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Published by: Oxony20 on Jan 29, 2014
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Department of Economic History
Jonas Ljungberg and Lennart Schön Domestic Markets and International Integration.
Paths to industrialization in the Nordic countries
15, Wednesday
February, 2013
Alfa 3004
Jonas Ljungberg and Lennart Schön
Domestic markets and international integration. Paths to industrialization in the Nordic countries
 This article scrutinizes the role of structural change and foreign trade in the Nordic countries, except Iceland, in industrialization prior to 1914. Sector contribution to GDP as well as the role of the foreign trade is compared across the countries. The comparison uncovers different paths to industrialization that cannot be explained by reference to received views, such as the shock of free trade or open economy forces. Denmark was not only richer than the rest of the
“Nordic Periphery” but also earlier in industrialization.
 Furthermore, agriculture had a much neglected role in Swedish catch-up, and despite its relatively large export sector, Norway lagged behind, as did Finland. Economic growth was characterized not only by rising exports but also by capital imports and increasing consumption, indicating wider economic and social change. Different sector structures in the Nordic countries largely explain why there was no clear pattern of catch-up or convergence, neither in the region nor in relation to the Western European leaders. We conclude that the social capability of the Nordic countries to integrate and respond to external influences 1850-1914 must be seen in the perspective of the evolving domestic markets and the prior establishment of market institutions. Key words: Convergence, industrialization, structural change, foreign trade.  JEL classification: N13, O14
In a European perspective, the Nordic countries are cases of successful industrialization and growth from the second half of the nineteenth century. This success has traditionally been ascribed to the performance of the export sector and open economy forces, but over the last thirty years internal factors have become more prominent in explanations and have even been suggested to offer the prime cause of the industrialization. In this paper, we will apply a comparative approach on the four Nordic countries
 leaving out the fifth, Iceland. With only a few exceptions, the countries have been dealt with as singular cases but we think the comparison is useful, in particular when the aim is to distinguish between causal factors.
 A very broad comparative approach was, however, provided in the literature on globalization where the Scandinavian countries figured as particularly successful upshots of open economy forces in the late nineteenth century.
 While the export argument, and even more so the globalization thesis, tend to pass over what Abramovitz termed the problem of social capability
 in the individual countries, proponents of the internal roots of development have sometimes forgotten about the broader context. In this article, we want to strike a balance between the role of internal factors and open economy forces, respectively, for the growth and modernization of the Nordic countries in the nineteenth and early twentieth century. In short, open economy forces were crucial for the Nordic performance but, for example, the fact that imports exceeded exports during the industrialization should remind us that the full picture requires a closer look at what was going on in the interior. And differences are as telling as similarities in success.
 The comparative approach seems to have been reserved for encyclopedias: Jörberg,
 Nordic Countries
 (1973); Hornby,
Dänemark, Norwegen und Schweden
(1992); Ljungberg, ‘
/Williamson, ‘Open Economy Forces’(1995) and ‘
Education, Globalization, and Catch-
 (1995); for a critique and a mo
deration, see Ljungberg, ‘
Catch Up
’(1996) and ‘
Impact of the Great Emigration
’ (1997); Schön, ‘Internal and External Factors’
Abramovitz, ‘Catching Up’

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