economic history. before the crises in the 1930s and particularly before world war one, there was a period characterised by openness, increased cross - border trade and growing international capital flows. major technical advances in the 19th century were introduced successively as the production of goods and services gradually become more modern. these developments peaked in the 1920, a period of high economic growth in many countries. stock - market investors as well as consumers looked forward to rising future income. these expectations were broken, however, when the gains from the new technology, instead of leading to rapidly rising corporate profits, accrued mainly to the national economy in the form of a lower price rise and substantial real wage increases. with the global depression in the 1930s, the move towards further integration was checked. a number of decisions to raise tariffs and prohibit international capital movements exacerbated the economic situation. this made the negative consequences for the global economy even more serious and the international economy landed in a deep depression. developments in this period demonstrated that protectionism and closed doors are not conducive to higher living standards. after world war two, some minor steps were therefore taken once more towards increased international cooperation. the deregulation of trade began in earnest in the 1950s and financial deregulation started in the 1970s. important breakthroughs in technology followed in their wake. all this heralds another favourable period of rising living standards in the countries that manage to reap the benefits. turning now to sweden, there are a number of parallels with developments here in the 19th century. from a poor agrarian society to a wealthy industrial nation in the early 19th century sweden was still a poor country. strategic social institutions were in a shaky state. the form of government was unstable, the payment system was rather chaotic and there was a general shortage of credit facilities. people who wanted to try something new found themselves restricted. many saw no alternative to emigrating and trying their luck in america. it seems that more than a million people left sweden for the new country in the west before the process of industrialisation began in earnest here. less than a hundred years later, at the end of the 19th century, the swedish economy had undergone a dramatic transformation. inflation was low and the payment system functioned properly. the country vibrated with energy in every sphere. an impressive number of new products were developed on the basis of swedish inventions and many of them became world leaders. swedish financial experts were involved early on in exploiting the innovations. more and more people found work, living standards

rose and sweden achieved one of the highest growth rates in the world. when it comes to the causes of sweden ’ s rapid economic transformation, there are some differences of opinion. the industrialisation taking place elsewhere was probably a major factor. another was the possibility of importing capital for large investments. domestic reforms in key areas may also have helped create the conditions for growth. price stability was presumably of some significance. low, stable inflation reduces uncertainty about the future for those who have to plan for the long term. confidence in the commitment to price stability was gradually built up after parliament in 1830 decided to base the currency on the value of silver. another important factor was probably the development of the credit system in the 19th century. banks were established and financial know - how grew after interest controls had been abolished. this made it possible to finance industrial investment and exploit all the new inventions. an increasingly stable form of government no doubt also contributed to the transformation. the constitution was reformed by degrees and served to guarantee stability. business enterprise benefited from the abolition of trade guilds, the freedom to trade and the introduction of joint stock companies. another import measure was, of course, the introduction of compulsory education, which led in time to increased human capital. this is not intended to be a complete account of all the factors behind sweden ’ s transformation from a poor country into a rapidly growing industrial nation. my point is that, if a number of institutional changes had not been made, the outcome would have been less favourable. these changes provided a stable framework for the process of industrialisation and ensured that our country could benefit from the ongoing globalisation. realignment of sweden ’ s economic policy it may be asked whether the good growth at present can also be attributed to a realignment of swedish economic policy. there are no doubt those who consider the political decision - makers could have gone further in this direction, just as there are others who think they have gone too far. i shall not enter that discussion but simply note that a number of important decisions have been made in the past ten to fifteen years. they include the deregulation of credit and foreign exchange markets, the reform of the tax system, changes to components of the transfers system and the enhancement of competition. all this has helped the swedish economy to function better. moreover, price stability is now monetary policy ’ s statutory objective and the riksbank, now also formally independent, has been made accountable for this. other steps, in the form of a far - reaching