Is Sweden competitive in Global value chains? This report introduces a novel value-added measure of country competitiveness in global value chains. Using this measure, the development of Swedish competitiveness in global value chains is analyzed. Implications of using different measurements of competitiveness are discussed.

Production processes have become increasingly fragmented across national borders. This changes the nature of international competition. As a consequence conventional indicators of competitiveness based on gross exports are increasingly less informative.

In this report we use a new analytical tool that measures the incomes and jobs being generated by Sweden in Global Value Chains (GVC). GVCs are identified by tracing the flow of goods and services across industries and countries as described in a world input-output table. This allows us to trace the incomes from labour and capital that is directly and indirectly generated in the production of final manufacturing goods. The analysis is based on a new database, called the World Input-Output Database that combines national input-output tables, bilateral international trade statistics and data on production factor requirements.

Using this database the report details the main trends in GVC income and jobs in Sweden from 1995 to 2011.

• The share of high-skilled labour in the Swedish GVC income has increased rapidly. GVC jobs for low-skilled workers have declined.
• In total, the increase in high-skilled job opportunities outweighed the job losses for low-skilled workers so that total GVC jobs increased by about 22 thousand from 1995 to 2008.
• Jobs were mainly created in services sectors and in occupations that are either in the pre-production stage (such as R&D and design) or in the post-production stage (such as marketing and after-sales services).
• Sweden’s share in the total world income was relatively stable at between 0.7 and 0.8 percent of world GVC income and about 2.7 percent of the EU-27 GVC income.

The analysis shows that a GVC perspective on competitiveness is essential for advancing the policy debates on how to measure competitiveness and the causes and consequences of globalization.