The rampant growth rate of Swedish GDP per capita from the mid-1850s to 1913, as borne out by early versions of Swedish historical national accounts, has nurtured the notion that the Swedish rise to prosperity was propelled by the confluence of unproportionally high levels of sophistication and very low levels ... (Show more)
The rampant growth rate of Swedish GDP per capita from the mid-1850s to 1913, as borne out by early versions of Swedish historical national accounts, has nurtured the notion that the Swedish rise to prosperity was propelled by the confluence of unproportionally high levels of sophistication and very low levels of GDP per capita (Krantz and Nilsson 1975; Sandberg 1978, 1979). The purport of this nexus was captured famously by Sandberg’s (1979) depiction of Sweden as the “impoverished sophisticate”. This view was later supported also by more recent versions of Swedish historical national accounts. Krantz and Schön (2007) showed that Swedish GDP per capita by mid-nineteenth century was 80 percent of the average of Western Europe (excluding the UK and the Netherlands). The image of Swedish mid-nineteenth century backwardness has however been challenged by Edvinsson (2013). The figures of his, in contrast, show a level of Swedish GDP per capita that is equal with western Europe by the mid-nineteenth century.
The most important difference between the two versions of Swedish historical national accounts concerns the treatment of home production. In harmony with the recommendations of the System of National Accounts, Edvinsson (2013) attempted to include home production before 1950. This is particularly important in the case of Sweden since the grain growing season was very short. As a result of the long off season, home production offered one way of supplementing household incomes in the agricultural sector. Krantz and Schön (2007) made no systematic attempt to include home production, even though they added it to GDP occasionally to circumvent the shortcomings of the Industrial Statistics (Schön 1988; Bohlin 2003).
Discriminating between these two versions of Swedish historical national accounts is matter of great importance. Currently, the Krantz and Schön’s (2007) version underpins the frequently told narrative that Sweden, somehow, leapfrogged into modernization. Accepting Edvinsson’s (2013) version would imply a very different narrative. The great benefit of national accounts is that they can be calculated from output statistics, income statistics or as the sum of private expenditures, public expenditures, and net exports. All previous versions of Swedish historical national accounts have been calculated by the output method, except for parts of services output, which have been estimated from the income side. In this paper, however, we are instead calculating GDP entirely from the income side. Thanks to a parallel project aiming to trace the income distribution from 1860 onwards and using a social tables approach, we have amassed a great deal of information on labour and capital earnings. The information on earnings is based on income taxes and an assortment of complementary sources tracking those below the income threshold for paying taxes. Based on this mass of earnings information, we will construct new estimates of decadal GDP figures between 1860 and 1910. These new estimates will help us to forward our understanding of the growth trajectory and standards of living in Sweden from the mid-nineteenth century to World War I. (Show less)