Position in the Global Economy Swedish Globalization Forum May 2012 Christian Ketels Swedens Position in the Global Economy Scope of the Report How is Swedens economic performance in a global context ID: 189934
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Slide1
Sweden’s Position in the Global Economy
Swedish Globalization Forum
May 2012
Christian KetelsSlide2
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 actionSlide3
The Conceptual Framework
Prosperity Outcomes
Global Economic Activity
Institutions
Performance
Fundamentals
Macro-economic Policies
Business Environment Conditions
Company Operations and Strategy
MACRO
MICROSlide4
Long-Term Trends in Prosperity
EU-15
United States
GDP per capita, US-$, PPP-adjusted
Source: Groningen Growth and Development Center, The Conference Board, 2006
Sweden
Countries that have surpassed Sweden
in terms of prosperity:
1970s: Canada, Iceland, Norway
1980s: Austria,
Denmark
1990s: Australia,
Ireland
Countries that
Sweden has surpassed
in
terms of prosperity:
2000s: Germany, Denmark, Ireland,
Canada, IcelandSlide5
Labor MobilizationHours worked per Capita
Source: Conference Board (2012)
Annual hours worked per CapitaSlide6
Swedish World Market Export Shares
Total exports
Service exports
Goods exports
Source: WTO (2011)
Swedish World Market Export Share, in %Slide7
Relative Change in World Export Market Share, 2000 – 2010Change in Market Share 2010 to 2000 as % of 2000 Market Share
Source: WTO (2011)Slide8
Sweden
Export Portfolio By Cluster, 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.
Underlying
data drawn from the UN Commodity Trade Statistics Database and the IMF BOP statistics.
Sweden’s world export market share,
2010
Change In Sweden’s Overall World Export Share: -
0.02%
Sweden’s Average World Export Share:
1.2%
Forest Products
Business Services
Communications Equipment
Furniture
Communications Services
Biopharmaceuticals
Power and Power Generation Equipment
Fishing and Fishing Products
Hospitality and Tourism
Aerospace
Engines
Aerospace
Vehicles
and
Defense
Metals and Metal Manufacturing
Change in Sweden’s world export market share,
2000
–
2010
Construction Services
Automotive
Transportation and Logistics
Oil and Gas
Heavy MachinerySlide9
Change of Share of Chinese ImportsSelected European Countries
Source: UNCTAD (
201
1
), author’s
analysis.
Sweden
Germany
Switzerland
Finland
Norway
Denmark
Share of Country in Chinese Imports, Level in 2000 = 1Slide10
Chinese Imports from SwedenShare by Product Group
Source: UNCTAD (
201
1
), author’s
analysis.
2000
2010Slide11
Swedish Exports by Firm Size
Selected Markets
Germany
BRIC
Norway
US
All Swedish exports: + 6.9%
All Swedish exports: 31.7%
Change in
SMEs
s
hare in total Swedish exports, 2000 - 2007
SMEs share in total Swedish export value, 2007
Note: SMEs defined as <200 employees, bubble size proportional to total export value
Source
:
Statistics Sweden, KTH (2012), author’s analysisSlide12
Sweden’s Foreign Direct Investment Position
Source: UNCTAD (
201
1
), author’s
analysis.
World market share
Outward FDI
Inward FDI
Stocks
Flows (3-year moving average)Slide13
The Shifting Face of GlobalizationThe Role of Trade and FDI in the Swedish Economy
TRADE
FDI
Relative to GDP
Exports
Imports
Inward
Stock
Outward
Stock
Source: UNCTAD (
201
1
), Statistics Sweden (2011), author’s
analysis.Slide14
Cluster Sector Employment over TimeShare of Total Employment
Source:
European Cluster Observatory (2012), author’s
analysis.
Sweden
11 EU countriesSlide15
Employment by Cluster
Sweden, 2000-2008
Sweden’s
EU employment share, 2008
Total employees, 2008:
Change in
LQ (fixed country sample), 2000 - 2008
Paper products
Information Technology
Automotive
Heavy Machinery
Analytical Instruments
Telecom products
Business Services
Metal Manufacturing
Medical Devices
Lightning and Electrical Products
Production Technology
Transportation and Logistics
Construction
Entertainment Products
Farming and animal husbandry
Oil and Gas
Absolute Job Gains
Absolute Job Losses
Processed Food
Pharmaceuticals
Aerospace
Source:
European Cluster Observatory (2012), author’s
analysis.Slide16
Macro
Political Institutions
Rule of Law
Human Development
Context for Strategy and
Rivalry
Related and Supporting
Industries
Demand
Conditions
Factor Input
Conditions
Micro
Capital
Comm.
Skills
Innov
.
Admin.
Social Infra-
structure and Pol.
Institutions
Macroeconomic
Policy
Business Environment Quality
Company Sophistication
Source:
Unpublished data from the Global Competitiveness Report (2011),
author’s analysis.
Competitiveness Profile of Sweden
2011
Logistic
.
<5
5-8
9-11
12-15
>15
Significant advantage
Moderate
advantage
Neutral
Moderate disadvantage
Significant disadvantage
Global RankSlide17
Doing Business in Sweden
Doing Business
2012
Rank
Change in
Rank vs. 2011
Getting Electricity
8
-2
Trading Across Borders
8
-1
Registering Property
19
-3
Resolving Insolvency
19
-1
Dealing with Construction Permits
23
No change
Protecting Investors
29
-1
Starting a Business
46
-6
Getting Credit
48
-3
Paying Taxes
50
-3
Enforcing Contracts
54
-2
Source:
World Bank
(
2012)Slide18
Source: USPTO (2010), Groningen Growth and Development Centre, Total Economy Database (2010)
Average U.S. utility patents per 1 million population, 2007-2009
CAGR of US-registered patents, 1999 to 2009
Innovative Output
Selected OECD Countries, 1999 to 2009
10,000 patents (avg. 1999 – 2009) =
TaiwanSlide19
Innovation PerformanceSweden’s Rank among European countries
Enablers
Firm Activities
Outputs
Human resources
New doctorate graduates per 1000 population aged 25-34
1
Percentage population aged 30-34 having completed tertiary
education
5
Percentage youth aged 20-24 having attained at least
upper secondary level education
9
Open, excellent and attractive research system
International scientific
co-publications per million population
4
Scientific publications
among top 10% most cited publications worldwide
6
Non-EU
doctorate students as % of all doctorate students
8
Finance and support
Public R&D expenditures (% of GDP)
3VC (% of GDP)2Firm investments
Business R&D expenditures (% of GDP)1Non-R&D innovation expenditures (% of turnover)18
Linkages
& entrepreneurship
SMEs innovating in-house (% of SMEs)
8
Innovative SMEs collaborating with others (% of SMEs)
6
Public-private co-publications per million population
4
Intellectual assets
PCT patents
pplications per billion GDP
1
PCT patent applications
in societal challenges per billion GDP
1
Community trademarks
per billion GDP
9
Community designs per billion GDP
7
Innovators
SMEs introducing product or process innovations (% of SMEs)
9
SMEs introducing product or process innovations (% of SMEs)
16
Economic effects
Employment in knowledge -intensive activities
(% of workforce)
5
Medium-tech and high-tech exports (% of total exports)
12
Knowledge-intensive
services exports (% of total service exports)
12
New-to-market
and new-to-firm
sales (% of turnover)
30
Licence
and patent revenues from abroad (% of GDP)
4
Note: Coloring indicates relative
strengths
and
weaknesses
Source:
Innovation Union
Scoreboard (
2012),
author’s analysis.Slide20
Learning Outcomes Across Countries2009
SWEDEN
Finland
Germany
Norway
Denmark
Source:
OECD, Pisa 2009 database
Proficiency Score, 2009Slide21
Key IssuesImpact 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
supplyInnovation systems remains highly ranked but structural challenges are growingImpact of Changes in the Global Economy
Smaller companies become increasingly important for exports and innovation. Foreign markets are increasingly served through FDIThe majority of
net job creation occurs in sectors that serve local markets Slide22
Action Areas
Integrate
reform efforts across individual policy areas
Realign
policy tools with changing patterns of firm
behavior
Position
Sweden in the global economy
Impact of
Policy Reforms
Impact of
Changes in the
Global EconomySlide23
Action Areas: Integrated ActionCurrent policy approach too often
targeted on
narrow
problems Lack of incentives to enter the labor marketLack of competition in education system
Lack of incentives to commercialize research
While these problems are real and important, a step-change in outcomes will require a more
systemic approach
Address supply (incentives, quality of education, relevance of science)Address demand (skill demand, returns to education, returns to business-academia collaborationAddress linkages (matching, information, collaboration platforms)
Integrate
reform efforts across individual policy areas
Realign
policy tools with changing patterns of firm
behavior
Position Sweden in the global economySlide24
Action Areas: Policy Tools
Integrate
reform efforts across individual policy areas
Realign
policy tools with changing patterns of firm
behavior
Position
Sweden in the global economy
Current policy approach is too often
based on
traditional economic
structures
Internationalization seen as export promotion
Research collaboration seen as spin-offs or linkages to multinationalsWhile the policy tools applied in these areas are important, they are insufficiently aligned with the needs of the emerging economic structuresFDI (inward and outward) and exports are simultaneous elements of firms’ internationalization strategy
Growing role of SMEs in trade and innovationInnovation is taking place in internationally connected regional clusters of research institutions and firms of different sizesSlide25
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 weaknessesFocus on cross-cutting dimensionsPositioning is not about picking winners, but about focusing policy on creating competitive advantages for the location
Specific business environment strengthsSpecific clustersIntegrated policy packages in high-priority areas