Nordic Welfare Spending, Cuts and GDP Growth
Notes on how taxes, welfare services and GDP developed in the postwar years.
When Social Democrats began taking power in Nordic countries how did spending and economic growth get affected? This is what we will look at in this story.
GDP Growth
Comparing GDP growth between countries is quite hard. You could convert the GDP for every country to dollars for each year. But then you will get unnatural fluctuations based fluctuations in currency exchange rates. For this reason I have taken GDP values in local currency for each year and plotted GDP development for each country relative to this.
Thus the GDP for every country is set to 100 in 1960. Thus this graph does not show absolute GDP but rather GDP development since 1960. It gives a sense of how much the economy has grown.
To analyze the growth it is worth being aware of various important time periods and events which has affected economic growth. Internationally this happens:
- 1973 to 1974 — Oil price jumps from $22 to $60 per barrel.
- 1979 to 1980 — Jump to $130
- 1986 — World oil prices collapse. Around $63 to $30.
- 1988 to 1991 — Collapse of the Soviet Union. In…
