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Following the 2008-09 crisis, Sweden’s economy has grown significantly faster than that of the OECD area as a whole. Sustainable economic growth will depend on Sweden’s future research and innovation performance. To secure Sweden’s future as a leader in research and innovation, the government’s Research and Innovation Bill 2013-16 establishes a more selective, quality-based funding approach, with a significantly increased government budget for R&D.

Hot Issues

Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.

Innovation to contribute to addressing social challenges (including inclusiveness)

Already in the 2008 research and innovation bill, the government presented 24 research areas of strategic importance for Swedish science, society and business, and invested USD 205 million (SEK 1.8 billion) a year. An additional USD 34.5 million (SEK 300 million) was invested in areas of strategic importance for society and business, following the research and innovation bill 2012. The Swedish Agency for Innovation Systems (VINNOVA), together with the Swedish Energy Agency and The Swedish Research Council Formas has launched a new initiative, Strategic Innovation Areas (SIA). VINNOVA has also launched a related programme, Challenge-Driven Innovation (CDI) to address specific social challenges and international competitiveness through “systems innovation”. In both initiatives, the actors, primarily the main end users in industry and the public sector, are developing the agendas and defining the targets. Funding for SIA was around USD 16.8 million (SEK 145 million) in 2013, including around USD 2.3 million (SEK 20 million) from the private sector. It will increase to USD 145 million (SEK 1.25 billion) for 2016, with around 50% from the private sector.

Encouraging innovation in firms and supporting entrepreneurship and SMEs

BERD is relatively high, at 2.31% of GDP (Panel 1d), though substantially below the level of a decade ago. Industry R&D is concentrated in large firms, which dominate the Swedish economy. While venture capital investment as a share of GDP is at the top of the OECD middle range (Panel 1h), there are gaps in the supply of business angel and early-stage VC. In 2013, the public Innovation Bridge Foundation was merged into ALMI to develop a single public entity focused on early-stage funding, e.g. by offering risk-bearing loans, seed and expansion capital, as well as advisory services and incubator funding, to entrepreneurs and small businesses. VINNOVA’s Research&Grow programme for innovative SMEs continues to be a key policy support measure worth USD 16.2 million (SEK 140 million) in 2013.

Reforming and improving public research system (including university research)

Public expenditure on R&D is high (Panel 1a). Much goes for research at Swedish universities, which are well placed in global rankings of world-class universities and publications (Panel 1b, c). HERD, at 0.92% of GDP in 2012, is the second highest in the OECD area. To raise the innovation-generating power of universities, the Swedish Research Council and VINNOVA are exploring ways to reform the incentive structures for university management and researchers created by the criteria and procedures for the distribution of basic funding (block grants) to universities.

Improving the framework conditions for innovation (including competitiveness)

Improving the framework conditions for innovation is a key theme of the recent National Innovation Strategy. A government-appointed committee was set up in 2011 to propose potential regulatory or tax reforms to improve conditions for business growth and R&D. Its recommendation to introduce R&D tax relief has been taken up by the government, which has proposed a 10% reduction in the employers’ social security contributions for employees engaged in R&D. As the maximum total reduction per group will be USD 26 700 (SEK 230 000) a month, the tax relief will primarily benefit smaller firms.

Improving the governance of innovation system and policy

The Ministry of Education and Research and the Ministry of Enterprise, Energy and Communications are largely responsible for research and innovation policy. A National Innovation Strategy was published in 2012 to improve co-ordination and to lay out the principles and direction of Swedish innovation policy with a 2020 perspective. Various agencies, led by VINNOVA, will monitor its implementation annually.

Country Charts

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Selected Highlights

New sources of growth

Since 2012, the government has given USD 1 million (SEK 9 million) a year to VINNOVA to develop competence, support systems, networks, etc., for pre-commercial innovative procurement. From 2014, the Swedish Competition Authority (KKV) will have the main responsibility for practical support for public procurement, including innovative procurement. VINNOVA will, however, encourage agencies and municipalities to identify and specify their strategic development needs and targets, and this may eventually lead to innovative procurement.

Technology transfers and commercialisation

Closer collaboration between industry and academia is an integral part of the SIA and CDI programmes. Furthermore, other VINNOVA programmes, such as VINNVAXT and VINN Excellence Centres, as well as thematic programmes, aim to support mission-oriented, pre-competitive collaboration between R&D providers and industry. Several schemes continue to support centres of excellence at universities, which seek to create excellent academic research environments in which industry participates actively. The low number of patents filed by universities (Panel 1p) is due to the “professor’s privilege” which entitles researchers (instead of institutions) to patent their inventions. The public research institutes, which were grouped into a single holding (known as RISE – the Research Institutes of Sweden Holding AB) in 2009, remain relatively small (Panel 4). Their purpose is to serve as a knowledge partner for businesses, as an intermediary between academia and industry, and as a nexus for participation in EU R&D projects.

ICT and Internet infrastructures

ICT infrastructures are strong (Panel 1k, l). The programme ICT for Everyone – A Digital Agenda for Sweden was adopted in 2011. It sets an ICT policy goal for Sweden to become the world’s leading economy in exploiting the opportunities of digitisation. Sweden’s e-government development index is above the OECD median (Panel 1n). Preparations for the construction of the European Spallation Source (ESS) are now under way in Lund, as is the construction of Max the IV facility for a new-generation synchrotron radiation light source.

Skills for innovation

Sweden’s share of doctorate graduates in science and engineering and adults’ ability to solve technical problems top the OECD countries (Panel 1w, u). However, 15-year-olds’ performance in science is below the OECD median (Panel 1v). Skill development is integral in most of VINNOVA’s schemes. A specific on-going initiative in support of skill development is the Mobility for Growth scheme. In the new school curriculum, the teaching of entrepreneurship is mandatory. To attract overseas talent, the tax exemption rules for foreign experts and highly qualified personnel have been simplified, allowing those with remuneration above a ceiling value to be exempt from certain parts of income tax.

Recent developments in STI expenditures

Spending 3.41% of GDP on R&D (2012), Sweden has the world’ fourth highest R&D intensity. The Research and Innovation Bill 2012 has increased the government budget for STI for 2013-16 by USD 464.6 million (SEK 4 billion) or by 15% compared to 2012.