Download Sweden`s Global Competitiveness

Sweden’s Position
in the Global Economy
Swedish Globalization Forum
May 2012
Christian Ketels
Sweden’s Position in the Global Economy
Scope of the Report
• How is Sweden’s economic performance in a global context?
• What are critical root causes for this performance that
Swedish policy makers can affect?
• Base report going wide, not deep
• Provides synthesis, key data, and a framework
• Identifies key challenges for Sweden going forward ; suggests
directions for action
The Conceptual Framework
Prosperity Outcomes
Performance
Global Economic Activity
MACRO
Fundamentals
Institutions
Macroeconomic
Policies
MICRO
Business
Environment
Conditions
Company
Operations
and Strategy
Long-Term Trends in Prosperity
GDP per capita, US-$,
PPP-adjusted
50,000
Countries that have surpassed Sweden
in terms of prosperity:
45,000
1970s: Canada, Iceland, Norway
1980s: Austria, Denmark
1990s: Australia, Ireland
40,000
35,000
Sweden
30,000
United States
25,000
EU-15
20,000
15,000
Countries that Sweden has surpassed
in terms of prosperity:
10,000
2000s: Germany, Denmark, Ireland,
Canada, Iceland
5,000
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Groningen Growth and Development Center, The Conference Board, 2006
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2010
Labor Mobilization
Hours worked per Capita
Annual hours worked
per Capita
840
820
800
780
760
Sweden
740
EU-27
720
OECD
700
680
660
640
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Conference Board (2012)
Swedish World Market Export Shares
Swedish World Market
Export Share, in %
2.00
Service exports
1.75
1.50
Total exports
1.25
Goods exports
1.00
0.75
0.50
2000
2002
2004
2006
2008
2010
Source: WTO (2011)
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Copyright 2011 © Christian Ketels
China
India
Lithuania
Slovak Republic
Romania
Poland
Latvia
Czech Republic
Bulgaria
Russian Federation
Brazil
Chile
Hungary
Slovenia
Australia
Turkey
Luxembourg
Estonia
South Korea
Switzerland
Iceland
Germany
Netherlands
Austria
Cyprus
Ireland
Belgium
Norway
New Zealand
Spain
Portugal
Denmark
Sweden
Greece
Italy
Malta
Israel
Finland
Mexico
United States
Japan
France
United Kingdom
Canada
Relative Change in World Export Market Share, 2000 – 2010
Change in Market Share 2010 to 2000 as % of 2000 Market Share
200%
150%
100%
50%
0%
-50%
Source: WTO (2011)
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Copyright 2011 © Christian Ketels
Sweden
Export Portfolio By Cluster, 2000-2010
8%
Change In Sweden’s Overall World
Export Share: -0.02%
Sweden’s world export market share, 2010
7%
Forest Products
6%
5%
4%
Business Services
Furniture
3%
Communications Services
Communications Equipment
Heavy Machinery
Biopharmaceuticals
2%
1%
Metals and Metal
Manufacturing
Aerospace Engines
Sweden’s Average World
Export Share: 1.2%
Automotive
Construction Services
0%
-4.0%
-2.0%
-1.0%
Transportation
and Logistics
Power and Power
Generation Equipment
Hospitality
and Tourism
Aerospace
Vehicles and Defense
-3.0%
Fishing and Fishing
Products
Oil and Gas
0.0%
1.0%
2.0%
3.0%
Change in Sweden’s world export market share, 2000 – 2010
Note: Bubble size is proportional to total export value in 2010
Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.
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Underlying
data drawn
from
UN Commodity Trade Statistics Database and the IMF BOP statistics.
Change of Share of Chinese Imports
Selected European Countries
Share of Country in
Chinese Imports, Level in
2000 = 1
2.00
Switzerland
1.50
Germany
1.00
Norway
Denmark
0.50
Sweden
Finland
0.00
2000
Source: UNCTAD (2011), author’s analysis.
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2010
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Chinese Imports from Sweden
Share by Product Group
2000
2010
Misc Primary
produces,
manuf.,
Chemicals, 3.5% 2.0%
3.9%
Manufactur
ed goods,
8.8%
Primary
produces,
9.0%
Misc
manuf.,
9.0%
Machinery,
Transport
Equip,
47.0%
Chemicals,
13.0%
Machinery,
Transport
Equip,
81.6%
Source: UNCTAD (2011), author’s analysis.
Sweden Globalization Council 2007 04-17-07.ppt
Manufactur
ed goods,
22.0%
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Swedish Exports by Firm Size
Selected Markets
SMEs share in total
Swedish export value,
2007
All Swedish
exports: + 6.9%
70%
60%
Norway
50%
Germany
40%
30%
All Swedish
exports: 31.7%
BRIC
20%
US
10%
0%
0%
2%
4%
6%
8%
10%
Change in SMEs share in total Swedish exports, 2000 - 2007
Note: SMEs defined as <200 employees, bubble size proportional to total export value
Source: Statistics Sweden, KTH (2012), author’s analysis
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Sweden’s Foreign Direct Investment Position
World market
share
4%
3%
Flows (3-year
moving average)
Outward
FDI
2%
Stocks
Inward
FDI
1%
0%
2000
2002
Source: UNCTAD (2011), author’s analysis.
Sweden Globalization Council 2007 04-17-07.ppt
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2006
12
2008
2010
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The Shifting Face of Globalization
Relative
to GDP
The Role of Trade and FDI in the Swedish Economy
175%
150%
+62%
+7.5%
125%
100%
75%
Inward
Stock
Imports
50%
25%
Outward
Stock
Exports
0%
2000
2010
TRADE
Source: UNCTAD (2011), Statistics Sweden (2011), author’s analysis.
2000
2010
FDI
Cluster Sector Employment over Time
Share of Total Employment
50%
Sweden
45%
40%
11 EU countries
35%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: European Cluster Observatory (2012), author’s analysis.
Employment by Cluster
Sweden, 2000-2008
3.00
Absolute Job Gains
Absolute Job Losses
Paper products
Sweden’s EU employment share, 2008
2.50
Information Technology
Automotive
2.00
Heavy Machinery
Analytical Instruments
Metal Manufacturing
Telecom products
Lightning and Electrical Products
1.50
Business Services
Production Technology
Medical Devices
Construction
Entertainment Products
Transportation and Logistics
1.00
Oil and Gas
Pharmaceuticals
0.50
Processed Food
Farming and
animal husbandry
Aerospace
0.00
-1.5
-1.0
-0.5
0.0
Change in LQ (fixed country sample), 2000 - 2008
Sweden Globalization
CouncilCluster
2007 04-17-07.ppt
Source:
European
Observatory (2012), author’s analysis.
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0.5
1.0
Total employees, 2008:
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Competitiveness Profile of Sweden
2011
Micro
Business
Environment
Quality
Macro
Company
Sophistication
Social Infrastructure and Pol.
Institutions
Context for Strategy
and Rivalry
Political Institutions
Related and Supporting
Industries
Rule of Law
Demand
Conditions
Human Development
Factor Input
Conditions
Capital
Comm.
Admin.
Innov.
Macroeconomic
Policy
Global
Rank
<5
Significant
advantage
5-8
Moderate
advantage
9-11
Neutral
12-15
Moderate
disadvantage
>15
Significant
disadvantage
Logistic.
Skills
Source: Unpublished data from the Global Competitiveness Report (2011), author’s analysis.
Doing Business in Sweden
Source: World Bank (2012)
Doing Business
2012 Rank
Change in Rank vs.
2011
Getting Electricity
8
-2
Trading Across Borders
8
-1
Registering Property
19
-3
Resolving Insolvency
19
-1
Dealing with Construction Permits
23
No change
Protecting Investors
29
-1
Starting a Business
46
-6
Getting Credit
48
-3
Paying Taxes
50
-3
Enforcing Contracts
54
-2
Innovative Output
Selected OECD Countries, 1999 to 2009
Average U.S. utility patents per
1 million population, 2007-2009
300
Japan
250
United States
Taiwan
200
Switzerland
150
Israel
Finland
South Korea
Germany
Canada
100
Sweden
UK
Denmark
50
France
Italy
0
-5%
Netherlands
Austria
Norway
Belgium
New Zealand
Mexico
-3%
Hungary
-1%
1%
Australia
Ireland
Spain
3%
5%
CAGR of US-registered patents, 1999 to 2009
7%
9%
10,000 patents (avg. 1999 – 2009) =
Source: USPTO (2010), Groningen Growth and Development Centre, Total Economy Database (2010)
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Copyright 2011 © Christian Ketels
Innovation Performance
Sweden’s Rank among European countries
Enablers
Human resources
New doctorate graduates per
1000 population aged 25-34
Percentage population aged 3034 having completed tertiary
education
Percentage youth aged 20-24
having attained at least upper
secondary level education
Open, excellent and attractive
research system
International scientific copublications per million
population
Scientific publications among top
10% most cited publications
worldwide
Non-EU doctorate students as %
of all doctorate students
Firm Activities
1
Firm investments
Business R&D expenditures (% of
GDP)
Non-R&D innovation expenditures
(% of turnover)
Outputs
Innovators
1
4
Linkages & entrepreneurship
SMEs innovating in-house (% of
SMEs)
Innovative SMEs collaborating with
others (% of SMEs)
Public-private co-publications per
million population
Finance and support
Public R&D expenditures (% of
GDP)
3
Intellectual assets
PCT patents pplications per billion
GDP
PCT patent applications in societal
challenges per billion GDP
Community trademarks per billion
GDP
VC (% of GDP)
2
Community designs per billion GDP
6
8
Note: Coloring indicates relative strengths and weaknesses
Source: Innovation Union Scoreboard (2012), author’s analysis.
19
9
SMEs introducing product or
process innovations (% of SMEs)
16
18
5
9
SMEs introducing product or
process innovations (% of SMEs)
8
Economic effects
6
Employment in knowledge intensive activities (% of
workforce)
4
1
1
9
7
Medium-tech and high-tech
exports (% of total exports)
Knowledge-intensive services
exports (% of total service
exports)
New-to-market and new-to-firm
sales (% of turnover)
Licence and patent revenues
from abroad (% of GDP)
5
12
12
30
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Copyright 2011 © Christian Ketels
Learning Outcomes Across Countries
2009
Finland
Proficiency
Score, 2009
600
Germany
SWEDEN
Norway
Reading
550
Denmark
Math
Science
500
450
400
350
300
Source: OECD, Pisa 2009 database
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Copyright 2011 © Christian Ketels
Key Issues
Impact of Policy Reforms
• Level of educational attainment is modest compared to international
peers
• Labor market reforms have had an impact but worked largely through
increasing labor supply
• Innovation systems remains highly ranked but structural challenges
are growing
Impact of Changes in the Global Economy
• Smaller companies become increasingly important for exports and
innovation.
• Foreign markets are increasingly served through FDI
• The majority of net job creation occurs in sectors that serve local
markets
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Copyright 2011 © Christian Ketels
Action Areas
Impact of
Changes in the
Global Economy
Impact of
Policy Reforms
Integrate
reform efforts
across individual
policy areas
Realign
policy tools with
changing patterns
of firm behavior
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Position
Sweden in the
global economy
Copyright 2011 © Christian Ketels
Action Areas: Integrated Action
Integrate
reform efforts
across
individual
policy areas
• Current policy approach too often
targeted on narrow problems
Realign
policy tools
with changing
patterns of
firm behavior
Position
Sweden in the
global
economy
– Lack of incentives to enter the labor market
– Lack of competition in education system
– Lack of incentives to commercialize research
• While these problems are real and important, a step-change in
outcomes will require a more systemic approach
– Address supply (incentives, quality of education, relevance of science)
– Address demand (skill demand, returns to education, returns to businessacademia collaboration
– Address linkages (matching, information, collaboration platforms)
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Copyright 2011 © Christian Ketels
Action Areas: Policy Tools
• Current policy approach is too often
based on traditional economic
structures
Integrate
reform efforts
across
individual
policy areas
Realign
policy tools
with changing
patterns of
firm behavior
Position
Sweden in the
global
economy
– Internationalization seen as export promotion
– Research collaboration seen as spin-offs or linkages to multinationals
• While the policy tools applied in these areas are important, they are
insufficiently aligned with the needs of the emerging economic
structures
– FDI (inward and outward) and exports are simultaneous elements of firms’
internationalization strategy
– Growing role of SMEs in trade and innovation
– Innovation is taking place in internationally connected regional clusters of
research institutions and firms of different sizes
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Copyright 2011 © Christian Ketels
Action Areas: Global Positioning
Integrate
reform efforts
across
individual
policy areas
Realign
policy tools
with changing
patterns of
firm behavior
Position
Sweden in the
global
economy
• Current policy approach is too
oriented on doing what is good in general rather than on
what benefits Sweden most in particular
– Focus of policy reforms on weaknesses
– Focus on cross-cutting dimensions
• Positioning is not about picking winners, but about focusing policy on
creating competitive advantages for the location
– Specific business environment strengths
– Specific clusters
– Integrated policy packages in high-priority areas
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Copyright 2011 © Christian Ketels