Sweden - striving to sustain its model for economic success

As befits the home of the Nobel Prize, bestowed annually for ground-breaking achievements in medicine, physiology, physics and chemistry, Sweden has a tradition of original research that it must now convert to commercial and strategic advantage if it is to maintain its legendary success and competitiveness in these increasingly challenging times.

Sweden has long been the envy of Europe and beyond, on account of its high standard of living, generous welfare benefits and much admired education and healthcare system, funded by high levels of income tax and underpinned by a robust economy. The latter, fuelled by strong exports and consumer spending, is outpacing the Eurozone, of which it is not a member, with an annual growth of 2.8% for 2007.

Timber, pulp and paper and mining (iron ore, copper and uranium) have provided the basis of the country’s economic growth since the 1920s. Today, its subsequent success in manufacturing and design is manifested in international household names such as Volvo, Saab, SKF, Ericsson, Electrolux, H&M and IKEA. AstraZeneca leads the healthy pharmaceutical sector, which comprises a big and expanding group of biotech and biomedicine SMEs.

Sweden’s sound, mixed economy and relatively low unemployment put it in a good position to withstand the worst of the effects of the devastating economic downturn that has hit many other countries with a vengeance. “The downturn is not good for anybody, but we have gone into this crisis in a strong position because we have the resources to act,” says Tomas Aronsson, EUREKA National Project Coordinator. “We have a big surplus in the State budget and our key industries are doing well. We’re not unaffected though. Our automotive and telecommunications becompanies are cutting their workforces, but they are strong multi-nationals and can see opportunities to take market share in the current economic situation.”

Putting science first
Technological change has been the key driver of Sweden’s above average growth in GDP per capita in recent years. The country puts 4% of GDP into research and development, making it one of the top three OECD countries in terms of R&D activity. Approximately 75% comes from industry and 25% from government funding.

The country’s industrial research strengths lie in medicine, telecommunications, IT and automotive technologies; basic research has been dominated by medicine, healthcare and biotechnology, principally pharmaceuticals. Sweden has 12.6 researchers per 1,000 employed people, 68% of whom work in industry; it also has one of the highest graduation rates in advanced research programmes and is second only to Switzerland in the number of scientific articles published.

“Our investments in innovation and new industry have had a good impact on our industry structure”, says Tomas Aronsson.
“The potential for improvements is big, however, considering the 4% of GDP we invest in basic science. Basic research is vital and an investment in the future, but we would like to see more resources put into innovation and research that are of immediate and strategic importance to industry.” 

Maximising opportunities for innovation
Sweden’s Ministry of Education and Science has overall responsibility for the coordination of research policy, although research resources exist within the scope of all ministries. National science, research and technological development programmes are run through agencies such as the Swedish Research Council and VINNOVA, the Swedish Governmental Agency for Innovation Systems, which also runs the national EUREKA office. VINNOVA’s principal responsibilities are to increase the country’s rate of innovation by funding the needs-driven research required by a competitive business and industrial sector, and to strengthen the necessary networks. 

October 2008 saw the government introduce the 2009-2012 Research and Innovation Bill in a bid to strengthen Sweden’s international competitiveness and maintain its position in the international research arena. It aims to achieve these objectives through initiatives aimed at improving the commercialisation rate of research results, increasing the support and funding for high-tech SMEs and maximising opportunities for the research institute sector – unusually small and underfunded for an OECD country – to take a greater and more inclusive role in R&D activities.

The Research and Innovation Bill and its funding provisions are not before time, given Sweden’s need to preserve its export markets in an increasingly competitive global market, to optimise conditions for the major innovative, research-based companies which are the engine of its economy and who might otherwise decamp to more advantageous countries, and to develop new, renewable sources of energy. Most of the 15 billion krona (approximately €1.4 million) being funded by central government will go to universities and other higher education institutions over the Bill’s four-year life. Strategic areas targeted for investment include those where Swedish research is already world-class and where the industry sector and society have a priority need for new knowledge: medicine and life sciences; ICT, nanotechnology and material science; and climate-related research such as climate models and ocean research and renewable energies.

Shortening the journey to market
Sweden currently participates in around 90 running EUREKA projects at any given time to the tune of €33 million, including at least 20 Cluster projects and 13 Eurostars projects – not bad for a country with a relatively small population, says Tomas Aronsson.

“The Cluster projects are very important to us, particularly ITEA and CELTIC. We also know that we need to improve R&D support and funding for our high-tech SMEs, and the Eurostars programme fits their needs well. For the first cut-off for projects, we invested €3.5 million, making Sweden the fourth largest country in terms of funding, behind France, Germany and Spain, and it looks as though it will be similar for the second cut-off. We’re happy about this, as these countries have much bigger GDPs and populations than Sweden. Eurostars also complements another of the national programmes VINNOVA runs, Research & Grow, which focuses on SMEs and in which we’re investing €10-12 million annually.

“EUREKA’s flexibility and network of 38 countries is a tremendous asset. As members of the network, when we’re evaluating a project, we know exactly how the other partner countries are assessing it, and we help and trust each other, which is very important. Recently, my Danish counterpart emailed me urgently for some information he needed for a presentation in his ministry and within a couple of hours he had everything he needed from me and our colleagues in the Norwegian and Finnish EUREKA Offices!”