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

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Presentation on theme: "Sweden’s Position in the Global Economy Swedish Globalization Forum May 2012 Christian Ketels."— Presentation transcript:

1 Sweden’s Position in the Global Economy Swedish Globalization Forum May 2012 Christian 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 deep Provides synthesis, key data, and a framework Identifies key challenges for Sweden going forward ; suggests directions for action

3 The Conceptual Framework Prosperity Outcomes Global Economic Activity Institutions Performance Fundamentals Macro- economic Policies Business Environment Conditions Company Operations and Strategy MACROMICRO

4 4 ©Sweden Globalization Council ppt Long-Term Trends in Prosperity EU-15 United States GDP per capita, US-$, PPP-adjusted Source: Groningen Growth and Development Center, The Conference Board, 2006 Sweden Countries that have surpassed Sweden in terms of prosperity: 1970s: Canada, Iceland, Norway 1980s: Austria, Denmark 1990s: Australia, Ireland Countries that Sweden has surpassed in terms of prosperity: 2000s: Germany, Denmark, Ireland, Canada, Iceland

5 Labor Mobilization Hours worked per Capita Source: Conference Board (2012) Annual hours worked per Capita

6 6 Copyright 2011 © Christian Ketels Swedish World Market Export Shares Total exports Service exports Goods exports Source: WTO (2011) Swedish World Market Export Share, in %

7 7 Copyright 2011 © Christian Ketels Relative Change in World Export Market Share, 2000 – 2010 Change in Market Share 2010 to 2000 as % of 2000 Market Share Source: WTO (2011)

8 8 ©Sweden Globalization Council ppt Sweden Export Portfolio By Cluster, Note: Bubble size is proportional to total export value in 2010 Source: 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. Sweden’s world export market share, 2010 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

9 9 ©Sweden Globalization Council ppt Change of Share of Chinese Imports Selected European Countries Source: UNCTAD (2011), author’s analysis. Sweden Germany Switzerland Finland Norway Denmark Share of Country in Chinese Imports, Level in 2000 = 1

10 10 ©Sweden Globalization Council ppt Chinese Imports from Sweden Share by Product Group Source: UNCTAD (2011), author’s analysis

11 11 ©Sweden Globalization Council ppt Swedish Exports by Firm Size Selected Markets Germany BRIC Norway US All Swedish exports: + 6.9% All Swedish exports: 31.7% Change in SMEs share in total Swedish exports, SMEs share in total Swedish export value, 2007 Note: SMEs defined as <200 employees, bubble size proportional to total export value Source: Statistics Sweden, KTH (2012), author’s analysis

12 12 ©Sweden Globalization Council ppt Sweden’s Foreign Direct Investment Position Source: UNCTAD (2011), author’s analysis. World market share Outward FDI Inward FDI Stocks Flows (3-year moving average)

13 The Shifting Face of Globalization The Role of Trade and FDI in the Swedish Economy TRADEFDI Relative to GDP Exports Imports Inward Stock Outward Stock Source: UNCTAD (2011), Statistics Sweden (2011), author’s analysis.

14 Cluster Sector Employment over Time Share of Total Employment Source: European Cluster Observatory (2012), author’s analysis. Sweden 11 EU countries

15 15 ©Sweden Globalization Council ppt Employment by Cluster Sweden, Sweden’s EU employment share, 2008 Total employees, 2008: Change in LQ (fixed country sample), Paper products Information Technology Automotive Heavy Machinery Analytical 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 Food Pharmaceuticals Aerospace Source: European Cluster Observatory (2012), author’s analysis.

16 Macro Political Institutions Rule of Law Human Development Context for Strategy and Rivalry Related and Supporting Industries Demand Conditions Factor Input Conditions Micro Capital Comm. SkillsInnov. 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 Sweden 2011 Logistic. < >15 Significant advantage Moderate advantage Neutral Moderate disadvantage Significant disadvantage Global Rank

17 Doing Business in Sweden Doing Business 2012 Rank Change in Rank vs Getting Electricity8-2 Trading Across Borders8 Registering Property19-3 Resolving Insolvency19 Dealing with Construction Permits23No change Protecting Investors29 Starting a Business46-6 Getting Credit48-3 Paying Taxes50-3 Enforcing Contracts54-2 Source: World Bank (2012)

18 18 Copyright 2011 © Christian Ketels Source: USPTO (2010), Groningen Growth and Development Centre, Total Economy Database (2010) Average U.S. utility patents per 1 million population, CAGR of US-registered patents, 1999 to 2009 Innovative Output Selected OECD Countries, 1999 to ,000 patents (avg – 2009) = Taiwan

19 19 Copyright 2011 © Christian Ketels Innovation Performance Sweden’s Rank among European countries EnablersFirm ActivitiesOutputs Human resources New doctorate graduates per 1000 population aged Percentage population aged having completed tertiary education5 Percentage youth aged having attained at least upper secondary level education9 Open, excellent and attractive research system International scientific co- publications per million population4 Scientific publications among top 10% most cited publications worldwide6 Non-EU doctorate students as % of all doctorate students8 Finance and support Public R&D expenditures (% of GDP)3 VC (% of GDP)2 Firm investments Business R&D expenditures (% of GDP)1 Non-R&D innovation expenditures (% of turnover)18 Linkages & entrepreneurship SMEs innovating in-house (% of SMEs)8 Innovative SMEs collaborating with others (% of SMEs)6 Public-private co-publications per million population4 Intellectual assets PCT patents pplications per billion GDP1 PCT patent applications in societal challenges per billion GDP1 Community trademarks per billion GDP9 Community designs per billion GDP7 Innovators SMEs introducing product or process innovations (% of SMEs)9 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)12 New-to-market and new-to-firm sales (% of turnover)30 Licence and patent revenues from abroad (% of GDP)4 Note: Coloring indicates relative strengths and weaknesses Source: Innovation Union Scoreboard (2012), author’s analysis.

20 20 Copyright 2011 © Christian Ketels Learning Outcomes Across Countries 2009 SWEDEN Finland Germany Norway Denmark Source: OECD, Pisa 2009 database Proficiency Score, 2009

21 21 Copyright 2011 © Christian Ketels 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

22 22 Copyright 2011 © Christian Ketels 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

23 23 Copyright 2011 © Christian Ketels 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) Integrate reform efforts across individual policy areas Realign policy tools with changing patterns of firm behavior Position Sweden in the global economy

24 24 Copyright 2011 © Christian Ketels Action Areas: Policy Tools Integrate reform efforts across individual policy areas Realign policy tools with changing patterns of firm behavior Position Sweden in the 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

25 25 Copyright 2011 © Christian Ketels Action Areas: Global Positioning Integrate reform efforts across individual policy areas Realign policy tools with changing patterns of firm behavior Position Sweden in the 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


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