Is the Aurora Borealis an Inspiration to the Performance of Nordic Economic Sustainability?

Abstract

The Nordic countries are well positioned in the main international economic, social, and sustainability indices, and the scientific literature that supports these indices argues that a rise in these rankings promotes economic growth. With this unprecedented empirical study, we intended to assess whether, in the case of the Nordic countries, the long term maintenance of high positions translates into sustainable economic growth. The period considered was between 2004 and 2008, and we used the ARDL methodology to assess time series. The ARDL methodology has the advantage of providing us with short and long term coefficients. Using five of the leading international indices, we conclude that, for the Nordic countries, economic freedom is not important for economic growth, while business friendly regulation is the most important variable. Three important findings of our study (in which Granger causality complemented the ARDL methodology) are that these countries were able to adapt perfectly to the globalization process, entrepreneurship makes an important contribution to the continued economic and social success of these countries (allowing them to continue to enjoy their “Nordic welfare states” in these uncertain times), and corruption harms the Nordic economy. These variables have contributed to the countries’ economic and social sustainability.