Sweden’s Position in the Global Economy Swedish Globalization Forum May 2012 Christian Ketels.

Sweden’s Position in the Global Economy

Swedish Globalization ForumMay 2012

Christian Ketels

Sweden’s Position in the Global EconomyScope of the Report

• How is Sweden’s economic performance in a global context?

• What are critical root causes for this performance that Swedish policy makers can affect?

• Base report going wide, not deep

• Provides synthesis, key data, and a framework

• Identifies key challenges for Sweden going forward ; suggests directions for action

The Conceptual Framework

Prosperity Outcomes

Global Economic Activity

Institutions

Performance

Fundamentals Macro-economic Policies

Business Environment Conditions

Company Operations

and Strategy

MACRO MICRO

4 © Sweden Globalization Council 2007 04-17-07.ppt

Long-Term Trends in Prosperity

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

EU-15United States

GDP per capita, US-$, PPP-adjusted

Source: Groningen Growth and Development Center, The Conference Board, 2006

Sweden

Countries that have surpassed Swedenin terms of prosperity:

1970s: Canada, Iceland, Norway1980s: Austria, Denmark1990s: Australia, Ireland

Countries that Sweden has surpassed in terms of prosperity:

2000s: Germany, Denmark, Ireland,Canada, Iceland

Labor MobilizationHours worked per Capita

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011640

660

680

700

720

740

760

780

800

820

840

SwedenEU-27OECD

Source: Conference Board (2012)

Annual hours worked per Capita

6 Copyright 2011 © Christian Ketels

Swedish World Market Export Shares

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.50

0.75

1.00

1.25

1.50

1.75

2.00

Total exports

Service exports

Goods exports

Source: WTO (2011)

Swedish World Market Export Share, in %


Relative Change in World Export Market Share, 2000 – 2010Change in Market Share 2010 to 2000 as % of 2000 Market Share

China

Lith

uani

a

Roman

ia

Latvi

a

Bulga

ria

Brazil

Hunga

ry

Austra

lia

Luxe

mbo

urg

South

Kor

ea

Icela

nd

Nethe

rland

s

Cypru

s

Belgi

um

New Z

eala

nd

Portu

gal

Sweden Ita

lyIsr

ael

Mex

ico

Japa

n

Unite

d Kin

gdom

-50%

0%

50%

100%

150%

200%

Source: WTO (2011)


SwedenExport Portfolio By Cluster, 2000-2010

Note: Bubble size is proportional to total export value in 2010Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Underlying data drawn from the UN Commodity Trade Statistics Database and the IMF BOP statistics.

Sw

eden

’s w

orl

d e

xpo

rt m

arke

t sh

are,

201

0

0%

1%

2%

3%

4%

5%

6%

7%

8%

-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0%

Change In Sweden’s Overall World Export Share: -0.02%

Sweden’s Average World Export Share: 1.2%

Forest Products

Business Services

Communications Equipment

Furniture

Communications Services

Biopharmaceuticals Power and Power Generation Equipment

Fishing and Fishing Products

Hospitality and Tourism

Aerospace Engines

Aerospace Vehicles and Defense

Metals and Metal Manufacturing

Change in Sweden’s world export market share, 2000 – 2010

Construction Services Automotive

Transportation and Logistics

Oil and Gas

Heavy Machinery


Change of Share of Chinese ImportsSelected European Countries

2000 2005 20100.00

0.50

1.00

1.50

2.00

Source: UNCTAD (2011), author’s analysis.

Sweden

Germany

Switzerland

Finland

NorwayDenmark

Share of Country in Chinese Imports, Level in

2000 = 1


Chinese Imports from SwedenShare by Product Group

Ma-chin-ery,

Transport

Equip; 81.6%

Manu-fac-tured

goods; 8.8%

Chem-icals; 3.9%

Misc manuf.; 3.5%

Primary produces; 2.0%

Machinery, Transport

Equip; 47.0%

Manufac-tured

goods; 22.0%

Chem-icals; 13.0%

Misc manuf.; 9.0%

Primary produces; 9.0%


2000 2010


Swedish Exports by Firm SizeSelected Markets

0% 1% 2% 3% 4% 5% 6% 7% 8%0%

10%

20%

30%

40%

50%

60%

Germany

BRIC

Norway

US

All Swedish exports: + 6.9%

All Swedish exports: 31.7%

Change in SMEs share in total Swedish exports, 2000 - 2007

SMEs share in total Swedish export value,

2007

Note: SMEs defined as <200 employees, bubble size proportional to total export valueSource: Statistics Sweden, KTH (2012), author’s analysis


Sweden’s Foreign Direct Investment Position


World market share

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%

1%

2%

3%

4%

Outward FDI

Inward FDI

Stocks

Flows (3-year moving average)

The Shifting Face of GlobalizationThe Role of Trade and FDI in the Swedish Economy

2000 2010 2000 20100%

25%

50%

75%

100%

125%

150%

175%

+7.5%+62%

TRADE FDI

Relative to GDP

Exports

Imports

InwardStock

OutwardStock

Source: UNCTAD (2011), Statistics Sweden (2011), author’s analysis.

Cluster Sector Employment over TimeShare of Total Employment

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200835%

40%

45%

50%

Source: European Cluster Observatory (2012), author’s analysis.

Sweden

11 EU countries


Employment by ClusterSweden, 2000-2008

Sw

eden

’s E

U e

mp

loym

ent

shar

e, 2

008

0.00

0.50

1.00

1.50

2.00

2.50

3.00

-1.5 -1.0 -0.5 0.0 0.5 1.0

Total employees, 2008:Change in LQ (fixed country sample), 2000 - 2008

Paper products

Information TechnologyAutomotive

Heavy MachineryAnalytical Instruments

Telecom products

Business Services

Metal Manufacturing

Medical Devices

Lightning and Electrical Products

Production Technology

Transportation and Logistics Construction

Entertainment Products

Farming and animal husbandry

Oil and Gas

Absolute Job Gains

Absolute Job Losses

Processed FoodPharmaceuticals

Aerospace

Source: European Cluster Observatory (2012), author’s analysis.

Macro

Political Institutions

Rule of Law

Human Development

Context for Strategy and Rivalry

Related and Supporting Industries

DemandConditions

Factor InputConditions

Micro

Capital

Comm. Skills Innov.

Admin.

Social Infra-structure and Pol.

Institutions

Macroeconomic Policy

Business Environment

Quality

Company Sophistication

Source: Unpublished data from the Global Competitiveness Report (2011), author’s analysis.

Competitiveness Profile of Sweden2011

Logistic.

<5

5-8

9-11

12-15

>15

Significant advantage

Moderateadvantage

Neutral

Moderate disadvantage

Significant disadvantage

Global Rank

Doing Business in Sweden

Doing Business 2012 Rank

Change in Rank vs. 2011

Getting Electricity 8 -2

Trading Across Borders 8 -1

Registering Property 19 -3

Resolving Insolvency 19 -1

Dealing with Construction Permits 23 No change

Protecting Investors 29 -1

Starting a Business 46 -6

Getting Credit 48 -3

Paying Taxes 50 -3

Enforcing Contracts 54 -2

Source: World Bank (2012)

18 Copyright 2011 © Christian KetelsSource: USPTO (2010), Groningen Growth and Development Centre, Total Economy Database (2010)

Average U.S. utility patents per 1 million population, 2007-2009

CAGR of US-registered patents, 1999 to 2009

Innovative OutputSelected OECD Countries, 1999 to 2009

10,000 patents (avg. 1999 – 2009) =

-5% -3% -1% 1% 3% 5% 7% 9%0

50

100

150

200

250

300

UK

South Korea

Taiwan


Innovation PerformanceSweden’s Rank among European countries

Enablers Firm Activities Outputs

Human resources

New doctorate graduates per 1000 population aged 25-34 1

Percentage population aged 30-34 having completed tertiary education 5

Percentage youth aged 20-24 having attained at least upper secondary level education 9

Open, excellent and attractive research system

International scientific co-publications per million population 4

Scientific publications among top 10% most cited publications worldwide 6Non-EU doctorate students as % of all doctorate students 8

Finance and supportPublic R&D expenditures (% of GDP) 3

VC (% of GDP) 2

Firm investmentsBusiness R&D expenditures (% of GDP) 1Non-R&D innovation expenditures (% of turnover) 18

Linkages & entrepreneurshipSMEs innovating in-house (% of SMEs) 8Innovative SMEs collaborating with others (% of SMEs) 6Public-private co-publications per million population 4

Intellectual assetsPCT patents pplications per billion GDP 1PCT patent applications in societal challenges per billion GDP 1Community trademarks per billion GDP 9

Community designs per billion GDP 7

Innovators

SMEs introducing product or process innovations (% of SMEs) 9

SMEs introducing product or process innovations (% of SMEs) 16

Economic effects

Employment in knowledge -intensive activities (% of workforce) 5

Medium-tech and high-tech exports (% of total exports) 12

Knowledge-intensive services exports (% of total service exports) 12New-to-market and new-to-firm sales (% of turnover) 30Licence and patent revenues from abroad (% of GDP) 4

Note: Coloring indicates relative strengths and weaknessesSource: Innovation Union Scoreboard (2012), author’s analysis.


Learning Outcomes Across Countries2009

Hong Kong

Singapore

Japan

New Zealand

Australia

Liechtenstein

Estonia

Belgium

Iceland

UK Slovenia

France

US Sweden

Portugal

Latvia

ItalyLuxem

bourg

Croatia

Russia

Israel

Serbia

Bulgaria

Romania

Mexico

Montenegro

Brazil

Kazakhstan

Tunisia

Indonesia

Qatar

Peru

300

350

400

450

500

550

600

Reading

Math

Science

SWEDEN

Finland

Germany

Norway

Denmark

Source: OECD, Pisa 2009 database

Proficiency Score, 2009


Key Issues

Impact of Policy Reforms• Level of educational attainment is modest compared to international

peers• Labor market reforms have had an impact but worked largely through

increasing labor supply• Innovation systems remains highly ranked but structural challenges

are growing

Impact of Changes in the Global Economy• Smaller companies become increasingly important for exports and

innovation. • Foreign markets are increasingly served through FDI• The majority of net job creation occurs in sectors that serve local

markets


Action Areas

Integrate reform efforts

across individual policy areas Realign

policy tools with changing patterns

of firm behavior

Position Sweden in the

global economy

Impact of Policy Reforms

Impact of Changes in the Global Economy


Action Areas: Integrated Action

• Current policy approach too often targeted on narrow problems – Lack of incentives to enter the labor market– Lack of competition in education system– Lack of incentives to commercialize research

• While these problems are real and important, a step-change in outcomes will require a more systemic approach– Address supply (incentives, quality of education, relevance of science)– Address demand (skill demand, returns to education, returns to business-

academia collaboration– Address linkages (matching, information, collaboration platforms)


across individual

policy areas

Realign policy tools

with changing patterns of

firm behavior


global economy


Action Areas: Policy Tools


across individual

policy areas



firm behavior


global economy• Current policy approach is too often

based on traditional economic structures– Internationalization seen as export promotion– Research collaboration seen as spin-offs or linkages to multinationals

• While the policy tools applied in these areas are important, they are insufficiently aligned with the needs of the emerging economic structures– FDI (inward and outward) and exports are simultaneous elements of firms’

internationalization strategy– Growing role of SMEs in trade and innovation– Innovation is taking place in internationally connected regional clusters of

research institutions and firms of different sizes


Action Areas: Global Positioning


across individual

policy areas



firm behavior


global economy

• Current policy approach is too oriented on doing what is good in general rather than on what benefits Sweden most in particular– Focus of policy reforms on weaknesses– Focus on cross-cutting dimensions

• Positioning is not about picking winners, but about focusing policy on creating competitive advantages for the location– Specific business environment strengths– Specific clusters– Integrated policy packages in high-priority areas

Sweden’s Position in the Global Economy Swedish Globalization Forum May 2012 Christian Ketels.

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