Regional inequality is low in Sweden compared to most other OECD countries, but has been rising over the past decades, fuelling discontent in parts of the country, whose inhabitants feel left behind. The younger population is increasingly concentrated in the largest cities, which also enjoy the highest productivity growth. Demographic trends exacerbate the difficulty in providing equal public services across the country. Healthy public finances are allowing the government to increase its support to municipalities and regions to adjust to demographic developments and local operating conditions. Beyond this effort, keeping regional inequality in check will require upgrading the sub-national government fiscal framework, enhancing public service efficiency, especially through digitalisation, and promoting regional convergence further, especially by strengthening the role of universities in regional knowledge and innovation networks.
