Title: The role of excess capacity in reaching and holding on to success: evidence from Swedish industrial development

Authors: Ari Kokko

Addresses: European Institute of Japanese Studies, Stockholm School of Economics, PO Box 6501, SE-113 83 Stockholm, Sweden

Abstract: During the second half of the 19th century, Sweden was transformed from a poor agricultural economy into an industrial economy with a relatively high level of technology. This development was spearheaded by raw material intensive industries: wood products, pulp and paper, and iron ore. Today, the same industries are still highly competitive and make up a substantial share of the Swedish industrial sector. This article asks how Sweden was able to industrialise so rapidly, and how raw material intensive industries have maintained their competitiveness for over 100 years. We argue that excess capacity in learning, human capital, and institutions account for part of the answers to both questions. We also argue that benchmarking – drawing on the experiences and lessons from competitors and role models – may provide a tool for deciding what kind of excess capacity may be needed to prepare for various challenges in economic and industrial development.

Keywords: economic growth; excess capacity; forestry industry; institutional development; learning; Sweden; human capital; benchmarking; economic development; industrial development; wood products; pulp and paper; iron ore; raw materials; timber products.

DOI: 10.1504/IJLC.2005.008002

International Journal of Learning and Change, 2005 Vol.1 No.1, pp.122 - 140

Published online: 24 Oct 2005 *

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