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Country Profile – Sweden
Sweden invests heavily in research and development, and at times has enjoyed one of the world’s highest R&D intensities. Although this strategy has served it well and helped it build its GDP per capita, a reliance on exports means the country is suffering during the current recession. The question is whether its undoubted commitment to a knowledge-led economy will help it emerge from recession more quickly than countries with more mixed economies.
Sweden's gross domestic product (GDP) per capita has been growing steadily since the early 1990s and reached €36,988 in 2008, the 5th highest in the European Union. But Sweden's economy is now in a sharp downturn, with GDP expected to fall by 5.4% this year and unemployment reaching 8.1% in April. Sweden has suffered because it is dependent upon exports and its output goes to markets where the economic crisis has hit hardest, such as Germany. It hasn’t helped that one third of Sweden's exports consist of capital goods, such as cars. Moderate growth of GDP and exports is expected to return in 2010, in part due to a $4.2bn rescue package for the banking sector announced by the government on 3 February 2009.
Strong investment in research, education and innovation has given Sweden a highly skilled population, with a high proportion of the workforce taking knowledge-intensive jobs. The key industries include: engineering, which accounts for 50% of Sweden’s output and exports; IT; steel; motor vehicles; biotechnology and the pharmaceutical industries. Sweden also retains its traditional industries such as forestry, paper and pulp.
Foreign direct investment
Sweden is outward-looking. Its exports rose from 29% of GDP in 1980 to 44% in 2003. Sweden is also attractive for foreign direct investment (FDI). Its business environment is more investment friendly than the OECD average. According to the World Bank, it takes just 16 business days, on average, to start a business in Sweden, compared to an average across the OECD countries of 25 days. Along with its highly skilled workforce, Sweden also offers: innovativeness; high R&D intensity; close links between its research institutes and higher education institutes and the private sector; an efficient business sector and good market potential.
There was approximately €138bn of FDI between 1994 and 2003, the main investor countries being the UK (€35bn), Germany (€14bn), Finland (€12bn) and the USA (€8bn). Between 2003 and 2007, FDI amounted to €49.7bn. The overall FDI stock in 2007 amounted to approximately €190bn; the business sectors with the largest FDI inflow were:
- pharmaceuticals and chemicals receiving €39.2bn
- banking and finance €24.5bn
- energy and water €20bn
- machinery and engineering €19bn
- trade €17.5bn
ISA (Invest in Sweden Agency) promotes Sweden to potential foreign investors and helps them find business and investment opportunities. ISA has a regional network providing local assistance during the start-up and expansion phases of FDI projects.
R&D system in Sweden
Sweden’s R&D intensity (the proportion of GDP spent on R&D) has long been among the highest in the world, peaking at 4.3% in 2001 but still reaching 3.6% in 2007, compared to an EU25 average of 1.84%. In 2007 €10.7bn was spent on R&D. In 2005, 77,183 people worked in the R&D sector, of whom 38% were women. Most worked in the business enterprise (56,106), higher education (17,686) and government (3,391) sectors. (Data available at Statistics Sweden).
The business sector accounts for three-quarters of R&D: companies largely fund their own research but receive some contributions from the central government and abroad.
General innovation policy is set by the Swedish government. The Swedish Parliament controls R&D funds within all the ministries’ areas of responsibility. The Minister for Education, Research and Culture is responsible for coordinating research policy. Public-sector funding of R&D takes place both through grants paid directly to higher education institutions, and through support from research councils and sectoral research agencies.
The sectoral research agencies formulate and implement the innovation policies, create programmes and fund R&D aimed both at meeting the knowledge needs of individual sectors and at fostering the development of society. There are 30 sectoral research agencies with resources for R&D.
The most important agencies are:
- VINNOVA: Swedish Agency for Innovation Systems. VINNOVA’s mission is to promote sustainable growth by financing R&D and developing effective innovation systems. VINNOVA is a strategic granting and coordinating actor in the Swedish innovation system. Its available resources wer approximately €200m in 2006.
- SIDA: Swedish Agency for International Development Co-operation. SIDA is responsible for the greater part of Sweden’s international development cooperation. Most of SIDA’s grants are used to develop research cooperation in emerging countries, and regional and international research programmes. Through SIDA’s Research Council, support is also provided for Swedish research. Its research funding budget was approximately €97.5m in 2006, of which €35m goes to Swedish research.
- Swedish Energy Agency whose current energy-related research programme is intended to develop the energy system and generate growth. The programme was set up in 2005 and runs until 2011. Its budget for 2006 was approximately €81m.
- Swedish Environmental Protection Agency It manages Sweden's natural resources by legislation, monitoring, subsidies and land purchases, hunting and game management. Its research funding budget was approximately €10m in 2006.
The research councils support basic research and research policy implementation. The most important research councils are:
- Swedish Research Council is the largest state body providing funds for basic research in Sweden. The Swedish Research Council advises the Government in matters relating to research policy, and promotes and develops research information. It is the main founder of higher education institutes. Its budget for funding research was approximately €246.5m in 2006.
- Research Council for Environment, Agricultural Sciences and Spatial Planning. Its task is to promote and support high-quality research related to sustainable development. Its research funding budget was approximately €56m in 2006.
- FAS: Council for Working Life and Social Research. FAS supports and initiates research in the fields of employment, work and health, public health, welfare, caring services and social relations. Its research funding budget was approximately €30m in 2006.
In addition to the research councils and research agencies, there are a number of public research foundations, which together provide research funding in excess of €156m a year.
The most important foundations are:
- Knut and Raoul Wallenberg Foundation, which financed more than 100 projects during 2004 with €77m. Most of the grants were for scientific equipment within the natural sciences, technological and biomedical basic research.
- Riksbankens Jubileumsfond. The foundation is the largest financier of research outside the universities and university colleges in the fields of humanities and social sciences, with a yearly budget of €30m.
- The Swedish Foundation for Strategic Research's purpose is to support research in the natural sciences, engineering and medicine. Its efforts are aimed at establishing strategic research centres with an international impact. Its yearly research budget was approximately €50m in 2006.
The largest share of publicly funded research is carried out at Sweden’s higher education institutes, with only a small proportion being done at research institutes.
Sweden has also been allocated almost €2bn between 2007 and 2013 from the European Union's Structural Funds: €1.6bn under the Regional Competitiveness and Employment Objective and €300m from the European Territory Cooperation (ETC) Objective. Sweden participates in six cross-border initiatives (Nord, Botnia-Atlantica, Sverige-Norge, Öresund - Kattegatt – Skagerrak, Central Baltic, South Baltic) and the Northern Periphery, North Sea, Baltic Sea Transnational Programmes. The managing authority is Tillvaxtverket (Swedish Agency for Economic and Regional Growth).
One national countrywide programme is funded by the European Social Fund and eight regional programmes are funded by the European Regional Development Fund.
Specific R&D grants can be obtained in 10 thematic priority fields under the EU 7th Framework Programme and in the other instruments of the European Research Area, such as ERA-NETs. Sweden is among the foremost participants in the EU Framework Programme for Research and it is also one of the top recipients of funds from FP7.
Intellectual resources
There are 14 Swedish universities and 25 other higher education institutes that do research. The highest ranked university in Sweden is Karolinska Institutet followed by the universities of Uppsala, Stockholm and Lund.
Karolinska is a leading European medical university, conducting more than 40 % of all academic medical research in Sweden.
Uppsala University handles everything from basic research to applied science, encompassing topics such as theoretical mathematics, research about the function, construction and dynamics of matter, evolutionary biology and earth systems science. It also has connections to industry.
Leading research areas at Stockholm University include various aspects of humanities, law and social sciences; molecular biology, environmental sciences, astrophysics and particle physics, material and organic chemistry.
At Lund University research is performed in several fields, including nanotechnology, climate change and stem cell biology.
Medicine accounts for one third of the R&D done within the higher education sector. The smallest areas are agricultural science (5%), veterinary medicine (5 %) and humanities (6 %). In humanities slightly more than two thirds of the R&D expenditure was financed by direct government allocations. In engineering such allocations only made up about one third of the R&D expenditure.
Several national programmes have been created to strengthen interactions between academia and business. These include Centres of Excellence at universities and research institutes, industrial research institutes and technology parks.
Swedish presidency of the European Union
Sweden took over the presidency of the EU on 1 July, 2009 for half a year. The Swedish Presidency chose to give priority to three issues in R&D:
- Governance of the European Research Area (ERA)
The EU identified six fundamental areas for the development of the ERA in 2007: researcher mobility, scientific infrastructure, top-class research institutions, effective knowledge sharing, coordination of research programmes and international cooperation. The Swedish Presidency wants to initiate a discussion on the structures needed to manage, plan and develop these ERA themes.
- The future orientation of programmes at European level
The Swedish presidency wants to discuss the challenges that lie ahead for Europe such as the environment, climate change, an ageing population, health and migration. The question is how to design future research framework programmes so as Europe can respond to and take control over these challenges.
- Pro-innovation research policies