The political and socio-economic enivonrment of the Nordics

Governments of the Nordic region run on a system of ‘negative parliamentarianism’. This is where the majority of elected members of parliament do not have to be in government, rather they do not oppose it.

Denmark, Norway and Sweden are constitutional monarchies, where the role of head of state is a king or a queen. The role is more ceremonial with elected officials running the country. Finland is a republic with an elected president as head of state. The Finnish president has executive powers on areas such as foreign policy and military decision-making.

Social care in the Nordics is of a high standard and while there are differences between each of the countries, the welfare state encourages social mobility, high quality health care and other free or subsidised public services. This quality of care necessitates high levels of taxation but by embracing free market capitalism and quality education, each of the countries is able to maintain high levels of employment. Economic activity is also encouraged through private ownership, good wage levels and free trade. For example – while spending is high in the provision of public services, many of the services are provided by private organisations.

Combined, this model of high levels of social security and free market principles is often referred to as "the Nordic Model".

The Nordic countries currently face a number of challenges. Their social and welfare model is coming under pressure from a typically Western issue; an ageing population. With more citizens relying on state-funded services there are issues around how this might be sustained longer-term. Immigration provides one answer as, typically, it is younger families and individuals looking to migrate to the Nordics; often attracted by the higher standard of living. However, world events have seen a massive increase in the number of people looking to migrate to northern Europe; with hundreds of thousands attracted to the Nordics, threatening the short-term viability of the social system.

At a country level, Norway might at first glance suffer from the global downturn in oil prices. However, while the sovereign wealth fund is impacted, the overall economy switches to focus on other areas, such as public investment projects. The net impact in 2015 was continued growth of approximately 1.5%.

Denmark and Finland are facing productivity challenges, particularly where welfare payments are at a level that means that work isn’t always an attractive option and all four countries are facing issues around integration of migrants into the workforce.

Overall however, the Nordic region is in generally good financial shape, with a strong well-educated consumer base and on average, high levels of disposable income.




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