Innovative Sweden - A strategy for growth through renewal

Innovative Sweden

A strategy for growth through renewal

This publication may be ordered from the Information Secretariat, Ministry of Industry, Employment and Communications, Fax no.: +46 8 405 12 98. Cover illustration and graphic design: Navigare Kommunikation Printed by: Åtta:45 Stockholm, October 2004

This is a translation of Ds 2004:36

Contents

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

2 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

GETTY IMAGES

Foreword

Since 1994 the environment for Swedish growth and can foresee which enterprises will grow in the future. competitiveness has been improved through mea- This strategy aims to set an offensive agenda that sures in many areas – forceful restructuring of the highlights some priority areas where we in Sweden budget, broad investments in education, an offensive can improve the conditions for innovation and guard competition and trade policy and a modern family our lead. The strategy takes a broad approach, even policy, to give a few notable examples. if the emphasis is mainly on issues in the education,

Today the Government is devoting intensive efforts research, trade and industry policy areas. to growth issues, since growth is the key to preserving Neither market forces nor policies alone can create and improving welfare. The crucial short-term challen- more innovation. A cohesive policy aimed at facilitating ges are to put more people in jobs and to increase the renewal requires cooperation and interaction between number of hours worked. At the same time, we must people, enterprises, the education system and the manage to invest in growth for the future by promo- public sector at national, regional and local levels. As ting the increased productivity that will make welfare circumstances differ from place to place, it is important possible in Sweden in the longer term. to take local and regional perspectives into account. In

The “Innovative Sweden” strategy is about the addition, active efforts are needed at international level, long-term promotion of growth. Few countries are not least in connection with the EU’s endeavours to acin as good a position as Sweden to benefit from the hieve the Lisbon strategy target of making Europe the ongoing process of internationalisation and the emer- world’s most competitive economy by 2010. gence of the knowledge-based economy. Our tradi- Our vision is for Sweden to be Europe’s most competion of openness and our broad knowledge base have titive, dynamic and knowledge-based economy, and thus given us a head start over many other countries. We one of the world’s most attractive countries for investface the future from a good starting point. ment by large and small knowledge-based companies.

But we can not sit back and assume that success will The “Innovative Sweden” strategy, which stakes out be automatic. Others are making an effort to catch up a path for further work, has been drawn up under our and overtake us. The world is changing and the political leadership by a working group comprising representatitools that were successful until so recently no longer al- ves of the Ministry of Industry, Employment and Comways have the intended effect. We must find new ways munications, the Ministry of Education and Science and to reach our most important goal: sustainable growth the Ministry for Foreign Affairs, in cooperation with and welfare for everyone everywhere in the country. other relevant ministries. In the course of the work, the

In Sweden there is overwhelming agreement not group has canvassed the views of the business sector and to meet the growing international competition with the trade union movement, as well as representatives lower wages and basic production. We know that of the research and education community and public education and research play an ever-increasing role in agencies. The strategy is intended for gradual implemeneconomic growth. The capacity for renewal is crucial. tation in such forms as Government measures set out in In order to realise Sweden’s potential for growth, we bills presented to the Swedish Parliament and instrucneed to enhance our ability to generate knowledge and tions to central government agencies. Consultation and to translate it into sustainable growth and new jobs. contacts with different sectors of society will continue

A good climate for innovation establishes condi- during the implementation phase. tions in which knowledge and enterprise will lead to Together we will maintain and extend Sweden’s new goods and services, or new methods of produc- advantage. tion. Innovation is frequently based on research and Leif Pagrotsky Thomas Östros development, but it is often also a matter of recombi- Minister for Industry Minister for Education ning existing knowledge into new patterns. No one and Trade and Science

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

2 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION TIOFOTO

Sweden has a good starting point...

SWEDEN TOPS THE RANKINGS a spirit of consensus between the social partners born Few countries today are in as good a position as of a shared insight into the necessity of maintaining a Sweden to do well in the knowledge-based economy competitive business sector. Well-functioning social seand benefi t from internationalisation. In leading inter- curity systems, combined with good opportunities for national surveys of conditions for business, innovation skills development, increase the prospects of achieving and future growth, Sweden ranks fi rst or among the change without excluding significant groups from the best in the world. labour market. Sweden’s work and organisational cul-

In the early 1990s, Swedish business and the Swed- ture, moreover, is characterised by a non-hierarchical ish economy were in serious trouble. Unemployment structure that enables ideas from people at different was increasing dramatically and many companies were levels of an organisation to be used and developed failing. After extensive and often painful measures to within the existing organisation. put the country’s economy back on a sound footing, along with major initiatives to raise the level of skills in WORLD-LEADING INVESTMENTS the labour force, the Swedish economy has grown well IN KNOWLEDGE over the past decade. During the recovery, our eco- Sweden’s investments in education have long been nomic growth rate has been closer to the high figures among the largest in the world relative to the size of shown by the United States than to general EU levels. the economy. In 2001 our total spending on research In the difficult years, there were some who rejected the and development (R&D) amounted to 4.3 per cent of Swedish model and dismissed the ability of Swedish gross domestic product (GDP), which is the highest business to compete. However, both Swedish labour level in the OECD. Private and public sector investand Swedish enterprises have displayed an impressive

Expenditure on education and R&D in 2001, per cent

capacity to adapt to the new conditions in the world

of GDP.

market and now Sweden is a leader both in new indus-

12

tries and in the use of new technology. R&D

Sweden’s major initiatives in education, skills Education development and research and development, combined with substantial IT investments and IT initiatives aimed at including all members of society, have 8 created a favourable climate for knowledge-based enterprises. Sweden is one of the countries that have

6

attracted most international investment over the past decade and its economy is one of the best managed in Europe. Its strong public finances and measures in labour market and other policies have helped to bring about low inflation and hence low interest rates. 2

Sweden’s social security systems and its tradition of consensus between the social partners have put us in a 0

Sweden USA Other OECD EU15 Japan

good position to manage structural changes. Historical-

nordic average

ly, far-reaching structural changes have been made in countries Source: OECD

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

ments in R&D are among the highest in the world as produced are exported. In the Swedish manufacturing a percentage of GDP. sector, nearly three quarters of the labour force are em-

ployed by companies with international operations. A HIGHLY SKILLED LABOUR FORCE The international dimension of the Swedish Due in part to substantial investments in education over economy has grown much stronger in recent decades, a long period of time, Sweden has a highly skilled popu- as is evident, for example, from the fact that exports lation. This is evident in international measurements of as a share of Swedish GDP rose from 29 per cent basic knowledge, formal education and skills develop- in 1980 to 44 per cent in 2003. Similarly, Swedishment in the labour force. International measurements owned groups increased the proportion of their staff also show that relatively good use is made of the knowl- employed abroad from 45 per cent in 1990 to 64 per edge and skills of the labour force and that opportunities cent in 2001. The biggest international expansion has for further education and training are well developed occurred in the service sector, which frequently has in Sweden. According to the OECD, by international strong ties to Swedish manufacturing. comparison, Sweden has the highest proportion of the labour force in knowledge-intensive jobs. Foreign direct investment in Sweden,

1999-2003, SEK billion. Proportion of the population aged 16-64 with skills in arithmetic, document interpretation and reading

UK

comprehension, 1994–1998, per cent.

Germany Sweden Finland Norway USA Denmark

The Netherlands The Netherlands

Finland Norway Germany Belgium Belgium Canada Denmark

Australia Canada

USA France New Zeeland

Switzerland 0 50 100 150 200 250 300 350

Arithmetic Source: The Riksbank 2004

UK Document Irland interpretation

Reading Over the past ten years, foreign companies have

Portugal comprehension

made substantial investments in Sweden. Since the

0 10 20 30 40 50 60 70 80

mid-1990s, the number of people employed by

Source: International Adult Literacy Survey (IALS), OECD & Statistics Canada

foreign-owned companies has risen from around

300 000 to just over half a million. Foreign investments ONE OF THE WORLD’S MOST in Sweden are frequently made in high value-added INTERNATIONALISED ECONOMIES businesses in which R&D plays a signifi cant part. On Sweden is one of the world’s most internationalised average, foreign-owned companies have more produceconomies. Approximately 60 per cent of all goods tion intended for export, higher returns on equity and

4 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

higher productivity than Swedish-owned companies. jobs in the country and is distinguished by high know-

The inflow of foreign direct investment to Sweden ledge intensity and high levels of work intensity. Half is more or less matched by Swedish investment abroad. of all university graduates work in the public sector. In In the course of the past decade (1994–2003), Sweden a historical perspective, long-term strategic interaction has had an inward investment flow of SEK 1 409 bil- between the business sector and the public sector has lion while the outward flow of Swedish investment been crucial for the emergence of knowledge-based over the same period came to SEK 1 320 billion. activities. This interaction has played a very signifi cant

Sweden has a good international reputation as a role in Sweden’s industrial development and internaknowledge nation, a reputation based on both scien- tional competitiveness. This is true especially of teletific successes and a strong international presence of communications, energy and railways. known, well-established companies. In recent years The Swedish administrative system is of a high Swedish successes in information and communica- international standard and is less bureaucratic than in tions technology and biotechnology have attracted most other countries. For example, Sweden has wellgreat interest from foreign researchers and investors. developed public records, which have helped make Swedish companies and the Swedish research com- the country interesting for cutting-edge research in munity have good international networks. They are the life sciences. The term “life sciences” generally very active in international research collaboration refers to research areas that contribute to increased and interesting partners for cooperation in strategic understanding of life processes. This includes mediknowledge-building alliances. These cooperative cine, biology and biotechnology. Sweden is also one activities and alliances enable Swedish researchers of the international leaders in expanding information in companies, institutes and academic institutions infrastructures to cover the entire country and, in adto interact with top players in international R&D. dition, tops the tables in information technology and Sweden is among the foremost participants in the Internet use in all sectors of society. Sweden is well to EU framework programme for research and technical the fore in the development of public e-services for development and it is also one of the top recipients of enterprises and the general public. funds from the framework programme.

One asset in the increased level of internation- A DIVERSIFIED BUSINESS SECTOR alisation is the great diversity of geographical and WITH HIGH KNOWLEDGE CONTENT cultural origins among Sweden’s population. More By international comparison, Sweden has high skills than a tenth of the population was born abroad but levels and competitiveness in many industries. Some has lived in Sweden for five years or longer. Approxi- can look back on a long history, such as the forestry, mately one in four people under the age of 40 has a paper and pulp industry, vehicle manufacturing, minnon-Swedish background. In Western Europe, only ing, the steel industry, telecommunications and phar- Luxembourg and France have higher proportions of maceuticals. These have long been the backbone of their population born abroad. Moreover, by interna- Swedish exports. Other industries have grown out tional comparison, Sweden’s inhabitants generally of new technological advances or the encounter behave a good knowledge of other languages. tween new and old activities, a major driver being

the demand for renewal to promote greater competi- A PUBLIC SECTOR WITH tiveness in the old industries. Sweden lies well to the ADVANCED SERVICES fore in a dozen or so important new areas, such as in- By comparison with other OECD countries, Sweden formation technology, microelectronics, biosciences, has a large public sector. It accounts for a third of all equipment and assistive devices for use in health care

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

and care of the elderly, and vehicle and traffi c safety. dustries. In absolute terms, however, it is Sweden’s Sweden is also a leader in delivering holistic solutions traditional basic industries and engineering industry in the environmental and energy area and displays that create the most value growth. By virtue of their top-notch skills and creativity in areas such as music, size, these industries will continue to dominate Swedesign and food. den’s economy for the foreseeable future. Growth will

Sweden is internationally known for its advanced depend on the interplay between old and new within consumers, who rapidly take to new technology and and between different industries and technologies. new products. As a result, a number of companies use Sweden has a good starting point. Nevertheless, there Sweden as a test market. Demanding customers are are a number of global trends that will affect condia powerful motor for the development of new goods tions for sustainable growth and bring new challenges and services. – but also new opportunities. These trends are likely

Growth is frequently associated with newer in- to become stronger and more prominent in the future.

6 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

...but conditions are changing

As a result, we will be increasingly required to further GDP growth and annual percentage growth concentrate our strengths and bolster areas in which in real GDP in the ten countries with highest

absolute GDP growth, 1996-2001.

Sweden is or may become vulnerable in the future.

1200 12 GDP growth in billion dollars,

THE ECONOMY IS INCREASINGLY GLOBAL

1990 prices.

The process of globalisation, with the worldwide

Annual percentage growth in GDP.

trade, investment and development of new tech-

900 9

nology it involves, is leading to people, capital, goods, services, information and technology moving across regional and national borders faster and at lower cost

600 6

than ever before. The pace of change is accelerating and geographical restrictions on both demand and supply are declining in importance. As a result, competition is growing and the need for rapid renewal is 300 3 increasing dramatically.

Investments by companies, including their investments in R&D, are becoming more and more

0 0

mobile internationally and to a greater and greater USA China France Germany UK Japan CanadaIndia Italy Spain

Source: UN

extent are seeking the regions and countries that offer the best conditions. While the cost scenario plays a part, particularly in selecting locations for simpler enlarged EU offers potential for increased trade for forms of production, studies have shown that stable our enterprises, a potential that should be exploited. rules, access to growing markets and the availability By working for clear, simple rules in the internal marof personnel with appropriate skills are key factors ket we create a large domestic market that provides when choosing where to set up business. Attractive better prospects for the business sector in Europe to knowledge environments in concentrated geographi- assert itself in the rest of the world. cal areas are assuming increasing significance for the localisation of investments. THE ECONOMY IS INCREASINGLY

At the same time, new opportunities are opening KNOWLEDGE-BASED up as new and dynamic markets emerge with new The importance of unique products and a higher partners for trade and cooperation. Many of these are knowledge content in production is constantly inclose at hand: the Baltic Sea region with its new EU creasing. Standardised and labour-intensive operations member states and Russia. Other countries enjoying are facing elimination or transfer to countries where rapid growth and great trade potential are China, India, costs are lower. More and more, our competitive edge Iran and South Korea, as well as Brazil and Mexico. will consist in a good provision of knowledge, product

Sweden is a small country and is dependent on renewal, effi cient production processes and a fl exible exports. Consequently, it is of the utmost importance and effective working organisation. This means that that we continue to work for open international trade, more is required of the labour force, in terms of skills, particularly in the domestic European market. The mobility and capacity for change.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

This development is accompanied by the growing countries to be adjusted with environmental thinking sophistication of consumer demand. Apart from pro- as early as possible. All these processes are signifi cant ducts with a high knowledge content, demand is now drivers of innovation and development. steadily growing for services that are connected with The nations that lead the way in the transition to these goods in one way or another. To succeed not just a sustainable society have much to gain. Agriculture in developing and delivering a certain product, but and forestry and associated industries are a major asalso in adapting it continuously to demand and supp- set for Sweden here, as is our country’s great expertise lementing it with various forms of services, requires in environmental technology. The major opportunian ability to combine industrial expertise with sys- ties for growth lie in a global market. tems thinking. This has been one factor encouraging Sweden is also affected to an ever-increasing exlarge corporations to merge and redefi ne their core tent by what is happening in other parts of the world. activities. In a parallel process, smaller knowledge-ba- International threats to security, environmental dissed enterprises are acquiring increasingly important asters and the depletion of natural resources have roles as specialist suppliers and knowledge partners made society more vulnerable. These great challenges for the large companies. provide powerful incentives for developing new solu-

The development of new technology changes the tions drawing on new knowledge and technology, and basic conditions for knowledge generation and value hence also for innovation. creation. The most far-reaching example, perhaps, is information technology, which affects production THE POPULATION IS AGEING processes and productivity in all industries. Other ar- Sweden, like most other European countries, has a eas undergoing technological revolutions are biotech- high proportion of older people in its population and, nology, materials technology and nanotechnology. partly as a result of this, fewer and fewer people will These shifts in technology, too, cut across research disciplines and business areas. Dependency ratio for EU countries in 2000

and forecast for 2050, per cent

CALLS FOR SUSTAINABILITY Dependency ratio: population over 65 as a proportion

of the labour force aged 16-64.

ARE GROWING

Italy

In Sweden, as in other countries, there is a growing

Sweden

awareness that the development of society cannot be

Greece

achieved at the expense of future generations being

Belgium

able to support themselves and enjoy a good quality Spain of life. Sustainable growth implies economic growth EU without jeopardising the ecosystems on which we de- Germany

France

pend and while protecting human resources. One of

UK

the great challenges is to create conditions that allow

Austria

prosperity in all countries while avoiding any resultant Portugal overexploitation of the earth’s resources. A great deal Finland of work is being done to ensure that production and Denmark

Luxemburg

consumption are sustainable in ecological, economic 2000

The Netherl.

and social terms. Measures to make environmentally 2050

Ireland

driven growth possible have high priority, partly so 0 10 20 30 40 50 60 70 80 as to enable the industrialisation of the developing Source: Eurostat

10 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

have to support more and more. However, we will and technology. While globalisation therefore weaves face these challenges earlier than many other coun- us into a worldwide network, local and regional nettries. Around 2010 the large groups of people born in works are growing in importance. A recognition that the mid-1940s will be reaching the age of 65, retire- this is the case has led to many local and regional iniment age in Sweden. tiatives for knowledge-based business development

Twenty years later it will be time for those born proceeding from local and regional conditions. in the 1960s, an even more numerous group, to retire. Alongside the increasing globalisation of the Combined with a general increase in life expectancy, economy, there is a trend towards greater internathis means that the dependency ratio will rise contin- tional political cooperation. The development of the uously until 2040. This situation will require a great EU is an obvious example, which includes elements deal in terms of higher labour force participation of supranational decision-making. This changes the and greater renewal and productivity to enable us in environment for political work. Issues that could Sweden to manage our welfare requirements in the previously be decided at national level must now long term. A larger proportion of older people in the increasingly be dealt with by regional, national and population poses new demands, not least for public international levels in close collaboration. services in the health and care sectors. Information technology is a necessary support in making activities more effective and efficient and remedying future staff shortages in these areas. Since the growth of the older sector of the population is not solely a Swedish phenomenon but is occurring in many other countries, this development also opens up new business opportunities based on the lifestyles and purchasing power of older people.

NEW DIVISION OF ROLES BETWEEN INTERNATIONAL, NATIONAL AND REGIONAL LEVELS

The conditions for both regional development and dialogue between national and regional levels have changed. Previously, considerably more issues could be decided within national boundaries. Now, globalisation links the world’s economies together. One consequence of this is that even relatively small enterprises focusing on the domestic market are now competing to a greater extent directly in a global market, since their clients are extending their international contact points and supplier networks. At the same time, the signifi cance of local and regional environments is growing, as geographical proximity is necessary for meetings and communications between people developing, conveying and using knowledge

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

TIOFOTO

An innovation strategy for Sweden

To date, Sweden has succeeded in managing these improvement in the long term and hence of growth global trends well and better even than many of the and prosperity in Sweden. Innovation means that countries with which we compete. Over the past ten know ledge is translated into new products – goods or years, our growth has exceeded both the EU and services or combinations of the two. Innovation can OECD average. Our GDP per capita is the world’s also consist of new methods of designing, producing eighth highest. The trade surplus today is the highest and marketing existing products. The concept is used on record, as is the surplus on the current account. for both the creative process and the outcome. Despite the fact that Swedish enterprises employed To build a firm foundation for a sound innovation capeople in low wage countries in the 1990s, domestic pacity in the business and public sectors, a strong, specialdemand for highly educated labour has continued to ised knowledge base is needed. Innovations enable enterincrease. Year after year, we rank as the world’s fore- prises to compete successfully on international markets. most IT country, and when the EU rates innovation Innovations also generate new and better ways of providcapacity, Sweden holds a leading position. ing for the needs of society. For knowledge to be built up

But changes tend to accelerate, and competitive and used to create value, it is essential that people’s skills pressure continues to increase. In the Lisbon strategy, are harnessed and that their capacity for initiative is made Sweden and the other EU countries have welcomed use of. The Innovative Sweden strategy therefore focuses these global changes and drawn up guidelines for achiev- on four priority areas for action and initiatives: ing greater competitiveness and sustainable growth. Al-

Knowledge base for innovation though Sweden is in a good position both to realise the

Innovative trade and industry Lisbon strategy and succeed in a broader international

Innovative public investment perspective, we cannot rest on our laurels. Instead, Swe-

Innovative people den needs to actively exploit its advantage and come to grips with the challenges of the future. Rapid global AN INNOVATIVE SOCIAL CLIMATE developments give rise to a number of broad challenges, Building on Sweden’s strengths and dealing with weakwhich a Swedish innovation strategy must meet: nesses and problems on the basis of changed conditions

in the world around us is not something that can be

Investment is becoming increasingly mobile

managed by the Government on its own. The interplay

internationally

between public and private interests therefore needs to

International competition is getting tougher

be strengthened. Promoting innovation is largely about

The public sector is facing new demands

encouraging dialogue and interaction between different

Initiative and skills are growing in importance

actors in society. The common knowledge resources of These challenges make it more important than ever this country need to be developed and turned into new to boost Swedish society’s capacity to renew itself. products and jobs, our interaction with the rest of the The knowledge content of production must continue world can be intensifi ed and people’s will and ability to increase. If Sweden is to remain in the forefront to try new things should be further encouraged. This and lead development, copying and modelling itself requires a commitment from many actors in Swedish soon others will not be suffi cient; it is necessary to cre- ciety. These efforts should also be strengthened through ate new ideas – to be innovative. vigorous cooperation with actors in the world around us,

Innovation is the major source of productivity not least in the EU.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

THE FOLLOWING VISION SHOULD BE THE GUIDING PRINCIPLE FOR THESE JOINT EFFORTS:

Our vision is for Sweden to be Europe’s most competitive, dynamic and knowledgebased economy, and thus one of the world’s most attractive countries for investment by large and small knowledge-based enterprises. World-leading knowledge will fl ourish in a number of priority research areas. Well-developed interaction between the research community, the public sector, industry and trade unions will guarantee the large-scale transformation of knowledge into goods and services. Both traditional and new industries will be permeated by the capacity for renewal. Business product development will be extensive and rapid and innovative people will see to it that both existing companies and the new emerging companies grow. Public investment will be an engine for innovation and growth. Sweden will have the world’s highest educational level, it will be best in the world at making use of the skills of its population and it will have a working environment that encourages women’s and men’s initiative and skills development. The points of contact with the surrounding world and between the various sectors of society will be well developed. Swedish society will combine economic development, social welfare and cohesion with a good environment.

14 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Knowledge base for innovation

INVESTMENTS ARE BECOMING INCREASINGLY It is important that student and teacher exchanges MOBILE INTERNATIONALLY also include countries outside Europe and that the Globalisation has led to investments in entrepre- Swedish research community cooperates with topneurship and research becoming increasingly mobile class environments throughout the world. between countries and regions. The development of Research conducted in Sweden is open to the new knowledge and innovations is also increasingly multitude of issues existing in society and plays taking place in partnerships between research organi- a major role in the development of a knowledgesations and enterprises in different countries. based economy. The state has special responsibility

For Sweden and Swedish regions to be attrac- for financing basic research, where the issues to be tive places for people and enterprises to work in, studied are decided by researchers. The state also a strong knowledge base and well-defined research funds research, addressing the knowledge needs of and innovation environments with well-developed the business sector and society as a whole. New international contacts will be necessary. A strong, growth industries and radical renewal in existing inspecialised knowledge base is also fundamental to dustries arise out of close collaboration between the the three other areas of the strategy – an innovative business sector and universities and higher education business sector, innovative public investment and in- institutions in such areas as information technology, novative people. biotechnology and materials research.

Many innovations and technological discover-

ENSURING THAT SWEDISH EDUCATION ies have their origins in academic research. Well-

AND RESEARCH ARE OF WORLD CLASS functioning interaction between universities, higher A fundamental condition for Sweden to be able education institutions, research institutes and the to continue to compete successfully in the knowl- business sector is therefore vital. This interaction edge-based economy is that Swedish research and also contributes to high research standards and to the education are of world class. To maintain the strong creation of interesting environments for Swedish and international position of Swedish research, continued foreign researchers and enterprises. efforts need to be made in research and postgraduate A major proportion of the Swedish research education. profession will reach retirement age in the next 10–

Greater international cooperation brings greater 15 years. A large-scale expansion of research educaopportunities to strengthen Swedish education and tion has been undertaken in recent years to meet the research while placing stronger demands on Swedish greater demand for research graduates, both in higher education institutions and research higher education and society as a whole, and to environments to be internationally competi- ensure a continued supply of outstanding tive. The EU framework programme for researchers. research and technological develop- For many years, extensive investments ment, for instance, and the Bologna process, have been made in the Swedish education system which deals, for example, with harmonised and higher education in particular has been considdegree structures and quality issues, have erably expanded. It is vital to continue improving been instrumental in strengthening Euro- educational standards, from pre-school to university pean educational and R&D cooperation. level. It will be crucial for future Swedish

16 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

GETTY IMAGES INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

competitiveness that there are enough people with who are already well educated participate in training technical and scientific skills. A large proportion of schemes more frequently than others. Public sector the major expansion of higher education in recent employees attend more courses than private sector years has taken place in science and technology. This employees and those in large enterprises receive more has led to a significant increase in the number of training than those in smaller enterprises. There are higher education graduates in these areas. To en- indications that are our efforts in further education able this development to continue, there must be that have made us world leaders are slackening. sufficient numbers of interested applicants with good The increasing internationalisation of knowledge basic skills from upper secondary education. Greater development makes it important for Sweden to offer efforts are therefore being made to attract interest in students and researchers exchange programmes with technology and science. To increase the recruitment the rest of the world. There has been a considerable base, efforts to develop educational programmes and increase in the number of exchanges in recent years, make them more attractive must continue. but international student and research mobility are

The education system must respond to the need still hampered by differences in, for example, degree for continual upgrading of knowledge and skills in structures or credit and grading systems. a working environment that is changing more and more rapidly. Lifelong learning over and above TO ENSURE THAT SWEDISH EDUCATION AND formal education is extremely important for socie- RESEARCH ARE OF WORLD CLASS, EFFORTS ty’s innovative capacity. Technological development ARE NEEDED TO: and rapid changes in organisational methods make it less likely that education early on in life will suffice Create a school that gives throughout people’s careers. A world-class education everyone basic skills system must therefore encourage and prepare the To ensure a high educational level of the population, way for lifelong learning. Within the framework of it is important to continue large-scale, comprehensive the European Social Fund Objective 3, programmes and long-term investments in education at all levels. include support to employee skills development over Pre-school, which is the start of lifelong learning, will the period 2000–2006. An evaluation has shown be developed. In 2005 a major programme will be that these initiatives have had positive effects for the initiated to enable more pre-school teachers and child people and workplaces participating in them, in carers to be employed in pre-schools, so as to reduce terms of enhanced professional skills and greater the size of children’s groups. propensity for change. To enable more pupils to achieve the targets and

In an international perspective, Sweden has a to ensure that all schools are good schools, a prorelatively high educational level. The proportion of gramme is being implemented for higher standards well-educated people is higher in the public sec- in schools. At the same time, initiatives to employ tor than in the business sector. Within the business more teachers and other specialists in schools are sector, there is marked difference in educational level being pursued. between large and small enterprises. In enterprises It is also important that greater opportunities are with fewer than fifty employees, the proportion of available to allow everyone to achieve a full upper employees with university-level education is lower secondary school education. Upper secondary school than in enterprises with more employees. During the needs to be developed so that more pupils achieve 1990s, these gaps in educational level widened. The the common objectives. To enable schools to impattern is the same with regard to staff training. Those prove their capacity to respond to modern society’s

18 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

demands for broad knowledge combined with a high things later on in life. The state has a special responsidegree of specialisation, standards need to be raised bility to adapt the range of courses and programmes so and a holistic approach, in-depth study and context that the need for supplementary training on the part of need to be further emphasised. employees and companies can be met in a long-term

Vocational training should be improved through perspective. To make lifelong learning a reality, both greater cooperation between upper secondary school enterprises and individuals must be given stronger and working life. A new upper secondary apprentice fi nancial incentives for skills development. training programme will be an attractive alternative in upper secondary vocationally-oriented programmes. Ensure internationally competitive

The expansion of higher education and the crea- higher education institutions tion of at least one strong higher education institu- Greater profi ling, a clearer division of labour and tion in each county have enabled more people to collaboration will enable more effi cient use of the study. The Government’s long-term target is that combined resources of universities, other higher edu- 50 per cent of those born in any given year shall cation institutions and research institutes. The estabhave embarked on university level studies by the lishment by higher education institutions of profi les in age of 25. Broader recruitment to higher education, areas in which they are strong will enable standards of both socially and geographically, will continue to be higher education to be raised. By distributing research promoted. To meet the growing need for advanced funds on a competitive basis, agencies responsible for vocational skills, advanced vocational training should fi nancing research will be able to strengthen national be expanded in the long term. priorities and help concentrate national efforts.

Promote good mathematical skills Encourage international student and an interest in studies in science and researcher mobility

and technology To strengthen the competitiveness of Swedish higher

Further efforts are needed to get more people to education and increase student mobility on the study technology and natural sciences. An interest in international labour market, the Swedish degree mathematics should be encouraged throughout the structure must be more clearly defi ned. An internaeducation system, from pre-school to higher educa- tionally competitive master’s degree should be introtion, and mathematics teaching developed so as to duced. The credit system should also be changed so focus upon its practical importance in working and that Swedish students and educational programmes daily life. Compulsory schools should be encour- can assert themselves better internationally. To inaged to profi le themselves in the natural sciences crease mutual confi dence in educational programmes and technology and teachers given opportunities and degrees, Sweden will continue to work actively for skills development. More innovative and attrac- for European cooperation on issues relating to quality tive courses need to be set up in the borderlands assurance in higher education. between areas such as technology, design, civics, the Swedish higher education institutions must be humanities and science. encouraged to profile themselves more clearly, to

collaborate more and to increase the division of

Promote lifelong learning labour between them so as to make them more The education system should be designed so that it al- attractive to international researchers and students. lows everyone to acquire a good basic education when To enable universities and other higher educayoung, and to supplement their education or learn new tion institutions to recruit more foreign students to

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

master’s and other postgraduate programmes, they innovations and modernise their operations. Research should be able to offer fee-paying courses to students provides the basis for developing new knowledge. It is from countries outside the European Economic Area vital in this process to allow great scope for the ideas (EEA). This will be supplemented by exchange pro- of researchers themselves. Many interesting research grammes such as the Linnaeus Palme programme, results stem from basic research, where knowledge giving less well-off students from the developing development is driven forward by researchers’ curioscountries the opportunity to study in Sweden. ity and desire to solve practical and theoretical prob-

lems. At the same time society is permeated, both in

Continue to invest in research the business sector and other areas, by problems that

and research education research can help to solve. The fact that research is Conditions for the best Swedish research and innova- put to practical use is also something that motivates tion environments must be improved. Their interna- researchers and advances academic research. tional competitiveness should be strengthened by es- Publicly financed research in Sweden is heavily tablishing priorities and concentrating efforts. Sweden’s concentrated to universities and other higher educommitment to basic research should continue. cation institutions, compared with other countries.

The number of research degrees awarded should Relatively little research is carried out at research continue to increase, to ensure the continued supply institutes. Research institutes outside the academic of researchers for institutions of higher education, the system have generally stemmed from special needs business sector and society as a whole. for research in areas of significance for the business

sector and society in general. The Swedish Testing and

Strengthen industrial research institutes Research Institute, the National Institute for Working To improve the quality of applied industrial research Life and the Swedish Defence Research Agency are and make better use of the results of this type of R&D, industrial research institutes need to be de-

R&D investment as a percentage of GDP, 2001.

veloped as a major supplement to universities and

Israel

other higher education institutions. Greater collabora-

Sweden

tion between higher education institutions and other

Finland

research institutes should also be promoted. The process,

Iceland

already begun, of merging industrial research institutes Japan to create more cohesive units is being continued. Larger Korea and more focused institutes will be able to act as a link USA

Germany

between academic research and that of the business sec-

Denmark

tor, undertake R&D for the needs of the business sector

France

and society as a whole and act as a stronger partner in

Belgium

international R&D collaboration, such as EU projects, Singapore more effectively than the present institutes are able to do. Canada

UK

The Netherl. Business sector

CONCENTRATING EFFORTS IN

Norway University and higher

SWEDISH PROFILE AREAS

Ireland education sector

Expansive and knowledge-intensive industries, tradi- Other public sector

Spain

tional industries and the public sector all need access

0 1 2 3 4 5 6

to new knowledge in order to develop technological Source: OECD MSTI, 2003

20 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

examples of institutes with an obvious link to socially

relevant issues. KEY FACTS

The Swedish model of publicly financed research

Innovation systems

with universities and other higher education institu-

The term innovation systems comprises several tions as primarily responsible for research places

dimensions and can refer to various levels. A special demands on these institutions to respond ef-

national innovation system can be described in fectively to the research needs of society. Sweden is

terms of important actors and components such one of the countries investing most public resources

as universities, colleges, institutes, large and small on R&D. Sweden also has a very R&D-intensive

enterprises, venture capital and regulatory framebusiness sector, which is therefore responsible for a

works. The state plays an important role in national very high proportion of all R&D investments, com-

innovation systems. To a large extent, the Governpared with other countries. A few large corporations

ment is responsible for the provision of regulatory are responsible for the majority of these R&D ef-

frameworks, infrastructures, interlinking bodies, forts. During the most recent recession, several of the

and educational and research organisations. In adlargest enterprises in Sweden reduced their R&D

dition to national and sectoral innovation systems, investments, primarily in areas with longer perspec-

there are regional and local innovation systems. tives and bolder visions. This has affected the busi-

Innovation processes often occur in environments ness sector’s scope for collaboration with higher

where geographic proximity and related factors are education institutions and research institutes. Greater

decisive. Examples of factors that can be unique internationalisation and fiercer competition has also

to a certain place or region are the existence of motivated companies to focus their efforts on

specialised knowledge, local social networks and narrower core operations.

trust between the parties concerned.

In recent years, many Swedish enterprises have

grown more abroad than in Sweden. Many enterprises

Clusters

have an increasing proportion of employees in other

The term cluster partially replaces the old terms countries, both because of relocation of production and

sector and branch. As concepts, sector has becobecause their operations are expanding faster in countries

me too broad and branch too narrow. By definition, abroad. In some cases, it has been a matter of the cost

a cluster cuts across different branches. A cluster situation being more advantageous in other countries

is also an aspect of competition based on different for certain types of production. In other cases, proximity

relationships; relationships between individuals to growing markets has been the decisive factor. At the

working in companies in different branches, betsame time Sweden is attracting international enterprises

ween related companies and their customers, but that are investing both funds and effort in operations in

also between companies and research institutes, Swedish environments. These examples are an expres-

trade organisations, actors in the public sector, sion of internationalisation and the fact that investments

etc. Another aspect of cluster is based on the local and operations are moved to, or started in the locations in

production environment, or the home base, which the world that are regarded as most advantageous. Large

are crucial for a company’s competitiveness, since multinational enterprises make up the backbone of the

innovations are often generated as a result of spe- Swedish economy. It is vital for our future welfare that

cific local skills and competence. it continues to be attractive in the long term for these

enterprises to operate in Sweden, in terms both of R&D

and advanced production.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

In a global perspective, Sweden is a small country with people finding new courses of action and re-examining limited resources. Creating attractive environments that established practices. An important aspect here is support international competitiveness therefore means therefore an influx of international resources, both focusing on a number of profi le areas with interesting fu- direct investment and cutting-edge skills. An effective ture prospects. We will need to succeed in strengthening internal market in the EU can contribute to this. and developing strong research and innovation environ- The expansion of higher education and the ments that can interact with the surrounding society at allocation of research resources to all higher educainternational, national and regional levels and that can tion institutions have provided better conditions help to form competitive clusters and effective innova- for these institutions to contribute to development tion systems. Volume is needed to create dynamics and locally. A further factor is the requirement laid down our most prominent enterprises must be on the spot and in the Higher Education Act that higher education spur each other on to continued renewal of production institutions, in addition to conducting education and and processes by means of lively competition, a high research, cooperate with the surrounding society. level of skills and strategic collaboration in developing The role of higher education institutions as engines knowledge. To achieve suffi cient critical mass, a well- in regional development and specialisation has great functioning interplay between the business sector, re- potential for further expansion. search and education actors and other public actors will To achieve a stronger organisation for financing be needed. These can prioritise their efforts collectively research, the Swedish Parliament took a decision and concentrate a major part of private and public in- in 2000 to establish a new agency structure, which vestments on research, education and enterprise. entered into force on 1 January 2001. The aims of the

Many actors, both public and private at national new organisation were to provide scope for focusing and regional levels, have important roles to play in efforts on important scientific areas, promote colidentifying and contributing to the development of laboration between research and development and attractive environments. Initiatives are springing up improve the dissemination of information about in Sweden in collaboration with the private business research. It is vital that the new agencies, the Swedsector, the research base and various stakeholders at ish Research Council, the Swedish Council for Worklocal government (including municipalities), regional ing Life and Social Research, the Swedish Research (including county administrative boards, county Council for Environment, Agricultural Sciences and councils, regional autonomous bodies and coopera- Spatial Planning and the Swedish Agency for Innovative bodies) and national levels. Regional growth pro- tion Systems (VINNOVA) continue to apply flexgrammes and regional development programmes are ibility in giving scope to new issues and that they are strategic tools for these initiatives. The EU structural able to respond rapidly and provide strong support to fund programmes are also important in this context. promising research areas. At the same time, they must

For Sweden and Swedish regions to be attractive succeed in reducing support to areas that are no in the long term for large and small enterprises, inves- longer as important. Research funds are distributed tors and highly skilled people, the attraction must according to qualified assessments – this is a prereqbe based on unique conditions that are difficult to uisite for research to be undertaken at the highest reproduce anywhere else. Important components of international level. this are well-developed networks, patterns of cooper- It is vital that research financing is improved to ation, positive attitudes and people’s ability to act allow coordinated efforts in important areas such as collectively and solve problems to realise their vi- technology and medicine. A major point of departure, sions. Attractiveness is also based on companies and when prioritising research, should be to identify areas

22 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

in which Sweden is currently in a strong position, or is be undertaken at the absolute cutting-edge of knowlikely to be in a strong position in the future. It is not ledge and technology in close collaboration between possible to foresee exactly which R&D efforts will be the business sector, higher education institutions and successful. However, well-developed procedures ena- research institutes. Several good examples already ble the identification of current and future areas of exist of jointly fi nanced research programmes with potential strength. VINNOVA has an important role, participants from various sectors of society, where collaborating with other financers, in giving support academic research is collaborating with the business to needs-based research. Efforts in various areas will and public sectors. These can be further developed. be able to contribute significantly to the development The importance of higher education institutions to of the business sector and society, and hence promote the business sector can be enhanced by giving strong sustainable growth. focus on the commercialisation of research results,

generating more collaboration with the business sec- TO CONCENTRATE EFFORTS IN tor and research institutes and by further stimulating SWEDISH PROFILE AREAS, EFFORTS and making use of local and regional strengths. This ARE NEEDED TO: must be undertaken with a view to international

competitiveness in the research community and the

Prioritise strategic areas in research business sector.

and the business sector

When allocating research funds, prioritisation between Promote regional specialisation in and within research areas will be necessary. Greater combination with national priorities focus will be needed on areas in which Sweden already A precondition for generating strong clusters and is, or can potentially be, a world leader in terms of innovation systems is that account is taken of each research and industry in the short- and long-term. The region’s specifi c conditions and particular specialisaagencies funding research in Sweden should cooperate tions. Greater interaction between national and remore extensively when allocating resources. gional priorities therefore makes it easier to concen-

Strategic programmes based on technological trate effort on Swedish profi le areas. areas or industries should be introduced. To identify existing and potential areas of strength, an interactive SEIZING THE OPPORTUNITIES process will be necessary between relevant stake- PRESENTED BY GLOBALISATION holders such as universities, other higher education Sweden’s business sector, the research community institutions, industrial research institutes, the busi- and the public sector have extensive international ness sector and other institutions, led by the agencies networks, knowledge exchange and business relations. responsible for funding research. Development of It should be possible to develop these and use them these programmes must be undertaken jointly and even more effectively to strengthen and consolidate in collaboration. Programmes must be long-term and strong Swedish profi le areas. We are in a unique poregularly followed up. To assess the focus and results sition, based on the high degree of internationalisaof these programmes, international expertise and tion in this country. The successful campaign to atevaluation should be made use of. tract foreign investments to Sweden must continue.

The development of cooperation with international

Increase interaction between research, partners will provide greater scope for both small and

industry and the public sector large enterprises and researchers throughout Sweden The state has an interest in enabling R&D projects to to benefi t from globalisation. This may apply, for ex-

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

ample, to client and supplier relations and to strategic internationalise must be even more clearly characteralliances for R&D collaboration. A higher degree of ised by prioritising, focusing and the ambition to be specialisation and ever-shorter product cycles require at the forefront of development. These efforts are inenterprises and organisations to make use of oppor- tended to consolidate and strengthen Sweden’s standtunities for establishment and marketing in strategic ing as a whole and the position of Swedish enterprises markets and cooperation with demanding interna- and Swedish skills in markets and areas where we are tional clients. particularly able to compete. There should be a clear

A fundamental condition for continued successful focus on dynamic and rapidly growing markets. This international exchange is a good knowledge of foreign applies both to countries in our immediate vicinity languages apart from English. More extensive interna- in the Baltic Sea region, with the new EU member tional contacts with trade and knowledge partners in countries and Russia, and to more distant countries new markets give rise to a need for greater language that are enjoying rapid growth and have great trade skills. This applies, for example, to language skills for potential in Asia, including China and India. More closer contacts with countries where strong growth is advanced initiatives and new projects will be impleforeseen in the next few decades. mented to market strategic industries and areas in

A clearly defined, well-underpinned and attrac- which Sweden has cutting-edge skills. This applies tive image of Sweden and Swedish areas of expertise both to traditional industries and new ones. is important to strengthen the Swedish economy and More frequently than it does today, Sweden trade. Sometimes the image of Sweden projected should make use of the opportunities offered by EU by Swedish actors is overly self-critical. To convince membership for negotiations with third party counforeign and domestic actors of the potential for long- tries on reaching trade agreements and establishing term development in localising in Sweden and Swed- research collaboration with interesting markets. ish regions, actual conditions must be described. Particular focus must be given to strong points and clear Promote Sweden’s attractiveness ambitions for the future in the areas where Sweden is as a cooperation partner for potentially capable of being a world leader, industri- research and development ally and in terms of research. A continued high level of participation in interna-

tional research collaboration, both within and outside TO SEIZE THE OPPORTUNITIES the EU, is important for Sweden. This participation PRESENTED BY GLOBALISATION, strengthens both Swedish and European industries’ INITIATIVES ARE NEEDED TO: competitiveness and our own R&D base. The par-

ticipation of Swedish actors should be encouraged so

Promote good language skills that they have a chance to infl uence the direction of To provide the basis for successful future international research projects. exchange both when studying and in the working environment, it is important that children and young people Attract foreign direct investment are encouraged to study foreign languages at school. and top skills

Initiatives must continue to market internationally

Promote Swedish business establishment high-tech areas and new industries and clusters in

in strategically important markets which Sweden has special skills in order to attract Efforts to make it easier for Swedish businesses, foreign investment to Sweden. Skills from different particularly small and medium-sized enterprises, to sectors in society must be brought together in efforts

24 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

that strengthen Swedish profi le areas so as to achieve Develop the image of Sweden greater impact and improve Sweden’s attractiveness as a country of innovation in international competition. Sweden’s ability to in- Developing and drawing attention to Sweden as a terest foreign labour in working in Sweden depends country of innovation is one of the priority remits on many factors, including personal taxation. An ex- of all Swedish promotion, including export and inpert tax rate was introduced in 2001 as a major incen- vestment promotion, tourist promotion and cultural tive for attracting key persons, experts and research- promotion. Promotion of Sweden focuses on drawers to Sweden. ing attention to Sweden, Swedish values and the

opportunities they present. Initiatives will continue

Ensure an internationally to demonstrate that Sweden is a reliable trade and

competitive corporate tax rate cooperation partner, an attractive market for foreign An internationally competitive corporate tax rate direct investment, a leading high-tech and R&D namust be ensured to attract foreign investment. It is tion and a country that is appreciated by both women important that the Swedish corporate tax rate does and men as a place in which to live, work, study and not differ essentially from euro countries in our vi- pursue their research. cinity. Such a development could pose a threat to Swedish growth and welfare.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Innovative trade and industry

INTERNATIONAL COMPETITION IS pressures to restructure risk having dramatic regional BECOMING INCREASINGLY FIERCE effects. The renewal of services and products must Growing international competition places more and therefore be strengthened, particularly in small and more pressing demands on the business sector. The medium-sized enterprises. knowledge content and pace of renewal of products and processes must increase to enable enterprises to STRENGTHENING THE INNOVATIVE meet the needs of their clients in a more satisfactory CAPACITY OF EXISTING SMALL AND manner than their competitors. MEDIUM-SIZED ENTERPRISES

In the longer term, new and growing knowledge- Over time, our entire production structure has been based enterprises are an important source of renewal, altered towards products with a greater knowledge new jobs and sustainable growth. The capacity of content and greater productivity, which has resulted enterprises to develop new, attractive products with in a higher added-value level. Against the background high value-added levels and to introduce them on the of global competitive pressure, which increasingly market will be decisive for growth and prosperity in involves knowledge-intensive competition, we must Sweden in the long term. continue to promote and stimulate this development.

Activities based on new technology and knowled- To succeed in this, the business sector’s product range ge are extremely important for creating new jobs and must continually be renewed and the development increasing value-added levels. To be able to compete potential of Swedish enterprises must be strong. successfully with countries with more advantageous A unique pattern in the Swedish business sector cost levels, enterprises in Sweden must raise produc- that has developed over the years is the strong link tivity and the knowledge content of production. In between the large, international, R&D-intensive comnewer, knowledge-intensive industries, productivity panies and their subcontractors. The skills for develogrowth is considerably higher than that of traditional ping more complex product design for international industries. Knowledge-based enterprises are therefore markets have largely been found in the bigger compaimportant to raise productivity in the business sector nies, which are mostly concentrated in the traditional as a whole and to renew traditional industry. and basic industries. It is these industries that will be

Sweden’s basic industries, which include the tim- responsible for most value creation in Sweden in the ber, forestry and pulp, metallurgy and motor vehicle foreseeable future. Renewal in these industries is conindustries, are internationally very advanced. The ditional on it being attractive for companies to conticontinued development of basic industry is crucial nue operating in Sweden. Their Swedish subcontracfor Sweden’s long-term competitiveness. tors will need to be even stronger to be able to

Great attention must be directed in assert themselves in international competition. the next few years to the development of Both together and on their own, these industrial production in Sweden. Over subcontractors must be skilled knowthe last ten years, low-productivity ledge partners for the large companies jobs that have disappeared have been and be able to expand their markets interreplaced by a greater number of, and more nationally. Part of the challenge lies in smaller qualified jobs. This trend must continue. companies becoming better at learning about But because industry plays a vital role for developments in knowledge at higher education regional economic development, strong institutions and research institutes.

26 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

VEIG EDLUND

SOL INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Experience has shown that this ability to keep infor- Good access to knowledge, a skilled labour force and med is frequently linked to the ability to interact in advanced technology in production technology and networks with other companies, large and small. production systems – particularly within the fi eld of

The knowledge-based element of the Swedish automation, production of short series and complex business sector, in international terms, is unusually products – strongly affect competitiveness in many strongly concentrated to a few large multinational small and medium-sized manufacturing businesses in enterprises that are active in high or medium-to-high Sweden. Development of a working organisation for technological sectors with great long-term growth fl exible production is also of central importance for the potential. Six large corporations are responsible for manufacturing industry to be able to defend its posialmost 60 per cent of the R&D investments of the tion in international competition and to meet the inbusiness sector. The employees of larger enterprises creasingly varied and sophisticated demands of clients. show a higher level of education than those of smaller Internationally speaking, the R&D activities of ones. Sweden has a long tradition of collaboration small and medium-sized enterprises are small. On avbetween academic research and the large industrial erage, the formal educational level of their employees enterprises. This collaboration must be administered, is lower than in many of the countries with which we further developed and expanded to include smaller are in competition. Strengthening the capacity of small enterprises and new industries. and medium-sized enterprises to undertake product

development and increase the knowledge content of

Small and medium-sized enterprises' R&D

their products and processes is therefore of central im-

as a percentage of GDP.

portance. Design is an important aspect here. Increa-

Iceland sing R&D investment by small and medium-sized en-

Finland

terprises is vital for Sweden. Several countries use tax

Switz. (-96)

Norway (-95) deductions as an incentive for small and medium-sized

Denm. (-98)

enterprises wishing to make investments in R&D.

Sweden

Belgium (-95) By expanding their market horizons and coming

USA

Canada (-98) into contact with international competitors and

UK clients, there are more incentives for individual enter-

Netherl. (-98)

France (-98) prises to increase the knowledge content of, and re-

OECD new their goods and services. Good opportunities for

EU

Korea (-97) exporting and developing markets are therefore es-

Germany (-97)

sential to strengthen the innovative capacity of small

Spain

Polen and medium-sized enterprises.

>100 employees Italy 100–500 employees Portugal

TO STRENGTHEN EXISTING SMALL AND

0,0 0,2 0,4 0,6 0,8 1,0 1,2

MEDIUM-SIZED ENTERPRISES’ INNOVATIVE

Source: OECD, SME Outlook 2002

CAPACITY, EFFORTS ARE NEEDED TO:

The industrial research institutes, which are small in Sweden compared with the rest of the world, have Strengthen strategic collaboration the potential to play a considerably greater role as re- between enterprises search actors for knowledge and technology develop- New forms for strategic collaboration between large ment in the business sector, particularly for small and and small enterprises, and between small enterprises medium-sized enterprises. themselves, should be examined in order to create

28 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

mutual exchange and to enhance the skills and de- rough R&D investments by these companies will be velopment capacity of smaller businesses. National necessary. In many cases, this will also be required for and regional cluster initiatives are interesting in this companies to be interesting knowledge partners viscontext. Skills development for company executives à-vis larger contractors. in smaller businesses should be encouraged, as should knowledge building through the exchange of board Promote the capacity of small and representatives between large and small enterprises. medium-sized enterprises to operate

internationally

Strengthen cooperation between company The participation of small and medium-sized enternetworks, higher education institutions and prises in international cooperation should be pro-

research institutes moted. The capacity of smaller companies to break Businesses need strong incentives to collaborate in net- into new markets should be strengthened to make use works and better information about how such collabo- of the great potential for new exports and operations ration can be brought about. Larger and internationally in foreign markets. Greater exports will be promoted more competitive industrial research institutes should by offering smaller enterprises the opportunity to be able to function as a link between universities, other bridge initial barriers to participation in strategically higher education institutions and smaller enterprises important markets abroad. more effi ciently than they do at present.

INCREASING THE COMMERCIALISATION Develop support for product OF RESEARCH RESULTS AND IDEAS

development and design In the R&D-intensive business sector, there is consi-

Well-functioning supportive structures for smaller en- derable potential for hiving off new enterprises. There terprises’ product development, product renewal and are also opportunities to form even more new enteruse of design should be built up. Vigorous outreach prises based on outstanding research at universities activities should be an important element of this. and other higher education institutions. At present,

there are hardly any sustainable structures for advice

Develop production technologies or meeting places at an early stage between the creaand production systems tors of ideas, entrepreneurs and fi nancers.

To boost the competitiveness of Swedish manufac- Inventors and individual innovators need both turing industry, forms for supporting the develop- advice and help with financing at early stages in ment of production technology and production sys- order to turn good ideas into successful products. tems should be considered for areas in which Sweden What they need is advice on such matters as patents, has favourable prospects. design, marketing, economics, legal aspects, packa-

ging and distribution. Innovation advisors, working in

Encourage small and medium-sized networks with each other and other experts, can give

enterprises to invest in R&D rapid access to a broad and extensive knowledge base A review should be made of different means of en- and have a very important role to play in promoting couraging R&D investment by small and medium-si- commercialisation of research results and ideas. zed enterprises. International competition has meant The greatest potential for industrial renewal is that increasingly pressing demands are placed on the to be found in existing industry. Existing enterprises capacity of small and medium-sized enterprises to embody enormous capital in terms of organisation, undertake R&D of their own. Continued renewal th- experience and routines. This must be made use of as

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

extensively as possible by strengthening the forces for role to play as a supplement since private actors show renewal in these enterprises. limited interest when commercial risks are high and

The steam turbine, the adjustable spanner, the AXE difficult to assess. Studies and international expetelephone exchange, the three-point safety belt, Losec rience show, however, that this type of investment and the C-Pen are just a few examples of Swedish yields large financial returns for society. In recent inventions. Sweden has a long tradition of enterprises years, capacity for public financing at this stage has that have been started on the basis of an invention, such declined in Sweden. as SKF, Tetra Pak and Aga. Companies are still being A precondition for obtaining access to external started around new inventions. Other ideas are trans- financing is frequently that the invention is covered formed into products in existing companies. Favourable by intellectual property protection. This type of legal conditions must be in place to give innovations with protection is also important for innovative activities, by development potential a chance to become commer- enabling the inventor, designer and originator to profit cially viable. But it is often impossible initially to predict financially from his/her achievement. This generates which innovations may lead to commercial success. funds for investment in development and marketing of

An important requirement for enterprise, entre- new goods and services. In the long term therefore, intelpreneurship and innovation is risk-taking, which in lectual property rights are of vital importance for growth turn requires good financial opportunities throug- and employment. Intellectual property protection is also hout the country. Even though there is a well-deve- important from a number of other perspectives. Registloped risk capital market in Sweden, the scope for ration of intellectual property rights such as patents

and design protection (patterns) contributes to the dis- Spin-off activities from universities and other higher semination of information. Patenting makes it easier, for

education institutions, institutes and R&D-intensive

example, for enterprises to find technical and economic

enterprises in Sweden, 1991-2001.

information on competing technologies and businesses.

The need for intellectual property protection 700 increases in pace with the growing globalisation of

markets and the sale of products in more and more 600 countries. In recent years, the service content of

the economy has become more important and the

500

deregulation of the services markets requires new 400 methods for dealing with financial risks. Intellectual

property rights have thus become more important

for assessing business risks and the future value of in-

vestments. This has become clear through the almost

200

explosive development of intellectual property rights 100 in recent years. Patents, copyrights and trademarks

represent significant values in today’s knowledge-

0

1991 -92 -93 -94 -95 -96 -97 -98 -99 -00 -01 based economy. Because of this, the importance of

Source: SCB and VINNOVA 2003

ensuring intellectual property rights has markedly

increased since the beginning of the 1990s. This appfinancing businesses and enterprises at early stages of lies particularly to patents, where rapid technological their development is frequently insufficient. At this developments and the globalisation of markets have preliminary stage, public financing has an important greatly increased the need for effective protection.

30 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

The opportunities given by the regulatory framework enterprises and individual innovators need to be betto transfer and place rights, such as patents, at the ter developed. Early stage advisory services need to disposal of others represent increasingly important be strengthened so that the ideas of more people get values in global trade. The international trade in a chance to be transformed into new products and patents and licences has, however, led to the use of services and hence new jobs. Efforts should be made patents becoming more complex than in cases where to ensure that better use is made of opportunities for the inventor alone manufactures, markets and exports spin-off activities from large enterprises’ developa product. The need for expedient rules for intellec- ment work outside core operations. Business-generatual property rights issues has increased as a result ting activities associated with higher education instiof this development. The fact that the process has tutions need to be developed to take up research rebecome more complex also leads to a greater need to sults and transform them into commercial operations strengthen companies’ awareness of these issues. and new enterprises. The new structures developed

An effective competition policy enables small and should be based on existing structures in the form of newly established enterprises to set themselves up on university holding companies and technology bridge the market. Reforms that have been implemented have foundations. Bringing about greater collaboration betbeen instrumental in improving competition conditions ween existing actors to make better use of available on the Swedish market. However, several important resources is vital. In order to give institutions of higmarkets, such as the food and construction industries, her education incentives to support their researchers are still noticeable for their lack of competition. in their efforts to commercialise their research results

Within the EU, a transparent and predictable and to create better conditions to make use of researsystem for administrative cooperation is important. chers’ results and ideas without them being required Swedish and foreign enterprises must be able to rely to become entrepreneurs themselves, the “teachers’ on an effective, common administrative system when exception”, which means that the teacher alone owns they transform their ideas into goods and services on the right to his/her inventions, will be reviewed. the market in various ways. A well-functioning administration and supervision to ensure sound conditions Increase fi nancing at early stages of for competition help create a good business climate, business and company development. both for established enterprises and for newly started At the earliest, pre-commercial stages of new knowbusinesses wishing to operate in the common market. ledge-intensive business concepts, the state must play Expanding knowledge-based enterprises must be given a clearer role, since these are operations involving the opportunity to make use of the fact that Sweden great risks and where private actors only operate to a has the EU internal market as its domestic market. limited extent. A sustainable long-term structure for

good state fi nancing at this stage needs to be develo- TO INCREASE THE COMMERCIALISATION ped and state funds for initial support increased. Seed OF RESEARCH RESULTS AND IDEAS, EFFORTS fi nancing should include projects both in traditional ARE NEEDED TO: industries and new spheres. The role of the state vis-à-

vis private actors should be more clearly defi ned.

Transform research results and ideas more effectively into businesses Design workable ground rules and enterprises and promote the use of intellectual

The structures for looking after business ideas, spin- property protection offs and inventions originating from small and large Measures should be taken to increase the awareness

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

of smaller enterprises of the importance of patents Create sound conditions for competition and other intellectual property protection. Sweden that favour the growth of new enterprises must have appropriate ground rules to enable it, to Efforts to fi ght against cartels and the abuse of domiat least the same extent as the countries with which nant positions must continue. Initiatives are needed we are in competition, to create incentives for inno- to strengthen competition in industries that are not vation. Sweden will therefore continue to actively suffi ciently competitive. In new markets, structures promote the introduction of effective intellectual and regulations must support the evolution of baproperty protection at the EU level and in other in- lanced and well-functioning competition. Sweden ternational contexts. should also continue to actively pursue effective legal

cooperation in the EU’s internal market.

32 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Innovative public investment

THE PUBLIC SECTOR IS ment administration has, for example, contributed MEETING NEW DEMANDS to the innovation and development of environmen- Demographic developments, greater internationalisa- tally sound solutions through local investment and tion, deregulation, regulatory changes and technolo- climate investment programmes. gical developments make for changed conditions and Large public investment has traditionally functioplace new demands on the capacity and procedures ned as an engine for renewal and enterprise. Dereof the public sector. The public sector has an infl uen- gulation and regulatory changes in many important ce on the climate for innovation and growth through areas have altered the division of roles and hence the publicly managed operations, procurement and regu- situation concerning responsibilities and interests. lation. It is important that the central government This applies to areas such as railways, telecommuniadministration, municipalities and county councils cations and power supplies. We now have fewer large contribute to greater innovation and competition for manufacturers and a larger number of operators. At sustainable development and show innovation and the same time, focus has shifted from technological renewal in their own operations to meet the needs of development to business development. System sosociety better. lutions and overall responsibility have been shifted

forwards in the value chain and are now increasingly USING THE PUBLIC SECTOR AS AN close to the market. With these changes, the division ENGINE FOR SUSTAINABLE GROWTH of roles has become better defined, but the ques-

Sweden has outstanding public sector operations tion of who has overall responsibility and who is in several fi elds that are interesting for other responsible for coordination is unclear. Better coorcountries. This applies, for example, to administra- dination of development and commissioned projects tive services and systems, environment-friendly pu- could contribute both to more efficient use of comblic transport solutions and education. It also app- mon resources and to the emergence of innovations lies to innovative solutions in health care and the and new enterprises. social services, safety, energy and environmental The Swedish defence industry represents an imtechnology. Goods, services and systems that were portant part of the technological base of Swedish inoriginally developed for the Swedish public sector dustry as a whole. The role of the central government have greater export potential to other markets than administration as a buyer in this context makes it is presently achieved. More developed cooperation possible to undertake R&D activities at the absolute between the public and business sector could lead forefront of knowledge and technology. R&D in the to greater export opportunities. field of defence and security is an important

Another major opportunity is to make component of many strong research and innobetter use of the public sector’s role as vation environments. Moreover, the buyer and specifier of goods, services Swedish defence industry possesses great and systems. The public sector is capacity to develop new knowledge that will responsible for guaranteeing long-term benefit civil society. common interests. The growth of new The regulatory framework and customary and innovative activities benefits from procurement procedures affect both the type of competent procurement driven by large investments made and the bodies that are given the demanding clients. The central govern- chance to deliver them. A central issue in

34 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

VEIG EDLLUND

SOL

this context is identifying the options that give the participate more in public procurement of technobest value for money and elaborating what we mean logy and knowledge-intensive products and services. by “best” and “cheapest” in procurement processes. Procurement instruments should be more stringent What is important is to develop long-term thinking and more extensively coordinated by clearly defi ned towards desired results, rather than identifying the clients, who can articulate the requirements to be body that can undertake a well-defined task in the met. Special instruments have been drawn up for cheapest manner in the short term. This entails inter ecologically sustainable procurement. The regulatory alia the need to design procurement and investment framework for public procurement needs to be chanprocedures so that they do more to promote more ged so that it will be easier to place specifi c demands, widespread creative renewal and innovation while which can encourage the growth of new technologies. taking into account demands for cost-efficiency. There is a great need and great potential, for example,

for solutions that raise standards and increase effi cien- TO USE THE PUBLIC SECTOR AS AN cy in the health system, the social services and civil ENGINE FOR SUSTAINABLE GROWTH, security. Many clients in these areas could be better EFFORTS ARE NEEDED TO: coordinated in order to force the pace of new and

more effective solutions.

Ensure that publicly fi nanced activities contribute to creating products and Public consumption as a percentage

of GDP, 2002.

services for export

Goods and services developed for the Swedish pu- Sweden

Denmark

blic sector should be sold more extensively to other

Iceland

countries as well. More deliberate and systematic ef- The Netherlands

France

forts should be initiated to transform this potential

Belgium

into sustainable growth. Norway

Finland Portugal

Make use of the industrial and techno- UK

Canada

logical potential of the defence and

Germany

security sector for civil applications Italy

Austria

Building creatively on the industrial and technologi-

New Zeeland

cal potential existing in the defence and security sec- Luxemburg

Australia

tor for civil applications represents a major challenge

Spain

and opportunity for Sweden. This should be done in Japan

Greece

such a way as to strengthen existing industries and

USA

enterprises and promote the growth of new ones. Ireland

Switzerland

0 5 10 15 20 25 30

Develop more forceful, demanding

Source: OECD

public procurement

In their role as buyers, the public sector must pro- Develop regulations that force mote technological development and business poten- the pace of renewal tial more energetically, while meeting the needs of Stakeholders from the public sector should work even society as a whole. Structures should be considered more actively to promote sustainable growth and refor enabling small and medium-sized enterprises to newal through functioning regulations that as well as

36 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

being appropriate are also conducive to innovation, growing numbers of older people. Staff shortages are and thus growth. In their regulatory role, actors in the predicted in several of the areas that today are the public sector should be given a clear remit to promote core operations of the public sector, such as health renewal and force the pace of new solutions that have care and social services. This greater demand can a commercial value on international markets. One partially be met by more effi cient use of new techexample of this is environmental technology, where nologies and innovative solutions, such as changes in regulations and performance requirements from pu- working organisation. To attract skilled labour, the blic procurers have been two factors that have led to public services must also be attractive working places, a competitive Swedish industry in this fi eld, though which is the joint responsibility and interest of both here there is more to be done. Another example is employers and employees. the construction sector, where appropriately designed regulations can contribute to better, cheaper and en- TO PROMOTE RENEWAL AND EFFICIENCY vironmentally sound housing construction. IN THE PUBLIC SECTOR, EFFORTS ARE

NEEDED TO: PROMOTING RENEWAL AND EFFICIENCY

IN THE PUBLIC SECTOR Operate public services more

The public sector must meet the needs of society well effectively and innovatively and effi ciently. In the near future, this sector will face Information technology is an important force for an enormous pressure of demand, primarily in terms change that should be made use of in strategic, coorof health care and care of the elderly, owing to the dinated programmes in such areas as health care, the

social services and public administration. Important

issues to be considered in this context are working

Available on-line services in public agencies,

organisation, coordination and the division of roles

2001-2003, per cent.

and responsibilities between public actors at different

Sweden levels. It is also vital that ordinary people, i.e. the users Denmark of public services, are able to exercise strong infl uence

Ireland

on the design of these services.

Austria

Finland

Norway Develop new solutions to meet France the needs of society

UK In the fi elds in which Sweden is in a good position in

Netherl. terms of research and industry to develop new and

Portugal

better solutions to its domestic needs, a greater focus

Spain

and concentration of efforts is needed. Strategic, long-

Italy

Belgium term investments in R&D will enable the public and

Green Car, Brain Power and Nationellt Flygtekniskt

Luxemb.

Forskningsprogram (NFFP) are examples of such

0 20 40 60 80 100

programmes. These programmes aim at strengthe-

Source: Cap Gemini Ernst & Young 2004,

EU Commission follow-up of eEurope2005 targets. ning Sweden’s industrial and scientifi c base to deve-

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

lop more environment friendly vehicles (Green Car), ciety in the world in which information technology is enable earlier diagnoses and offer better treatment of, universally available. Sweden is at the forefront, both for example, dementia, stroke, Alzheimer’s Disease as regards the expansion of its IT infrastructure with and other neuro-related diseases (Brain Power) and high transmission capacity and the IT skills of society. produce new aviation technology for national security However, it is extremely important that we continue and industrial competitiveness (NFFP). Other poten- to work energetically to maintain and develop this tial areas may be civil security, traffi c safety, energy and leading position. Efforts in the field of infrastructure environmental technology. must be supplemented with efforts in other IT policy

areas, such as IT skills, to achieve the best results for

DEVELOPING INFRASTRUCTURE ordinary people and companies.

THAT PROMOTES RENEWAL AND Swedish infrastructure and IT skills provide great

SUSTAINABLE GROWTH scope for rationalisation of the public sector and Well-functioning transport and logistics systems are development of business opportunities on global an essential condition for long-term sustainable deve- markets. Research and development of mobile and lopment. Through its prime responsibility for provi- network-based services are an important component ding transport infrastructure, the central government in this context. The public sector has a major role in administration has a very important role in promo- developing and ordering services that give citizens ting innovation in the transport sector. This applies the best and most efficient social services possible. both to road transport, railways, marine transport and The development of services for the public sector can aviation and combinations of more than one type of also be an engine for actively generating services for transport. Sweden is at the forefront with regard to the private market. Good security is crucial for confiefforts to develop the interplay between vehicles and dence in the services of the information society. infrastructure. This is especially important in the traffi c safety area. Telematics Valley in Göteborg is a good TO DEVELOP AN INFRASTRUCTURE THAT example. By providing electronic infrastructure such PROMOTES RENEWAL AND SUSTAINABLE as the National Road Administration’s digital road GROWTH, EFFORTS ARE NEEDED TO: database, unique conditions are created to attract foreign development capital while generating innova- Develop effective systems for tive transport and logistics services. transport and logistics

If people are not limited to small labour markets The central government administration should exit will be easier for individuals to find employment ploit its strong commitment to the infrastructure and for employers to find staff. Larger, sustainable sector to promote renewal and innovation by develocal labour market regions are therefore important loping effective systems for transport and logistics. By for supplying skills and ensuring renewal. In the last working in partnership with the Swedish vehicle and few decades, commuting has increased in extent and component industry, solutions will be created that importance, which in practice means that the number optimise the use of vehicles and infrastructure and of local labour market regions has declined, but that benefi t both citizens and the business sector. these regions have grown in size. A larger recruitment area also reduces regions’ vulnerability. Increase mobility in and between

The IT policy objective established by the Swe- local labour market regions dish Parliament aims to make Sweden the first so- Conditions should be promoted for greater geo-

38 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

graphical mobility to help create a more dynamic, diversifi ed and innovative business sector and reduce regional vulnerability.

Develop an IT infrastructure for the future

Current efforts to encourage the expansion of a high transmission capacity IT infrastructure in the entire country should continue. Central government fi nancing for expansion in sparsely populated and rural areas will continue until the end of 2006.

The IT infrastructure is important in itself, as is the use of network applications that give greater accessibility to information society services. Boosting IT skills, increasing confidence and accessibility to the IT infrastructure are important for this development.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Innovative people

INITIATIVE AND SKILLS ARE Proportion of the active population to set up new enterprises, 2003, per cent. GROWING IN IMPORTANCE

Companies and business ventures are set up, devel- New Zeeland op and succeed thanks to innovative individuals who USA believe in their own and other people’s ability and Ireland potential for development. Making the most of peo- Canada ple’s initiative and skills is therefore becoming an Norway increasingly important factor in efforts to enhance Denmark the competitiveness of countries and companies in UK our global knowledge-based society. Germany

Italy

STIMULATING ENTREPRENEURSHIP The Netherlands AND ENTERPRISE Sweden

Working life in Sweden is characterised by large com- Finland panies in the business sector and a sizeable public France sector which accounts for a major proportion of em- Japan ployment. At the same time, it is important that we 0 3 6 9 12 15

Source: Global Entrepreneurship Monitor 2003 (selection).

create a climate where people consider starting and running their own businesses an interesting and natural option. Small and knowledge-intensive enterprises surrounding enterprise is felt to be expedient in terms account for many innovations and play a key role in of formulation and application. According to a survey creating new jobs. The larger companies, which often by the World Bank, Sweden ranks among the ten purchase services from smaller enterprises, are de- countries that regulate the business sector the least. pendent on a surrounding structure of creative part- The same survey reveals that Sweden is also among ners for cooperation. the ten countries that, in practice, have the best func-

By international comparison, few companies are tioning regulations and is one of the countries where started in our country. From the point of view of it is easiest to set up a new business. Nevertheless, Sweden’s long-term development, it is important that there are many people who regard the regulatory both women and men regard it as positive and natural framework as complicated, and this indicates that to set up and run their own companies and business even if this is a well-functioning area, there is much ventures, and that attitudes towards failure change. room for improvement. Among other things, we Trying again and learning from mistakes must need to speed up and improve the application be regarded, to a greater extent than today, as by public agencies of existing regulations. signs of vitality and willingness to take busi- Many competing nations are also ness-related risks. striving to simplify and improve their

An important aspect in the challenge regulatory frameworks. Continued improveto create better conditions for enterprise, ments are therefore crucial in enhancing Sweden’s entrepreneurship and innovation is promot- competitiveness. ing positive attitudes towards starting and running new enterprises. It is important, therefore, that the regulatory framework

40 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

GETTY IMAGES INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

TO STIMULATE ENTREPRENEURSHIP AND number of new enterprises and to growth in existing ENTERPRISE, EFFORTS ARE NEEDED TO: companies. The national programme for entrepre-

neurship, which is being run by the Swedish Busi-

Promote positive attitudes ness Development Agency (NUTEK) in 2002–2004,

towards entrepreneurship targets young people and schools. NUTEK has been To promote positive attitudes towards entrepreneur- commissioned by the Government to prepare a ship, joint efforts are required from different sectors proposal for an expanded national entrepreneurship of society – the political establishment, the business programme. It is to focus on concrete measures and sector, the education system and public agencies – at will be based on cooperation with other agencies and a national, regional and local level. Both broad, opin- organisations. ion-shaping measures and more targeted actions are

necessary. Secure a simple and expedient

regulatory framework that facilitates

Number of new entrepreneurs and motives enterprise

for starting up, 2001. Work on the regulatory framework affecting enter-

prise and its application will continue to receive

Working independently high priority. A broad action programme is being

implemented, with the purpose of simplifying regu-

Realising my ideas lations and improving government agencies’ services

and availability. The action programme is a result of

Earning money

the combined efforts of all ministries and 46 public

agencies, in accordance with a Government decision

Product needed on the market

in the autumn of 2003. The assigned task was to re- To avoid unemployment or riskt of it view existing regulations relating to business activi-

ties and to present a set of measures to reduce the

Other

administrative costs faced by enterprises. A method 0 2 000 4 000 6 000 8 000 10 000 for measuring the administrative burden on enter-

Source: Global Entrepreneurship Monitor 2003 (selection) prises is being developed. Agencies are to provide

better service by speeding up their administrative For more long-term results, it is necessary to arouse procedures. interest in entrepreneurship as well as curiosity and a spirit of adventure from an early school age. In order MAKING THE MOST OF to increase awareness of enterprise among young pe- PEOPLE’S SKILLS ople and to foster positive attitudes, entrepreneurship Innovation requires a climate in which employees can needs to be given a natural place in school curricu- renew their skills, and organisations can pursue effi lums and the interchange between schools and en- cient processes of change. Efforts are needed to enterprises developed. Upper secondary schools should courage the development of workplaces where both help to prepare pupils both for future employment women and men are able to reach their full capacity and for running their own businesses. and where new ideas, which can lead to new working

Measures will be taken to promote creativity and methods and products, are stimulated. In a climate awareness of enterprise among young people. In the of global competition, where industry is under strong long term, this action should lead to both a greater pressure to restructure, this is crucial for Sweden.

42 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

Proportion of the population, aged 25-64, to have nise and make better use of people’s skills, regardless participated in skills development in the four of gender, age or origin.

weeks preceding the survey, per cent.

By international comparison, there is little

Iceland mobility between different sectors of working life

U.K.

in Sweden. There is, for example, little movement

Finland

Sweden between the business and academic sectors, or be-

Denmark tween the public and private sectors. Switching from

The Netherl.

one organisation to another is an important means of

Norway

Luxemburg exchanging know-how and is also important in ensur-

Austria

ing an efficient match in the supply of and demand

Belgium

Germany for skills. Poor mobility means a locking-in of know-

Spain

ledge and can also lead to a lack of understanding for

Italy

France other sectors’ conditions and needs. It is also essential

2002

EU15 that Sweden, together with other EU member states,

0 5 10 15 20 25

continues to promote a genuine free movement of

Source: Cap Gemini Ernst & Young 2004,

EU Commission follow-up of eEurope2005 targets. persons in the Union. There are many direct and in-

direct obstacles, today, to an efficient internal market Studies show that enterprises, irrespective of their for EU citizens. fi eld, can boost their economic growth by developing strategies and systems for learning and know ledge TO MAKE THE MOST OF PEOPLE’S SKILLS, development. A good working organisation is fun- EFFORTS ARE NEEDED TO: damental to achieving effi cient and competitive enterprises and organisations. Sweden has an excellent Develop working organisations tradition in the fi eld of working organisation, and we that encourage renewal need to make the most of this. There is no contra- There must be a greater exchange of knowledge diction between a good working environment and between researchers studying working organisation effi cient production. There is a strong correlation be- and its applications. The social partners play a decitween companies’ capacity for organisational change, sive role here. Best practices need to be spread and investments in skills and their capacity to make full knowledge of factors with a positive effect must be use of new technology. New forms of working organi- boosted. Further knowledge is needed about the link sation can also encourage the development of more between technology and working organisations. The appropriate technical solutions. development of new technology in production must

Sweden has a unique asset in the diversity that be coordinated with the development of working orexists in our society, but we currently fail to make ganisations. There should be better training opportuadequate use of the available skills and competence. nities for existing managers, but management issues Today many people are excluded from the labour should also be accorded greater importance in the market or are engaged in tasks that do not match education system. their skills. This is an enormous waste of resources and is highly unsatisfactory for the individuals affect- Make better use of everyone’s skills ed. It also creates a divide between different groups Better use must be made of the full range of skills, in society. A vital challenge for Sweden’s employers in experience, contact networks and cultures and the the public and private sectors is, therefore, to recog- diversity among women and men in our society.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Increased participation and infl uence should be Increase mobility between the business stimulated in order to give new impulses and to and academic communities, the public enhance opportunities to promote creative and dy- and private sectors namic labour markets. Opportunities for foreign People need to be given greater incentive to switch students who have studied in Sweden to remain and between jobs and tasks in the business sector, politics, work here will be reviewed. the academic community, the public sector, the NGO

In order to make better use of people’s know- community and other spheres of activity. Individuals ledge, validation of qualifications and recognition of have experience, knowledge and skills which, through vocational skills need to be improved in cooperation interaction with new environments, can generate new with trade unions and employers. ideas and innovations. Further efforts will also be

made to remove direct and indirect obstacles to the

free movement of persons in the EU.

44 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Moving forward

The “Innovative Sweden” strategy sets out the direc- of the most important areas in an innovation policy tion of efforts in the next few years to create a strong context. Developing the forms for coordination and climate for innovation throughout the country. Certain cooperation between policy areas will be a key task in measures are relatively easy to implement, while oth- efforts to implement the strategy. ers will take more time since they require further The strategy is characterised by the need for more investigation, organisational changes, cooperation bet- intensive dialogue and collaboration between releween many different actors or special funding. vant parties – among others the Government – which

The aim is to present the measures required for can jointly develop the climate for innovation in the implementation of the strategy gradually, on Sweden. This cooperation can take various forms and multiple occasions. The Government can do this take place in different forums. Special groups will, for partly by means of special bills, such as the forthco- example, be appointed with time-limited mandates ming research policy bill and budget bills, but also and with specific tasks relating to well-defined proin the form of instructions to central government blem areas. It may involve relations between large and agencies and other actors. small enterprises, or questions relating to a certain

As conditions in Sweden and the rest of the field or area of technology. It may also be a matter of world change, work with the innovation strategy extended cooperation between central government may need further development. It is important that agencies with related spheres of responsibility within both the theoretical basis and the practical tools for important fields of development. the implementation of the Innovation Strategy are The conditions for sustainable growth and gradually developed and refined. An active exchange employment vary in different parts of the country, of experience with other countries is also significant, which is why political tools must remain flexible. as is Sweden’s participation in the EU’s innovation Many of the measures involved in the implementapolicy efforts. tion of the innovation strategy can be taken as part

Several policy areas have an impact on the deve- of the regional growth programmes which are being lopment of the climate for innovation. The emphasis conducted throughout the country in 2004–2007. of the strategy makes it clear that education and Various public and private actors are jointly carresearch policy, industrial policy, export policy, re- rying out the programmes, which should actively gional development policy, transport policy, IT policy, contribute to the implementation of the Innovative defence policy and environmental policy are some Sweden strategy.

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL

Innovative Sweden – an overview

EN STARK OCH PROFILERAD KNOWLEDGE BASE FOR INNOVATION INNOVATIVE TRADE AND INDUSTRY KUNSKAPSBAS

ENSURING THAT SWEDISH STRENGTHENING THE INNOVATIVE UTMANING EDUCATION AND RESEARCH ARE CAPACITY OF EXISTING SMALL AND Investeringar blir allt rörligare i världen. OF WORLD CLASS MEDIUM-SIZED ENTERPRISES

• Create a school that gives everyone basic • Strengthen strategic collaboration between skills enterprises • Promote good mathematical skills • Strengthen cooperation between company and an interest in studies in science and networks, higher education institutions and technology research institutes • Promote lifelong learning • Develop support for product development • Ensure internationally competitive higher and design education institutions • Develop production technologies and • Encourage international student and production systems researcher mobility • Encourage small and medium-sized • Continue to invest in research and enterprises to invest in R&D research education • Promote the capacity of small and medium- • Strengthen industrial research institutes sized enterprises to operate internationally

CONCENTRATING EFFORTS IN INCREASING THE COMMERSIALI- SWEDISH PROFILE AREAS SATION OF RESEARCH RESULTS AND IDEAS • Prioritise strategic areas in research and the business sector • Transform research results and ideas more • Increase interaction between research, effectively into businesses and enterprises industry and the public sector • Increase fi nancing at early stages of • Promote regional specialisation in business and company development combination with national priorities • Design workable ground rules and promote the use of intellectual property protection • Create sound conditions for competition that SEIZING THE OPPORTUNITIES favour the growth of new enterprises PRESENTED BY GLOBALISATION

• Promote good language skills • Promote Swedish business establishment in strategically important markets • Promote Sweden’s attractiveness as a cooperation partner for research and development • Attract foreign direct investment and top skills • Ensure an internationally competitive corporate tax rate • Develop the image of Sweden as a country of innovation

48 MINISTRY OF INDUSTRY, EMPLOYMENT AND COMMUNICATIONS • MINISTRY OF EDUCATION

INNOVATIVE PUBLIC INVESTMENT INNOVATIVE PEOPLE

USING THE PUBLIC SECTOR AS STIMULATING ENTREPRENEUR- AN ENGINE FOR SUSTAINABLE SHIP AND ENTERPRISE GROWTH • Promote positive attitudes towards entre- • Ensure that publicly fi nanced activities preneurship contribute to creating products and • Secure a simple and expedient regulatory services for export framework that facilitates enterprise • Make use of the industrial and technological potential of the defence and security sector for civil applications MAKING THE MOST OF • Develop more forceful, demanding public PEOPLE’S SKILLS procurement • Develop working organisations that • Develop regulations that force the pace encourage renewal of renewal • Make better use of everyone’s skills • Increase mobility between the business and academic communities, the public PROMOTING RENEWAL AND and private sectors EFFICIENCY IN THE PUBLIC SECTOR

• Operate public services more effectively and innovatively • Develop new solutions to meet the needs of society

DEVELOPING INFRASTRUCTURE THAT PROMOTES RENEWAL AND SUSTAINABLE GROWTH

• Develop effective systems for transport and logistics • Increase mobility in and between local labour market regions • Develop an IT infrastructure for the future

INNOVATIVE SWEDEN – A STRATEGY FOR GROWTH THROUGH RENEWAL