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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090018-7

B. Structure of the economy

1. Overview (U/OU)

Private enterprise predominates in Swedish industry, although there is an important admixture of state enterprises and private cooperative societies. The state owns or controls about 6% of all commercial and industrial enterprises in the country, including monopolies such as the postal and telegraph systems, radio and television networks, and liquor and tobacco production. The government (national and local) participates in the operation of the railroads and air carriers, and a number of government enterprises compete with private enterprises in industrial fields, particularly in the production of electric power, forestry products, iron ore, and steel. Government participation in industry has sometimes proceeded from a desire to develop industries and resources which private enterprise has considered too risky, and in some cases government participation has had a social motivation, such as keeping enterprises operating even when they have proven unprofitable in order to maintain employment opportunities.

Although the public sector participates to a relatively small extent in productive enterprises, it exerts a strong influence on the overall economy. The combined expenditures of the state and local governments and of the social security sector account for approximately one-third of GDP. Part of the expenditures are in the form of transfers to the private sector, with varying degrees of control being retained by the public sector. The magnitude of the public sector's demand for goods and services gives it a strong influence over the direction of economic development.

Cooperative societies account for 4% of all "productive" enterprises. They are concentrated in agricultural marketing and control over 30% of the country's food processing and about 15% of wholesale and retail trade, by value. Because they establish price standards and strive to control excessive price increases, the cooperatives are more influential in the economy than their share of employment and output indicate.

Approximately one-third of the GDP continues to originate in the industrial sector (mining, manufacturing, and electric power). The contribution of construction, an important barometer of investment activity, has been about 8% to 9%. The principal structural change evident in the economy over the last decade has been the increase in relative importance of agriculture, forestry, and fisheries. The latter activities — surprisingly for a country largely self-sufficient in foodstuffs and a leading producer of forestry products — account for less than 4% of the GDP, compared with almost 8% in the early 1960's. The relative importance of the major economic sectors is shown in the following tabulation of their respective percentage contributions to GDP in selected years:

Agriculture, even though limited by Sweden's relatively short growing season, supplies about 80% of the country's requirements for foodstuffs; tropical products and some vegetables must be imported. The government's agricultural policies aim at maintaining high levels of self-sufficiency without surpluses, while promoting increased mechanization and farm consolidation and encouraging a shift of labor away from agriculture. As a result of these policies and of a sustained strong industrial demand for labor, labor has been leaving the agricultural sector throughout the entire post-World War II period.

Swedish industry effectively combines natural resources, skilled labor, and technological know-how into a highly sophisticated industrial complex. The availability of rich deposits of iron ore, extensive forests ,and huge resources of hydroelectric power led to the development of the important metallurgical, wood processing, and chemical industries. The machinery and equipment industry is particularly noted for its ball bearings, telephone equipment, power equipment, automobiles, and ships. Ambitious research and development programs, in which state agencies and private industry have cooperated closely, have provided a major stimulus to industry.

Sweden's economy is one of the most internationally oriented in Europe. Almost half of its industrial output is exported, and manufactured products comprise almost four-fifths of the country's total exports. The international competitiveness of Swedish industry has been enhanced by direct investment in industrial plants abroad, by emphasis on quality production, and by mergers that have facilitated large-scale

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090018-7