The Swedish economy is doing well thanks to innovation: an analysis from ARDL approach

Economic reforms in Sweden in the early 1990s would have achieved economic performance, social justice and sound public finances. This study aims to empirically verify the impact of innovation, human capital and taxation on the growth of the Swedish economy. Using the ARDL and cointegration approach, we find evidence that 40% of long-term GDP growth is explained by innovation. In addition, we present the evidence that human capital, through its component that represents health, promotes long-term growth. However, the component that represents higher education is a hindrance to short-term growth over the long term.