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The Reluctant Infrastructure Manager: 70 Years of Government Ownership of Transport Infrastructure in Sweden
KTH, School of Architecture and the Built Environment (ABE), Urban Planning and Environment, Urban and Regional Studies.ORCID iD: 0000-0003-3878-0930
2013 (English)Report (Other academic)
Abstract [en]

Governments have a choice whether to intervene in the transport infrastructure sector to manage, finance and organize and sometimes own the assets of the sector or to rely on markets and private sector actors for the provision of these systems. In Sweden, like in most other countries, the government has, since the 19th century, gradually taken a more active role both for railroads and roads, including most of the roles outlined above.

From the 1840s, railroads and a more modern road system developed based on a mix of government and private/local government initiatives. A step towards centralization was taken in the 1930-40s, as the private- and local government-owned railroads and rural public roads, a majority of the total system, were taken over (nationalized) by the State. The government still owns these assets.

In this paper, the development of railroad and road infrastructure is analyzed based on a co-evolutionary perspective, including the influence of technology, economics and politics. The perspective is used in order to facilitate an understanding and explanation of the successive steps that led to the decision to nationalize railroads and roads. The following time periods up to 2010 are also analyzed with the perspective as a relief.

Based on a study primarily of the public documents of the time it is argued that the nationalization can be seen as a more or less logical step in a process of centralization that had been going on since the mid-1800s. Business economics rationality and cost reduction were important arguments for nationalization. Arguments in favor of the nationalization were that it was seen as a modernization of the sector, which also allowed for the introduction of new technology and a reduction of differences in road taxes. Welfare economics reasoning and discussions on natural monopolies were, however, not the focus.

It is further argued that the government waited for some time to take the final steps to nationalize the railroads and roads. The government entered the scene as a rather reluctant infrastructure manager.

The Parliament’s 1963 decision on transport policy, which is generally seen as among the most important policy decisions in the sector since the 1940s, might, it is argued, have been given a too important role. However, it is argued that the proposals put forward by the 1944 Transport Committee, which were never formally decided upon, were perhaps more influential. These proposals were largely market-friendly within the framework of the government ownership and financing model. The railroad and road systems should be run more or less as private businesses within this framework, with a focus on business economics efficiency, a full cost responsibility, and a competition view on the transport market.

The transport policy decision was formally approved in 1963, and it was largely based on the principles of the 1944 Transport Committee. These policies opened for a further restructuring of the transport sector, including transport infrastructure. The road system was expanded, while the railroads contracted, suffering from high costs and a decreasing market. There was, however, a gradually growing criticism towards both the planning practices and new construction programs for the road system, and against the effects the policies seemed to have for the railroad system.

The transport polices were changed during the 1970s. The 1979 Parliamentary decision on a revised transport policy brought a formal end to the policies based on market forces, competition and business economics, all of which were features of the 1963 decision. The new management philosophy was based on welfare economics, which should be the new basis for transport infrastructure and transport policies when it came to planning, management and pricing/taxation.

An interesting phase in the historical development of transport policy was a return in the 1988 Parliamentary decision to a goal structure closer to the earlier (1963) formulation of transport policies. In a following decision in 1998, another turn was made, which has since established welfare economics as the basis for transport infrastructure policies.

The principles set in the 1940s, with a firm base in a “cost responsibility principle” and a business economics perspective on transport infrastructure combined with government ownership and financing, was finally shifted to more of a welfare economics basis during the 1980-90s.

This was, it is argued, a way of reflecting a more active political agenda with new goals for transport policy. The policy shift was combined with deregulation and some privatization steps from the 1980s onwards. If the former policies might be seen as expressing a contradiction between government ownership and business economics, the new policies made a contradiction between deregulation and more developed and wider political goals in combination with welfare economics obvious. The government might be seen having gone from reluctance to contradiction as the basic stance of its policies as owner of railroads and roads.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2013. , 80 p.
Keyword [en]
Government's role, transport infrastructure, roads, railroads
National Category
Economic History
URN: urn:nbn:se:kth:diva-123651OAI: diva2:628221


Available from: 2013-06-13 Created: 2013-06-13 Last updated: 2013-06-14Bibliographically approved
In thesis
1. Government's Role for Transport Infrastructure: Theoretical Approaches and Historical Development
Open this publication in new window or tab >>Government's Role for Transport Infrastructure: Theoretical Approaches and Historical Development
2013 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis analyzes and discusses the development of the Swedish government’s role as owner and financier of roads and railroads from the 1930s until the 2010s. The influence on the development of the government’s role from two main theoretical paradigms is discussed and analyzed. These are:

a) neoclassical and welfare economics; and

b) new institutional economic theory with an organizational focus.

The thesis shows that there has been a shift from an institutional view on the organization and financing of the road and railroad systems following the nationalization in the 1930-40s, to a view more based on welfare economics from the 1970s.

Technology, economics and politics are three important factors influencing the development of the transport systems and of the government’s role. In the thesis these factors are covered in a co-evolutionary approach applied for analysis of the historical development. This approach connects to a dynamic view on organizations and firms in institutional theory.

Over time there have been shifts in the strength of the factors (technology, economics and politics) influencing the development. There have also been controversies around financing principles and contradictions between different elements in the policies actually pursued over time. One such controversy has been whether to aim for full cost coverage or for marginal cost coverage.

The thesis discusses how planning and coordination in the transport infrastructure sector can come about. A centralized public sector planner mode is contrasted towards a private sector spontaneous ordering mode. It is argued that it is difficult for a centralized planner to collect the necessary information and transform it into deepened knowledge in order to coordinate. A decentralized spontaneous ordering mode might though allow for including the necessary knowledge.

The thesis illustrates a number of trade-offs that must be taken into consideration when discussing a possible future development for transport infrastructure and the government’s role. The following aspects are discussed:

- the balance between public and private as the basic organizing principle;

- the balance between government and regions/local governments when it comes to

- the geographical division of responsibility; and

- the balance between the national and EU levels for strategic transport infrastructure planning and coordination, also in relation to spontaneous coordination and centralized planning.

The government has acted reluctantly and pragmatically and gradually developed its ownership role and the general policies in the sector. The government’s emphasis on market failure as its basic assumption has become stronger over time.

The thesis brings a deepened understanding of the long-term development of the government’s ownership and policy formation in the transport infrastructure sector in relation to the two theoretical paradigms. This combination of a historical view with the theoretical economic background gives new insights into the past and future of the government’s role for transport infrastructure.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2013. 107 p.
Trita-SOM , ISSN 1653-6126 ; 2013:05
Government, Market, Planning, Transport Infrastructure
National Category
urn:nbn:se:kth:diva-123626 (URN)978-91-7501-765-5 (ISBN)
Public defence
2013-08-26, F3, Lindstedtsvägen 26, KTH, Stockholm, 09:00 (English)

QC 20130614

Available from: 2013-06-14 Created: 2013-06-13 Last updated: 2013-06-14Bibliographically approved

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