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

capita in the United States and about $3,200 per capita in France. Sweden is second to the United States in telephones and television sets per capita, and third behind the United States and Canada in per capita ownership of automobiles. During most of the 1960's, Sweden led Europe, on a per capita basis, in construction of dwelling units. Comprehensive welfare programs include an extensive social security system, medical services and sickness benefits, unemployment compensation and retraining allowances, rent subsidies, and family allowances.

Sweden's industrial development has intensified its dependence on foreign markets and sources of supply. It imports essential raw materials, fuels, semimanufactures, and components for its industries, as well as finished manufactures not produced domestically. To maintain producing plants of sufficient size to yield economies of large-scale operations, on the other hand, it must sell a large proportion of its industrial output to foreign markets; the domestic market is too small to support large-scale producing units. The relatively high socks of labor in Sweden favor specialization in high-quality, high-value products; such specialization further increases the country's dependence on foreign markets.

Government economic policies in Sweden combine an emphasis on the social and economic responsibilities of the state with a determination to foster vigorous and competitive private enterprise. Policies have emphasized rapid structural change to achieve rationalization and productivity growth and generally have avoided measures to protect declining sectors. Although social welfare objectives are basic to Sweden's economic planning, considerable priority is accorded the balancing of foreign transactions to assure the economic growth necessary for the achievement of welfare goals. Adequate investment is also stressed in the attempt to foster sustained, balanced economic growth and full employment. Other prominent goals include a more equitable distribution of income and governmental control over the exploitation of the country's natural resources. Heavy stress is placed on the development of indigenous resources to attain a level of self-sufficiency adequate for wartime needs. Environmental protection and control have received considerably increased attention.

A major acceleration of Sweden's economic growth occurred between 1954 and 1963, when real gross domestic product (GDP) rose at an annual average rate of about 4.2%. Contributing to the virtually uninterrupted growth in those years was a substantial rise in the proportion of GDP used for investment — from 19% in 1954 to 22% in 1963. At the same time, Sweden's domestic prosperity was matched by a generally balanced external position.

Since the mid-1960's, however, Sweden's growth pattern has changed substantially; fluctuations in economic activity have been more violent, and growth has slowed. Annual percentage increases in real GDP were as follows:

During 1964-71, real growth decelerated to an annual average rate of 3.8%, and in the latter part of the period, the investment ratio and capacity utilization fell markedly. Hesitant fiscal policy and the delayed impact of monetary policy contributed to those results. The recession that occurred in 1971 was deeper than any earlier postwar recession; capacity utilization was low, and the share of investment in the GDP fell to 21% from a high of 24% attained in 1968. The changing pattern of domestic economic growth was accompanied by a sharp deterioration of the balance-of-payments position, largely due to spiraling cost-push inflation. This deterioration was sharply checked by the 1971 recession, which halted import growth and led to a substantial, but temporary, improvement in the payments position.

A limiting factor in the postwar development of Sweden has been the overall tight labor supply. The decade of the 1960's was characterized by virtually

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