Interesting comment that points to why economics is such a hard disciplline: Almost all of Sweden's large successful companies were created and grew during a period of very small government. - So does this indicate that small government is a cause for successful Swedish companies? It might, but since you can't recreate the experiment you will never know for sure, all you know is that there is a correlation. There are probably many other things that could have caused these particular companies to be successful. The Swedish system of education is one.

Agreed. It's a complex issue. However historically the combination of small government, trust and openness has proved to cause growth throughout the world.

The economist Mauricio Rojas wrote a very detailed analysis of the Swedish Economy and the Welfare State throughout history, which is available here: http://www.timbro.se/bokhandel/pdf/9175665891.pdf

I haven't read the full report yet, but it looks very interesting.

We have to be careful about the education as being treated as the golden ticket for growth. I believe a combination of good primary education and a strong research culture is of vital importance to growth, but without the right infrastructure for entrepreneurs it wont do anything.

Just look at all the people educated to the nth degree in failed communist economies to see what I mean. Also see the reoccurring debates here about the value of higher education for an additional counter point to education.

Sweden by the way were pioneers in using School Vouchers, something that the Democratic party in the US is heavily against.