Economic Trends In United States, Sweden, France and Germany


The private sector plays the dominant role in the U.S. economy. U.S. businesses enjoy greater flexibility than their counterparts in Western Europe and Japan to expand production, lay off workers and develop new products. U.S. firms are global leaders in technological advances, especially in computers and in medical, aerospace and military equipment.

The onrush of technology has expanded the gap in education and professional and technical skills between those at the bottom of the labor market and those at the top. The people at the bottom increasingly face difficulties in obtaining pay raises, health insurance and other benefits. Since 1975, most of the gains in household income have gone to the top 20 percent of households.

The economic downturn that began in 2008 drove the U.S. unemployment rate to 8 percent in early 2009, unacceptably high by U.S. standards but quite common in Western Europe.


Sweden’s tax burden remains one of the highest in the world. But the election victory of the center-right Alliance for Sweden coalition in September 2006 marked the beginning of a new era of Swedish economic policy — a shift away from the “cradle to grave” social welfare system that the defeated Social Democratic Party had implemented for much of the past century. The main economic theme of the new center-right coalition is strengthening economic incentives to work and diminishing the attractiveness of living off welfare payments. The coalition also seeks to reduce the public sector’s role in the economy through privatization.


France has made substantial adjustments to its economy over the past two decades, decreasing public ownership and economic planning while giving more play to markets, especially financial markets. By 2000, the state’s direct control of the economy had been reduced to core areas of public service, such as the post office.

While it has the lowest poverty rate among the world’s large economies at 7 percent, in large part due to a commitment to social equity, France struggles with the demands of more open European and global markets.

The French economy is plagued by persistently high unemployment, typically between 8 percent and 10 percent.


The German economy, the largest in Europe, combines free enterprise and competition with a high level of social services. Reflecting a social compact between employers and employees, workers’ representatives share power with executives in corporate boardrooms in a system known as co-determination (mitbestimmung).

Germany is seeking to ease labor-market rigidities through a reform program known as Agenda 2010. The agenda includes easing regulations relating to work time, layoffs, taxes, welfare and social security payments. The agenda is intended to make it easier for businesses to hire and lay off workers as market conditions warrant. The agenda reduces business taxes to a maximum of 42 percent in the highest tax bracket and to 15 percent in the lowest bracket.


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