Innovation Europe > News > Innovation EU Vol2-1 > Innovation Sweden

Sweden remains in the group of Innovation leaders (2008 EIS report). However, Sweden has been overtaken by Switzerland as the leading country in innovation. R&D investments by industry in Sweden are concentrated around some 20 large companies operating in the world market. Investments in R&D by SMEs are on a level comparable to other industrial nations, but their share of total R&D is smaller.

The Swedish economy is heavily dependent on exports, which to a large extent are specialised in investment goods. For this reason, the downturn in demand has a stronger impact on the Swedish economy than on the EU average. The necessary restructuring of the major export industries limits their ability to invest in innovation. More than 40% of business-sector R&D is performed by companies with headquarters outside Sweden, while for companies which are still nominally Swedish, the home market plays an increasingly marginal role.

Sweden can no longer count on being a natural choice when the survival and location of business activities are re-evaluated.

Main innovation challenges

• Strong dependence on a small number of large, globalised firms.
• Impact of the crisis on the motor vehicle industry and its suppliers.
• Lack of policies for supporting non-technological forms of innovation.

Conclusion

The current limited ability to invest in innovation by the largest companies not only affects the large companies, but also their demand for innovation-related services from knowledge- intensive SMEs, research institutes and universities.

Sweden is unique in that a country of nine million is home to two leading makers of heavy trucks and construction equipment, as well as two automakers. The motor vehicle industry accounts for around one-quarter of private sector R&D investments, one-fifth of investments in machinery and inventory, and provides 5% of private sector employment.

However, the two automakers have been affected by sharp drops in demand, the financial weakness of their respective US parent companies, and the resulting uncertainty about their future (in particular for Saab). The truck makers have a stronger market position, but the downturn in economic activity has meant a sharp cyclical drop in demand for their products.

While automobiles and heavy trucks may appear to be separate industries, there are strong links through their supplier networks. The failure of one major company would impact on the ability of Swedish component suppliers to reach the critical mass necessary to develop and manufacture components in Sweden.

In 2008, the government introduced a five-year Research and Innovation Bill. New funding for university research will be allocated based on a new quality assessment system, and one-third of the new funding will be allocated to a number of strategic areas, based on a competitive process. New language in the bill puts a stronger emphasis on putting knowledge to use through commercialisation and other means.

The government stake in industrial research institutes has been consolidated, with the ambition to develop the current structure dominated by small sector-focused institutes into stronger and larger institute blocks with the potential of becoming internationally competitive.