Where is Sweden competitive?
– using global value chain specialization patterns to define the key competitors of Sweden
In this study, Growth Analysis takes the global value chain perspective one step further. We use the tools of global value chain analysis to first ask the question of where Sweden is competitive, and then ask which nations that are the main competitors of Sweden.
The Global Value Chain (GVC) perspective is a new way of unraveling the economic activities that make up a growing part of the world economy. The main purpose of this report has been to take this perspective and run its full course with respect to analyzing the competitiveness of a country. Specifically, the report provides a method and a measure of the competitive characteristics of Sweden – what is its skill profile and to what markets it delivers economic value. By performing the same mapping exercise on the most significant other economies, a competitor mapping is provided.
While there are few major changes in the listing of the main competitors to Sweden as compared to those that often figure in policy discussions (Denmark, Finland), the close similarity to Austria and the Czech Republic is less often recognized in policy discussions. Also the relative dissimilarity of the Netherlands, which often is used as a benchmark for policy development, is interesting to note.
In addition the analysis shows:
- Sweden, Finland and Denmark receive about three quarters of their GVC income from the EU 15
- Both Finland and Sweden receive a high share of their GVC income from China
- Sweden is highly specialized in R&D, sales and marketing, logistics, technology and process development.
- Sweden does not have a comparative advantage in core production and assembly activities
- The Nordic countries are deeply integrated in each other’s value chains
Conclusion and recommendations
While mapping out key competitors, the report actually also recognizes potentially important economies for collaboration. One could argue that Sweden could benefit from close cooperation with Denmark and Finland to increase its competitive position in global value chains. This is yet another argument in favor of consciously seeking to develop the economic and policy collaboration and coordination between the Nordic countries. Now, even more than before, we could benefit from each other.
When value chains fragment and innovation is becoming global, the intellectual resources needed to compete successfully increases. For small countries the advantage for co-operation and division of labor therefore increases, in particular when as in Finland, Sweden and Denmark value chains are integrated to a large extent. We think that there are interesting possibilities for co-operation in the areas of research funding, university collaboration and in standard-setting in new technology areas such as in new digital manufacturing technologies.
Our findings indicate that, from a GVC perspective, the competitiveness profile of Sweden is not radically different from what the use of more traditional analytical tools would provide. This finding is informative in several ways. First, it confirms that even in a “new economy”, some of our old ideas hold true. However, it also shows that there are close competitors that we seldom notice or discuss - such as Austria or the Czech Republic. The GVC perspective also shows us a competitiveness image of Sweden in terms of the economic activities – instead of the traditional products and industries – where we are competitive in creating value. Both these findings open up for new ways of thinking about which policy instruments to use for enhancing competitiveness.
Where is Sweden competitive? – using global value chain specialization patterns to define the key competitors of Sweden
Serial number: PM 2016:06
Reference number: 2015/020