The economic situation in the periphery: Scandinavia until 1870

There was no economic transformation in Scandinavia until the last third of the nineteenth century. The region exhibited classic peripheral economic characteristics. Karl-Gustaf Hildebrand commented that Sweden is “a peripheral country that builds on her natural assets, exporting…forests and minerals, semi manufactures or simple and easily made products” (Hildebrand, 1992, 11, 13). Indeed, until 1870, the Scandinavian region experienced typical slow, pre-industrial economic growth. During the half-century between 1820 and 1870, its per capita GDP increased by only 18% compared with Western Europe's 54% growth. Per capita income in the three Scandinavian countries was only 63% that of Western Europe. Until 1870, Sweden had a typical one-dimensional agricultural character, with 72% of its active population working in agriculture and forestry, and only 15% in industry. Norway was similar, with 60% of employment in agriculture, forestry, and fisheries, and 16% in industry.

Agriculture was somewhat modernized and benefited from what Lars Magnusson (2000) suggests was an agricultural revolution. The traditional agricultural sector, however, was not an important factor in Norwegian and Swedish development. This was a consequence of the natural environment of these sparsely populated Nordic countries. Sweden had only twelve inhabitants per thousand square kilometers in the last third of the century, and Norway had only seven. Only 8% of the land in Sweden was cultivable. Although roughly two-thirds of the population worked in the primary sector, their contribution to the national income was limited – only 39% in Sweden and 45% in Norway in 1865.