Globalization will have dramatic effects on the Swedish economy - and by and large, positive ones. The entry of China and India into the world economy has already benefited Swedish consumers and will continue to do so on an even larger scale in the decades ahead.
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Three Channels of Globalization
1. The integration of China and India into the world economy,
2. the internationalism of firms and growth in cross-border business investment, and 3. The migration of workers between Eastern and Western Europe. A growth path where Western economies save and invest just enough to maintain their capital stock and educational level, where technological progress (if any) does not affect the balance between different sectors in the economies, and where China-India trade, the stocks of cross-border business investments, and the number of labor migrants are fixed at the pre-globalization levels. The gains from trade with the Asian giants give additional indirect gains
by (a) stimulating saving and investment and (b) shifting Swedish resources into knowledge-intensive activities, both of which will generate higher economic growth. At the same time, the integration of Eastern Europe means that Sweden will attract a large number of guest workers; and although most of these are likely to leave again, they will leave behind a permanent, positive influence. |