One important reason for the Nordic countries' success is often overlooked - the high level of trust among people in the Region.
The Nordic countries have recently attracted attention for their handling of the financial crisis. Last year, The Economist dubbed the Nordic countries 'the next supermodel' - a blueprint for other countries to follow. The Washington Post described Sweden as the 'rock star of the recovery'. At a time when global recession, austerity and the corrosion of welfare have taken their toll across Europe, many countries are looking for new models - and in doing so, they have discovered Denmark, Finland, Iceland, Norway, and Sweden.
The Nordic countries may be more vulnerable to global economic instability than other countries because their people expect the welfare system to provide a high level of security. As small, open economies, they are also sensitive to global shocks that can have an impact on our specialised export sector.
However, I am confident that the Nordic countries will overcome such challenges - not because of the splendidness and uniqueness of the Nordic model, despite what some international analysts may think. Indeed, the Nordic model is not necessarily as unique as it once was. According to a recent study (The Nordic Model - challenged but capable of reform) carried out by leading Nordic economists and published by the Nordic Council of Ministers, other countries have taken inspiration from the Nordic Region. For example, generous welfare systems, collective bargaining and high taxes are features of many societies around the world.
But it is not the different systems that distinguish the Nordic countries from other developed nations. Instead, there is another aspect that is particularly characteristic of the Region - trust. Nordic citizens display significantly higher levels of trust towards each other, politicians, government and the legal system than people in other parts of the world. Trust knits together communities in which people support and do things for each other, and this in turn provides a basis for general economic productivity and growth.
Trust promotes economic growth, but it is also a social outcome. Research shows that, in many ways, trust stems from a system of governance that is afforded legitimacy by its citizens. In the Nordic countries, trust has been generated by delivering relative economic equality and maintaining low levels of corruption. The degree of trust in the governance structures, and especially in the legal system, also influences mutual trust between people.
In order to avoid economic recession, instead of merely looking at how the Nordic countries have shaped and balanced different systems, governments should focus on being transparent and maintaining high levels of integrity and fairness.
Still not convinced that trust is the reason why the Nordic countries have managed to overcome the economic downturn? The European Social Survey, conducted in 2010, measured the level of trust around Europe. In the Nordic countries, the level of trust in other people was 6.6 (on a 0-10 scale); in politicians 4.8; and in the legal system 6.9. In continental Europe, the comparative figures were 5.0, 3.9 and 5.3, respectively. In southern Europe, which was most severely hit by the economic turmoil, the figures were even lower: 4.5, 2.2, and 4.1. In these countries, as soon as people stopped trusting each other, the markets froze, almost overnight, and the economy ground to a halt.
It is not only in economic terms that trust represents a valuable national asset. Trust has also been fundamental to the health reforms implemented in all of the Nordic countries in recent years, and will also be necessary for the unavoidable reforms coming up. If people don't see the benefits of reforms and believe them to be in their interests, the reforms won't have the desired effect.