Benchmarking green competitiveness

The challenges facing the world require a transition to a sustainable economy, thereby changing the conditions for business competitiveness. Up until now, knowledge of the green competitiveness of Sweden has been limited. To contribute to the knowledge in this area, this paper presents a study where the manufacturing sector of Sweden is benchmarked with other countries.

With the launch of the Environmental Technologies Strategy in 2011, the Swedish gov­ernment signalled an ambition to strengthen the development of Swedish companies de­veloping and commercialising new environmental technologies. The challenges facing the world, both in terms of climate change and other environmental problems require a transi­tion to a sustainable economy. There is a strong belief that such development will affect the conditions for business, and that firms in order to succeed internationally not only need to be competitive in traditional terms but also be in the forefront in terms of environmental, green competitiveness. However, up until now knowledge of the green competitiveness of Sweden has been limited.

To shed more light on the green competitiveness of Sweden, this paper presents the results from a study where a number of countries are benchmarked on a sector level. The bench­marking is based on three key factors for green competitiveness:

  • the speed at which sectors develop green innovations (measured by green patenting),
  • their ability to gain and maintain market share (measured by existing comparative advantages) and
  • a favourable starting point (measured by current output).

Based on these dimensions, the green competitiveness of manufacturing sectors in Sweden is benchmarked with the respective sectors in 14 other countries.

The study has important limitations, which are mainly due to the challenge of measuring and comparing green innovation activity. Green patenting is here used as an indicator to measure this activity, although patents only capture a share of all innovation activity, and the commercial value of different patents vary considerably. Despite the limitations, how­ever, the study constitutes a step forward in this area.

The study found that Sweden’s overall performance is comparable to that of Ireland, Fin­land, Norway and France. In Europe, Sweden is outpaced by Denmark and Germany, which both have many sectors with above-average green innovation and strong current comparative advantage. In some sectors where Sweden currently has a high level of com­petitiveness, emerging economies such as China and Korea but also Japan, Finland and Norway, display a considerably higher level of green innovation activity. This may suggest that these countries could be well positioned in these sectors to compete with Sweden in a future green economy.

The sectorial breakdown of the study shows that Sweden has a small number of sectors with a high level of green innovation activity and a large number of sectors with little green innovation. Sweden seems to have a strong green competitive position in a few sec­tors, in particular motor vehicles, manufacturing of special purpose machinery and furni­ture. Several other Swedish sectors stand out as having a strong comparative advantage today, but may be at risk from an insufficiently rapid rate of green innovation activity. Of particular concern are the paper and telecommunication sectors. These results provide a valuable backdrop for further analyses of Swedish policy measures. Further studies could examine to what extent we are observing catch up effects, adjust for patent quality, explore alternate measures of green competitiveness and analyse trends over time.

Benchmarking green competitiveness

Serial number: WP/PM 2013:18

Reference number: 2013/062

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