms of GDP growth rate, Bahrain grew 2. 7% in 2006. Like most of the modern countries of the west, most of the GDP comes from the services sector (69. 7%), followed by the industry sector (28. 8%), and agriculture (1. 5%) (CIA, 2008).

Figure 1 Read GDP Growth of Sweden Source: Plumbot, 2008 3. 2 Inflation and the Labor Force Sweden has low inflation rate in the Nordic countries, 2. 2% in 2007. This reflected the relatively stable condition of the economy, without significant recession of bursts of growth. Sweden has a considerably large labor force. In 2007 alone, there was estimated labor forces amounted to 4. 839 million, representing over 50% of the country’s population. Most of them worked in the service sector (74%) followed by the industry sector (24%), and agriculture (2%).

The level of unemployment is nevertheless, quite high, accounting for 6. 1% in 2007 (CIA, 2008). 3. 3 Exports and National Currency In 2007, Sweden government has account balance is $37. 97 billion. Its external debt is $598. 2 billion. Exports of the nation amounted to $170. 1 billion annually, which mostly come from machinery (about35%), followed by leading industry and products like motor vehicles, paper products, pulp and wood, iron and steel products, chemicals in which the major export partners are Germany (10. 4%), Norway (9. 4%), and the US (7. 6%) (CIA, 2008).

The country imports amounted $151. 4 billion that composes of petroleum and petroleum products, iron and steel; foodstuffs, clothing in which the major partners are Germany (18. 4%), Denmark (9. 2%), and Norway (8. 3%) (CIA, 2007).

Reference:

BBC. (2008). Social welfare spending. Retrieved November 20, 2008 from http://news. bbc. co. uk/1/shared/spl/hi/pop_ups/05/business_comparing_welfare_states/html/2. stm Central Intelligence Agency (2008). Sweden.

Retrieved November 20, 2008 from https://www. cia. gov/library/publications/the-world-factbook/geos/sw. html Haller, Harold S. (1993). Managing with profound knowledge: A management process based on the Deming management theory. Harold S. Haller & Company Johanson, J. Wiedesheim-Paul, F. (1975). The Internationalization of the Firm: Four Swedish Case Studies. Journal of Management Studies: 305-322. Plumbot. (2008). Economy of Sweden. Retrieved November 20, 2008 from http://plumbot. com/Economy_of_Sweden. html