Armed neutrality has kept Sweden out of war for nearly two centuries. Low unemployment, a low birthrate, and one of the world's highest life expectancies have characterized modern Sweden. Success has been credited to a blending of socialism and capitalism, including cooperation between the government and labor unions, which represent 90 percent of workers. High taxes finance advanced social programs, from education to health and child care and paid paternal leave.

In the 1980s a flood of immigrants from Asia, Africa, and Latin America sought the Swedish utopia but further taxed expensive social programs. Mounting economic problems led to cutbacks in 1991, when Sweden reassessed its social policies and elected a conservative government. The Social Democrats returned to power in 1994 with a commitment to stringent economic controls. By 1998 they were operating from a weakened power base—the lowest vote share in 78 years. Sweden joined the EU in 1995. Inflation is low and unemployment is down.

Radioactive fallout from Chornobyl underscored Sweden's resolve to dismantle its nuclear power plants, a process which was begun in 1997.