For a number of years, Growth Analysis has been commissioned to analyse the effect that the increased participation of Swedish companies in global value chains has had on Sweden’s economy. In the report “Sweden in an interlinked world”, Growth Analysis summarises the results of many different sub-studies and makes a number of operational and strategic conclusions for growth and business policy.

Results

• Almost one third (900,000 persons) of the labour force in Sweden’s private sector work in companies that participate in global value chains.
• In recent decades, Swedish competitiveness has been maintained and improved by Swedish companies successively increasing their participation in global value chains.
• Swedish enterprises, both large and small, are now significant players in global networks of companies through which a large share of Sweden’s exports is supplied.
• Imported intermediate goods now comprise a larger share of the value of Sweden’s exports than before and the possibility of importing competitive intermediate goods has become an increasingly important part of Swedish companies’ competitiveness.
• Small and medium size companies are a central part of the creation of the Swedish value that primarily large Swedish companies export. Small and medium-sized enterprises contribute greatly to Swedish exports but they often do so through larger companies.
• Participation in global value chains has implied a profound change in Sweden’s trade and industry and the demand for labour in Sweden has changed from manpower for relatively unskilled jobs to a greater demand for highly skilled workers. The increase of global value chains jobs is greatest in the county of Stockholm.
• Participation in value chains through core production and assembly operations is not Sweden’s strong side. Sweden’s special areas are research and development, sales and marketing, technology and process development.
• The Nordic countries are very integrated with each other’s value chains. Developments in Sweden reflect in general developments in other comparable countries such as the Netherlands, Finland and Denmark.

Recommendations

1. Business policy strategies need new and more customised measures of economic activity in global value chains. We describe in the report how new measures must be developed to make it easier to monitor the competitiveness of Sweden’s trade and industry.
2. Business policy must abandon the outdated notion that the goal is to get all companies to grow and become big. Our analyses show that in order to create competitiveness, there is a need for interaction between large and small enterprises and between companies in different countries.
3. The effectiveness of national control sticks in growth policy is decreasing in the wake of global value chains. We suggest that the innovation policy support systems that are closely linked to companies must be able to handle new forms of international partnerships. There needs to be more discussion on this matter, discussion between companies, government agencies, financiers, universities and higher education institutions.
4. The global value chains reinforce even more the importance of previously known challenges. Improving the framework conditions for Swedish and international investments in knowledge, entrepreneurship and skills development is still a central issue but the level of ambition must be raised considerably.
5. However, this cannot be done through individual projects or programme initiatives; all parts of the innovation system must be significantly improved. The most important component of this process is to continue to have ambitious, long-term rules of play or frameworks to make Sweden an attractive country for entrepreneurship, education, research and development. Effective housing policy and creative urban planning are central aspects since the growth of global value chain jobs increases the closer you get to city centres.
6. Cooperation and shared labour are important issues in order for small countries to continue to be competitive, especially if their value chains are already strongly integrated, as in Finland, Sweden and Denmark. We believe there are interesting opportunities for scaling up collaboration within research funding, universities and new standards in technical areas such as new, digital manufacturing techniques.