The forest industry – An engine of prosperity for rural areas

On a national level, the forest industry employs a total of 140,000 people across the country, representing just over two percent of total employment in the Swedish economy. The raw forest material is largely domestic, and the import of industrial forest products is relatively low. This makes the forest industry a significant contributor to Sweden’s trade balance. 

Nima Sanandaji, who holds a PhD in engineering, recently authored a Swedish-language report for SCA in which he notes that the four northernmost counties contribute around SEK 27 billion of Sweden’s roughly SEK 140 billion in net exports. Since only 900,000 people live in these counties, this means that per capita net exports are unusually high in northern Sweden. 

“There is roughly three times more net export per person in northern Sweden compared to the country as a whole. In many ways, a well-functioning forestry sector is the cornerstone of prosperity and welfare financing for the entire country – especially in forestry-dominated regions. The conditions for forestry thus affect the labor market, the business climate, and public services,” says Nima Sanandaji. 

A frequently overlooked effect of the forest industry, highlighted in Sanandaji’s report, is that it creates value for other sectors as well. In Norrbotten, Västerbotten, Västernorrland, and Jämtland, about 19,100 jobs can be attributed to the forest industry, of which 10,800 are directly employed in the sector and 8,300 are considered indirect jobs in other industries. This means the sector is nearly as important for generating jobs in other sectors as within its own. 

“It’s easy to forget that the forest industry, which brings in significant revenue from abroad, is a purchasing power hub. Without this revenue, it becomes difficult for individual forest owners to sell timber. The industries are, in a way, the engine that enables income for forest owners, various service providers in the value chain, and logistics companies,” says Nima Sanandaji. 

Are there any concrete measures that could increase the forest’s value creation? 
“Absolutely. One key is to avoid excessively restricting access to raw materials through overregulation. We need effective regulations that ensure sustainability while still promoting the harvesting of renewable raw materials. That’s also crucial for transitioning more products toward renewable alternatives,” says Nima Sanandaji. 

“Infrastructure is also of critical importance. It is expensive to transport heavy goods within the region, and the more efficiently this can be done, the better for Sweden as a whole. Road maintenance and investments in freight rail, for example from inland areas to the coast, are very important,” says Nima Sanandaji. 

The report is currently available in Swedish only and can be read here. 

Photo: Michael Engman