The Nordics are not quite as unique as you may think because a few other countries have similar or higher living standards and almost equally low-income differentials. However, it is quite legitimate to talk about the Nordic Model that combines high living standards, low-income disparities with low levels of poverty in a clean and safe environment where the general population respects the rule of law. That is a very rare combination of positive attributes that two recent independent scientific reports[1] on Happiness and Innovation clearly illustrate.
These outcomes are partly a result of our cultures that have naturally developed over the centuries, and, more recently, through institutions and policies that have distinct Nordic characteristics, like the following:
- Strong investments in human capital with universal education and healthcare,
- Flexible and secure in the labour markets,
- Extensive work-oriented public safety-nets financed by high taxes,
- Relatively efficient public sectors and tax systems, and
- Acceptance of structural changes supported by a high degree of trust in the society.
Unemployment has remained well below the European average even though the Nordics are now challenged by the impact of an ageing labour supply and faced with technical change and tough global competition in the export markets
Nordic culture has played a key role, going back hundreds of years, something that is more important than the newly created welfare state. Economists have not paid much attention to studying the impact of culture on economic outcomes, but it has been critically important for the development of the Nordic model.
There can be no question that it has been challenging to survive without working exceptionally hard in a hostile environment. Winters are tough up here in the North and the Nordic domestic economies are so small that it is an imperative to export goods and services into the global markets. Thus, the adapted culture is open with a strong emphasis on individual responsibility and hard work out of necessity.
In today’s world, the Nordic populations enjoy equality of opportunities in open democracies that place a high value on education and caring for those in need. Universal education, universal healthcare, and care of the young and old have all been developed over the recent decades as part of enlightened policies. This has provided a large pool of business folk, engineers, technicians, healthcare professionals and educators who understand the importance of knowledge and its application to innovations.
There can be no question that the Nordic economies are driven by innovations that provide the means to enjoy higher levels of productivity so that we are able to remain competitive in the export markets. The Nordic countries have systematically sought the most appropriate national policies where there is competitive advantage in the global markets.
Populations here have long understood the importance of fighting climate change by reducing the use of fossil fuels, by respecting nature and its natural diversity, by making a better use of land in agriculture and forestry, by keeping water sources clean, by reducing water usage, and, finally, by reducing energy consumption. Consumers are now understanding the importance of local foodstuffs, of consuming less meat and dairy products, and of seeking out alternative and sustainable sources of protein.
All of the above demands have a great significance for manufacturing and commerce, private consumption, and the public sector. Thus, the importance in recognizing that innovation as the key to remaining competitive and relevant in the global markets. Just as Apple smashed Nokia’s overwhelming position in the smart phone market, so the Nordic countries need to remain at the leading edge of innovation in business, commerce, science, education and in the s. If they just live off past achievements, the future will not support what has already been built. There is no need to re-invent the wheel, only find better uses for it or by making small changes to some of its characteristics. The wooden wheel became the way to move a cart, and later was morphed into a rubber tyre on a metal wheel to become part of vehicles and aircraft. Later it was morphed into dozens of high-tech metal- and plastic-based innovative materials suited for watches and other fine instruments as well as for huge turbines that spin in wind farms and in great hydro-electric dams in the harshest conditions.
[1] https://worldhappiness.report & https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2023-en-main-report-global-innovation-index-2023-16th-edition.pdf
Photo: Courtesy of ABB
