The Case of the Impoverished Sophisticate: Human Capital and Swedish Economic Growth before World War I

Around 1850 Sweden had a stock of human capital wildly disproportionate to its very low income level. This situation contributed significantly to the speed of the growth spurt that occurred between that time and World War I. In the short run, this large human capital stock allowed Sweden to take fuller advantage of the new opportunities for exports which appeared around 1860. In the longer run Sweden benefited because it is easier to achieve a rapid accumulation of physical than of human capital. The disproportionate early accumulation of human capital is explained in terms of religious, political, and military events of the previous three centuries.