Sweden

Following the R&I bill of 2012, the Swedish Agency for Innovation Systems (VINNOVA), together with the Swedish Energy Agency and the Swedish Research Council Formas launched a key initiative in 2013, Strategic Innovation Areas (SIA), to enhance international competiveness while finding sustainable solutions for social challenges through “systems innovation”. Implemented in parallel to SIA, the Vinnova’s Challenge Driven Innovation (CDI) programme addresses specific societal challenges, namely future healthcare, competitive industries, sustainable attractive cities, and information society. These two initiatives marked an important shift in policy orientation in Sweden, from focusing on supporting specific industries or sectors to catalysing a cross-sectoral and multi-disciplinary approach with long-term perspectives and funding towards societal challenges. Both programmes have received substantial increases in funding in the last few years: for example, funding for SIA increased to USD 145 million PPP (SEK 1.25 billion) for 2016, with around 50% expected from the private sector, up from USD 16.8 million PPP (SEK 145 million) in 2013, when the private sector contributed just 14% of funding. The Swedish Research Council supports fundamental research in all areas with a budget of some USD 750 million PPP (SEK 6,05 billion), medicine USD 27 million PPP (SEK 250 million), natural science and engineering USD 147 million PPP (SEK 315 million), social science and humanities USD 22 million PPP (SEK 200 million). The research council also funds strategic research in areas decided in dialogue with the government.

BERD is relatively high, at 2.31% of GDP, though the intensity of business expenditures on R&D is substantially lower than the levels seen 10-15 years ago. Industry R&D is concentrated in large firms, which dominate the Swedish economy. VINNOVA has recently gathered all of its grant support schemes for innovation in SMEs, including its Research&Grow programme, into a new umbrella programme, Innovation Projects in Companies. The programme is targeted at the early development of high-risk companies working on a novelty in the industry with international potential. VINNOVA has also launched a pilot innovation vouchers scheme targeting SMEs.

Public expenditure on R&D is high. Much of this goes to research at Swedish universities, which are well placed in global rankings of world-class universities and publications. HERD, at 0.92% of GDP in 2014, is among the highest in the OECD area. Around 45% of funding for research in Swedish universities comes through institutional block grant funding, with the remainder earned through project funding. The allocation of block grant funding continues to be debated in Sweden and has recently undergone some reform. Since 2014, around 20% is allocated on the basis of performance in attracting project funding and in publications, up from 10% since 2009. From 2018 allocation will be based on three criteria, performance in attracting project funding, publications, and cooperation with companies and society. The aim is to incentivise both research excellence and relevance by rewarding publications, external project funding, and the use and impact of researchand business contacts.

Improving the framework conditions for innovation is a key theme of the 2012 Research and Innovation Bill, followed by the 2016 Research Bill, the guiding frameworks for Swedish STI policy. This has for instance been the introduction of a modest R&D tax relief scheme, which provides a 10% reduction in the employers’ social security contributions for employees engaged in R&D. As the maximum total reduction is USD 26 000 PPP (SEK 230 000) a month, the tax relief primarily benefits smaller firms. The government has also sought to reform public venture capital so that it becomes less risk averse and focuses more on early-stage investments, where there are often shortfalls in private venture capital provision. A proposal tabled to the Swedish Parliament in 2016 proposes to incorporate the two existing public venture capital companies (Inlandsinnovation AB and Fouriertransform AB) into a new public company with a larger financial base and without predefined sectoral and regional investment foci. Its model will be fund-of-funds, i.e. co-investing with private capital funds, to provide early-stage capital to Swedish firms with high-growth potential.

The Ministry of Education and Research and the Ministry of Enterprise and Innovation are chiefly responsible for research and innovation policy. In addition to adopting a Research and Innovation Bill every four years, a bill with a ten-year bill perspective was submitted to Parliament in November 2016 and will be adopted in 2017, to enhance the longer term perspective in research and innovation policy. A National Innovation Council, chaired by the Prime Minister, was created in 2014 to identify innovation policy challenges and to recommend solutions.