Innovation is an attitude

Sweden, Finland and Denmark are leading countries when it comes to innovation and economic development. Enrico Deiaco, Swedish economist and former policy expert at the European commission, explains the secrets of this success.

Mr. Deiaco, for Sweden "innovation" is everything but a new concept. The last innovation index published by the EU confirms the lead of the country when it comes to innovation, followed by Switzerland, Finland, Japan and Denmark. What is the secret of Sweden's success?
This high standard in innovation is the result of at least three factors. First of all in the late 20th century Sweden made and adopted many breakthrough inventions that gave birth to companies like Ericsson (telecommunication), SKF (ball bearings) and AstraZeneca (Pharmaceuticals) that soon grew internationally. If you compare the situation of Sweden to that of our neighboring countries Finland and Denmark for example, we have a noticeable bigger concentration of large companies. And most of our large companies were established around big inventions, which were originally developed outside Sweden but modified and marketed in Sweden. The adoption of foreign inventions and their modification into commercial products was a key strategy for Swedish companies.

Which role does the state play in this success story?
The large companies benefited from a close interaction with the state which included the promotion of flexible labor markets, competitive business conditions and favorable corporate tax regimes. An important factor was also a sophisticated procurement strategy by government which created a strong demand and created incentives for increasing business R&D. These so called 'development pairs' between large companies and state agencies created strong industrial clusters that are still successful today (more…)