Open economy forces and late nineteenth century swedish catch-up. A quantitative accounting

Sweden recorded very high growth rates between 1870 and 1913. In 1870 Swedish real wages were only 52 percent as high as in British, and 30 percent as high as in the USA. By 1910, Swedish real wages were 5 percent higher than British real wages, and 59 percent as high as US real wages. This paper estimates that over 60 percent of this impressive Swedish catch-up on Britain was due to open economy forces: International labour and capital mobility, and international trade. Almost 90 percent of Swedens’s catch-up on America was due to these same open economy forces. Swedish history thus suggests that the economic convergence literature should pay more attention to Wicksell, Heckscher and Ohlin.