It's very rare you'll find clothing manufactured in Sweden. When I used to work at Khaki's of Carmel, the former sales rep from Eton visited our store (now representing another "Swedish" shirt line, Stenstroms) and I asked why shirts weren't manufactured in Sweden. I assumed it was a labor cost issue, but it's a bit more complicated than that.
While labor cost are a factor as well as having skilled labor to do the volume necessary for a company like Eton's size, there's a national and cultural idea that Sweden wanted to raise people up from working manufacturing-type jobs and and away from physical labor to provide a higher standard of living and better quality of life at work.
I'm not sure if it's necessarily a governmental mandate, but I'd imagine there were legal and tax (dis)incentives to move this kind of work outside their borders.
If someone on the board is from Sweden -- or is more familiar with the culture there -- and could elaborate on whether or not this is true, it'd be great to learn more.
As far as Eton's quality goes, I think they're pretty good. I have one of their tuxedo shirts. Yes, you'll get more bang for your buck perhaps from smaller brands and definitely if you go MTM from various online shirtmakers, but for off the rack sold at retail it's a good value and their fabric's finishing does a great job resisting wrinkles while not being officially "wrinkle-free". My only gripe is that the sleeves -- even on the slim fit -- were cut a bit fuller than I like.