Whether it’s Norway topping the 2019 HDI (Human Development Index) ranking, or all five Scandinavian countries featuring in the top 20 countries by GDP per capita, it is undeniable that Norway, Sweden, Finland, Denmark and Iceland are enviable in terms of economic development.

The economic model incorporated by these countries is known as the “Nordic model,” and is a mixed-economy styled system, gaining the best of both the free market and government-run worlds. The model has a large focus on producing high-quality pubic services from the state-run sector, including healthcare, pension payments and education.

One main reason why Nordic nations have progressed well, is due to the citizens’ trust in the government. Typically, agriculture was a widespread means of gaining income before the technological and digital revolutions, resulting in the farm-owners having similar economic objectives. This created homogeneity between communities, who instilled faith into the governments to respond to similar economic challenges that they were facing. As a result, the government changing policies to meet the needs of the people impacted many, and further solidified the Scandinavians’ reliance in their state.

Finland is notorious for having a consistently outstanding education system, and is frequently ranked number one. Former Finnish Prime Minister, Esko Aho, described that “after the civil war in the early 1900s, we focused on educational reforms,” in order to stimulate long-term economic growth, which would also boost employment. The changes have been effective, and Finland continues to preserve its concentration on education. For students, enrolment into primary schools starts at the age of 7, the days are shorter than in the UK, and there are fewer formal assessments. They believe that promoting a comforting environment motivates students to enjoy education rather than being overburdened by it, which will translate to long-term prospering and employment.

Furthermore, Norway’s sovereign wealth fund, is one of the factors contributing to create a sustainable and successful economy. After discovering a plethora of oil reserves in the North Sea, the state used profits from these resources and put them into a fund, which attracts foreign investment. The discovery of oil was carried out by a public-run company called Statoil, and is used to improve public services for the country. A sustainable approach is carried out by a designated council assigned to the fund, which prevents investment into firms which produce weapons, or those which pollute excessively.

Another aspect which shapes Scandinavian economies as we know them, is culture and labour productivity. All five nations are ranked within the top 13 for the productivity of labour per hour, higher than the likes of the UK and France. A work-driven culture is fundamental to the efficiency of businesses and production, and can contribute to increased exports or greater economic growth. Partly due to the flexible labour market, the Nordic citizens are generally considered to be happy people, with Finland topping the World Happiness Report. The work-life balance enables workers to be more productive, as working hours tend not to be as long as those in other nations.

It may seem as if Scandinavia is an ideal utopian society, but there is still some trouble in paradise: a high proportion of public sectors to GDP must result in high costs to taxpayers. The high-quality public services are funded by tax revenues, including income tax at around 50% of total income. Although salaries a high, the general cost of living can still be expensive for Scandinavians who earn lower incomes than the average. However, this is more of a problem for immigrants; those arriving from countries with lower costs of living will have to find employment as soon as possible, to meet the high costs.

Overall, Scandinavian countries have inevitably proven to be successful, but the economic model they utilise may not be applicable to other countries such as the UK, due to geographical, cultural and contextual differences and disparities between nations.