Presentation on theme: "Sweden’s Position in the Global Economy"— Presentation transcript:
1 Sweden’s Position in the Global Economy Swedish Globalization ForumMay 2012Christian Ketels
2 Sweden’s Position in the Global Economy Scope 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 deepProvides synthesis, key data, and a frameworkIdentifies key challenges for Sweden going forward ; suggests directions for action
3 The Conceptual Framework PerformanceProsperity OutcomesGlobal Economic ActivityFundamentalsMACROMICROInstitutionsMacro-economic PoliciesBusiness Environment ConditionsCompany Operations and Strategy
4 Long-Term Trends in Prosperity GDP per capita, US-$, PPP-adjustedCountries that have surpassed Sweden in terms of prosperity:1970s: Canada, Iceland, Norway1980s: Austria, Denmark1990s: Australia, IrelandSwedenUnited StatesEU-15Performance is good, especially since the structural reforms in the early 90s that were largely sustained by the governments that followedHowever, the performance is not exceptional: Sweden is tracking the U.S., not more, and while it is outperforming the European average, Europe is on a global scale a relatively weak benchmark in terms of growthCountries that Sweden has surpassed in terms of prosperity:2000s: Germany, Denmark, Ireland, Canada, IcelandSource: Groningen Growth and Development Center, The Conference Board, 2006
5 Labor Mobilization Hours worked per Capita Annual hours worked per CapitaSource: Conference Board (2012)
6 Swedish World Market Export Shares Swedish World Market Export Share, in %Service exportsTotal exportsGoods exportsSource: WTO (2011)
7 Relative Change in World Export Market Share, 2000 – 2010 Change in Market Share 2010 to 2000 as % of 2000 Market ShareSource: WTO (2011)
8 Sweden Export Portfolio By Cluster, 2000-2010 Change In Sweden’s Overall World Export Share: %Forest ProductsSweden’s world export market share, 2010Business ServicesFurnitureCommunications ServicesCommunications EquipmentHeavy MachineryFishing and Fishing ProductsMetals and Metal ManufacturingShift to servicesTraditional cluster ‘forest products’ is keeping up wellBiopharmaceuticalsTransportation and LogisticsPower and Power Generation EquipmentSweden’s Average World Export Share: 1.2%Aerospace EnginesConstruction ServicesAutomotiveHospitality and TourismAerospace Vehicles and DefenseOil and GasChange in Sweden’s world export market share, 2000 – 2010Note: 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.
9 Change of Share of Chinese Imports Selected European Countries Share of Country in Chinese Imports, Level in 2000 = 1SwitzerlandGermanyNorwayDenmarkSwedenFinlandSource: UNCTAD (2011), author’s analysis.
10 Chinese Imports from Sweden Share by Product Group 20002010Source: UNCTAD (2011), author’s analysis.
11 Swedish Exports by Firm Size Selected Markets SMEs share in total Swedish export value, 2007All Swedish exports: + 6.9%NorwayGermanyAll Swedish exports: 31.7%BRICUSChange in SMEs share in total Swedish exports,Note: SMEs defined as <200 employees, bubble size proportional to total export value Source: Statistics Sweden, KTH (2012), author’s analysis
12 Sweden’s Foreign Direct Investment Position World market shareFlows (3-year moving average)Outward FDIStocksInward FDIGenerally strongBut downward pressure due to late stage of cycle has been increased due to global volatiltiySignificant risk of strong external shockBSR somewhat isolated from direct financial contagionBut BSR strongly affected from real changes in the global economySource: UNCTAD (2011), author’s analysis.
13 The Shifting Face of Globalization The Role of Trade and FDI in the Swedish Economy Relative to GDPInward StockImportsOutwardStockExportsTRADEFDISource: UNCTAD (2011), Statistics Sweden (2011), author’s analysis.
14 Cluster Sector Employment over Time Share of Total Employment Sweden11 EU countriesSource: European Cluster Observatory (2012), author’s analysis.
15 Employment by Cluster Sweden, 2000-2008 Absolute Job GainsAbsolute Job LossesPaper productsInformation TechnologyAutomotiveHeavy MachineryAnalytical InstrumentsMetal ManufacturingTelecom productsSweden’s EU employment share, 2008Lightning and Electrical ProductsBusiness ServicesProduction TechnologyMedical DevicesTransportation and LogisticsConstructionEntertainment ProductsShift to servicesTraditional cluster ‘forest products’ is keeping up wellOil and GasPharmaceuticalsProcessed FoodFarming and animal husbandryAerospaceChange in LQ (fixed country sample),Total employees, 2008:Source: European Cluster Observatory (2012), author’s analysis.
16 Competitiveness Profile of Sweden 2011 MicroMacroBusiness Environment QualityCompany SophisticationSocial Infra- structure and Pol. InstitutionsMacroeconomic PolicyContext for Strategy and RivalryPolitical InstitutionsRelated and Supporting IndustriesRule of LawDemand ConditionsHuman Development<55-89-1112-15>15Significant advantageModerate advantageNeutralModerate disadvantageSignificant disadvantageGlobal RankFactor Input ConditionsCapitalAdmin.Logistic.Comm.Innov.SkillsSource: Unpublished data from the Global Competitiveness Report (2011), author’s analysis.
17 Doing Business in Sweden Doing Business RankChange in Rank vs. 2011Getting Electricity8-2Trading Across Borders-1Registering Property19-3Resolving InsolvencyDealing with Construction Permits23No changeProtecting Investors29Starting a Business46-6Getting Credit48Paying Taxes50Enforcing Contracts54Source: World Bank (2012)
18 Innovative Output Selected OECD Countries, 1999 to 2009 Average U.S. utility patents per 1 million population,Taiwan10,000 patents (avg – 2009) =CAGR of US-registered patents, 1999 to 2009Source: USPTO (2010), Groningen Growth and Development Centre, Total Economy Database (2010)
19 Innovation Performance Sweden’s Rank among European countries EnablersFirm ActivitiesOutputsHuman resourcesNew doctorate graduates per 1000 population aged 25-341Percentage population aged having completed tertiary education5Percentage youth aged having attained at least upper secondary level education9Open, excellent and attractive research systemInternational scientific co-publications per million population4Scientific publications among top 10% most cited publications worldwide6Non-EU doctorate students as % of all doctorate students8Finance and supportPublic R&D expenditures (% of GDP)3VC (% of GDP)2Firm investmentsBusiness R&D expenditures (% of GDP)1Non-R&D innovation expenditures (% of turnover)18Linkages & entrepreneurshipSMEs innovating in-house (% of SMEs)8Innovative SMEs collaborating with others (% of SMEs)6Public-private co-publications per million population4Intellectual assetsPCT patents pplications per billion GDPPCT patent applications in societal challenges per billion GDPCommunity trademarks per billion GDP9Community designs per billion GDP7InnovatorsSMEs introducing product or process innovations (% of SMEs)916Economic effectsEmployment in knowledge -intensive activities (% of workforce)5Medium-tech and high-tech exports (% of total exports)12Knowledge-intensive services exports (% of total service exports)New-to-market and new-to-firm sales (% of turnover)30Licence and patent revenues from abroad (% of GDP)4Note: Coloring indicates relative strengths and weaknesses Source: Innovation Union Scoreboard (2012), author’s analysis.
20 Learning Outcomes Across Countries 2009 FinlandProficiency Score, 2009GermanySWEDENNorwayDenmarkSource: OECD, Pisa 2009 database
21 Key Issues Impact of Policy Reforms Level of educational attainment is modest compared to international peersLabor market reforms have had an impact but worked largely through increasing labor supplyInnovation systems remains highly ranked but structural challenges are growingImpact of Changes in the Global EconomySmaller companies become increasingly important for exports and innovation.Foreign markets are increasingly served through FDIThe majority of net job creation occurs in sectors that serve local markets
22 Action Areas Impact of Changes in the Global Economy Impact of Policy ReformsImpact of Changes in the Global EconomyIntegratereform efforts across individual policy areasPosition Sweden in the global economyRealign policy tools with changing patterns of firm behavior
23 Action Areas: Integrated Action reform efforts across individual policy areasRealign policy tools with changing patterns of firm behaviorPosition Sweden in the global economyCurrent policy approach too often targeted on narrow problemsLack of incentives to enter the labor marketLack of competition in education systemLack of incentives to commercialize researchWhile these problems are real and important, a step-change in outcomes will require a more systemic approachAddress supply (incentives, quality of education, relevance of science)Address demand (skill demand, returns to education, returns to business-academia collaborationAddress linkages (matching, information, collaboration platforms)
24 Action Areas: Policy Tools Integratereform efforts across individual policy areasRealign policy tools with changing patterns of firm behaviorPosition Sweden in the global economyCurrent policy approach is too often based on traditional economic structuresInternationalization seen as export promotionResearch collaboration seen as spin-offs or linkages to multinationalsWhile the policy tools applied in these areas are important, they are insufficiently aligned with the needs of the emerging economic structuresFDI (inward and outward) and exports are simultaneous elements of firms’ internationalization strategyGrowing role of SMEs in trade and innovationInnovation is taking place in internationally connected regional clusters of research institutions and firms of different sizes
25 Action Areas: Global Positioning Integratereform efforts across individual policy areasRealign policy tools with changing patterns of firm behaviorPosition Sweden in the global economyCurrent policy approach is too oriented on doing what is good in general rather than on what benefits Sweden most in particularFocus of policy reforms on weaknessesFocus on cross-cutting dimensionsPositioning is not about picking winners, but about focusing policy on creating competitive advantages for the locationSpecific business environment strengthsSpecific clustersIntegrated policy packages in high-priority areas