Professional Documents
Culture Documents
Sweden’s Position
Globalization Council
Stockholm, Sweden
April 27, 2007
This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press,
1990), “Building the Microeconomic Foundations of Competitiveness,” in The Global Competitiveness Report 2006 (World Economic Forum, 2006),
“Clusters and the New Competitive Agenda for Companies and Governments” in On Competition (Harvard Business School Press, 1998), and
ongoing research on clusters and competitiveness. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Michael E. Porter.
Further information on Professor Porter’s work and the Institute for Strategy and Competitiveness is available at www.isc.hbs.edu
Sweden Globalization Council 2007 04-17-07.ppt 1 Copyright 2007 © Professor Michael E. Porter
A Changing Global Competitive Environment
• Globalization of markets
• Globalization of value chains
Market
• Internationalization of capital, especially portfolio investment
reaction
• Increasing knowledge and skill intensity of competition
• Value increasingly in the service component of activities
Sweden Globalization Council 2007 04-17-07.ppt 2 Copyright 2007 © Professor Michael E. Porter
Swedish Competitiveness in 2007
HOWEVER
• Recent policy changes are a move in the right direction but they are
not sufficient
Sweden Globalization Council 2007 04-17-07.ppt 3 Copyright 2007 © Professor Michael E. Porter
Long-Term Trends in Prosperity
GDP per capita, US-$,
PPP-adjusted
45,000
40,000
35,000
30,000
Sweden
25,000
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Groningen Growth and Development Center, The Conference Board, 2006
Sweden Globalization Council 2007 04-17-07.ppt 4 Copyright 2007 © Professor Michael E. Porter
What Creates Sustainable Prosperity?
Prosperity
Prosperity
Productivity
Productivity Competitiveness
Innovative
Innovative Capacity
Capacity
Sweden Globalization Council 2007 04-17-07.ppt 5 Copyright 2007 © Professor Michael E. Porter
Determinants of Productivity and Productivity Growth
Macroeconomic,
Macroeconomic, Political,
Political, Legal,
Legal, and
and Social
Social Context
Context
Microeconomic
Microeconomic Capabilities
Capabilities
Sophistication
Sophistication Quality
Qualityof
ofthe
the
of
ofCompany
Company Business
Business
Operations
Operationsand
and Environment
Environment
Strategy
Strategy
• A sound context creates the potential for competitiveness, but is not sufficient
• Competitiveness ultimately depends on improving the microeconomic capability
of the economy and the sophistication of local companies and local
competition
Sweden Globalization Council 2007 04-17-07.ppt 6 Copyright 2007 © Professor Michael E. Porter
Improving the Business Environment
Context
Context for
for
Firm
Firm
Strategy
Strategy
and
and Rivalry
Rivalry
z A local context and rules that
encourage investment and
sustained upgrading
Factor –e.g., Intellectual property
Factor Demand
(Input) protection Demand
(Input) Conditions
Conditions z Meritocratic incentive systems Conditions
Conditions across all major institutions
z Open and vigorous competition
z Presence of high quality, among locally based rivals z Sophisticated and demanding
specialized inputs available local customer(s)
to firms z Local customer needs that
–Human resources anticipate those elsewhere
–Capital resources Related
Related andand z Unusual local demand in
–Physical infrastructure Supporting
Supporting specialized segments that can be
–Administrative infrastructure Industries
Industries served nationally and globally
–Information infrastructure
–Scientific and technological z Access to capable, locally based suppliers
infrastructure and firms in related fields
–Natural resources z Presence of clusters instead of isolated
industries
Health
Cluster
Cluster Organizations
Organizations
Health and
and Beauty
Beauty MassMedic,
Products MassMedic, MassBio,
MassBio, others
others
Products Teaching
Teaching and
and Specialized
Specialized Hospitals
Hospitals
Surgical
Surgical Instruments
Instruments
and Suppliers
and Suppliers
Medical
Medical Equipment
Equipment Specialized
Specialized Business
Business
Services
Services
Biopharma
Biopharma- - Banking,
Biological
Biological Banking, Accounting,
Accounting, Legal
Legal
Dental
Dental Instruments
Instruments ceutical
ceutical
Products
Products
and Suppliers
and Suppliers Products
Products
Specialized
Specialized Risk
Risk Capital
Capital
Ophthalmic
Ophthalmic Goods
Goods VC
VC Firms,
Firms, Angel
Angel Networks
Networks
Diagnostic
Diagnostic Substances
Substances Specialized
Specialized Research
Research
Service
Service Providers
Providers
Research
Research Organizations
Organizations Laboratory,
Containers Laboratory, Clinical
Clinical Testing
Testing
Containers
Educational
Educational Institutions
Institutions
Analytical
Analytical Instruments
Instruments Harvard
Harvard University,
University, MIT,
MIT, Tufts
Tufts University,
University,
Boston University, UMass
Boston University, UMass
Sweden Globalization Council 2007 04-17-07.ppt 8 Copyright 2007 © Professor Michael E. Porter
Institutions for Collaboration
Selected Massachusetts Organizations, Life Sciences
Life
Life Sciences
Sciences Industry
Industry Associations
Associations University
University Initiatives
Initiatives
zz Massachusetts
Massachusetts Biotechnology
Biotechnology Council
Council zz Harvard
Harvard Biomedical
Biomedical Community
Community
zz Massachusetts
Massachusetts Medical
Medical Device
Device Industry
Industry zz MIT
MIT Enterprise
Enterprise Forum
Forum
Council
Council zz Biotech
Biotech Club
Club at
at Harvard
Harvard Medical
Medical School
School
zz Massachusetts
Massachusetts Hospital
Hospital Association
Association zz Technology
Technology Transfer
Transfer offices
offices
General
General Industry
Industry Associations
Associations Informal
Informal networks
networks
zz Associated
Associated Industries
Industries of
of Massachusetts
Massachusetts zz Company
Company alumni
alumni groups
groups
zz Greater
Greater Boston
Boston Chamber
Chamber of of Commerce
Commerce zz Venture
Venture capital
capital community
community
zz High
High Tech
Tech Council
Council of
of Massachusetts
Massachusetts zz University
University alumni
alumni groups
groups
Economic
Economic Development
Development Initiatives
Initiatives Joint
Joint Research
Research Initiatives
Initiatives
zz Massachusetts
Massachusetts Technology
Technology Collaborative
Collaborative zz New
New England
England Healthcare
Healthcare Institute
Institute
zz Mass
Mass Biomedical
Biomedical Initiatives
Initiatives zz Whitehead
Whitehead Institute
Institute For
For Biomedical
Biomedical
zz Mass
Mass Development
Development Research
Research
zz Massachusetts
Massachusetts Alliance
Alliance for for Economic
Economic zz Center
Center for
for Integration
Integration of
of Medicine
Medicine and
and
Development
Development Innovative
Innovative Technology
Technology (CIMIT)
(CIMIT)
Sweden Globalization Council 2007 04-17-07.ppt 9 Copyright 2007 © Professor Michael E. Porter
The Composition of Regional Economies
United States, 2004
Natural
Natural
Traded
Traded Local
Local Resource-Driven
Resource-Driven
Note: 2004 data, except relative productivity which uses 1997 data.
Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School
Sweden Globalization Council 2007 04-17-07.ppt 10 Copyright 2007 © Professor Michael E. Porter
Specialization of Regional Economies
Select U.S. Geographic Areas
Denver,
Denver,CO CO Chicago
Chicago
Leather
Leatherand
andSporting
SportingGoods
Goods Communications
CommunicationsEquipment
Equipment
Oil and Gas Boston
Boston
Oil and Gas Processed
ProcessedFood
Food
Aerospace Analytical
AnalyticalInstruments
Instruments
Seattle-Bellevue-
Seattle-Bellevue- AerospaceVehicles
Vehiclesand
andDefense
Defense Heavy
HeavyMachinery
Machinery
Everett, Education
EducationandandKnowledge
KnowledgeCreation
Creation
Everett,WAWA Communications Equipment
Aerospace
AerospaceVehicles Pittsburgh, Communications Equipment
Vehicles Wichita,
Wichita,KSKS Pittsburgh,PAPA
and
andDefense
Defense Aerospace
AerospaceVehicles
Vehiclesand
and Construction
ConstructionMaterials
Materials
Fishing
Fishingand
andFishing
Fishing Defense
Defense Metal Manufacturing
Metal Manufacturing
Products
Products Heavy
HeavyMachinery
Machinery Education
EducationandandKnowledge
Knowledge
Analytical
AnalyticalInstruments
Instruments Oil
Oil andGas
and Gas Creation
Creation
San
San Francisco-
Francisco-
Oakland-San
Oakland-San Jose
Jose
Bay
Bay Area
Area
Communications
Communications
Equipment
Equipment
Agricultural
Agricultural Raleigh-Durham,
Raleigh-Durham,NC NC
Products
Products Communications
CommunicationsEquipment
Equipment
Information
Information Information
InformationTechnology
Technology
Technology
Technology Education
Educationand
and
Knowledge
KnowledgeCreation
Creation
Los
Los Angeles
Angeles Area
Area
Apparel
Apparel Atlanta,
San Atlanta,GA
GA
Building
Building Fixtures,
Fixtures, SanDiego
Diego Construction
Leather ConstructionMaterials
Materials
Equipment
Equipment and
and Leatherand
andSporting
SportingGoods
Goods Transportation
Power Transportationand
andLogistics
Logistics
Services
Services PowerGeneration
Generation Houston
Houston Business Services
Education Business Services
Entertainment
Entertainment Educationand
andKnowledge
Knowledge Heavy
HeavyConstruction
ConstructionServices
Services
Creation
Creation Oil
Oil andGas
and Gas
Aerospace
AerospaceVehicles
Vehiclesand
andDefense
Defense
Note: Clusters listed are the three highest ranking clusters in terms of share of national employment
Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School
Sweden Globalization Council 2007 04-17-07.ppt 11 Copyright 2007 © Professor Michael E. Porter
Related Clusters in the U.S. Economy
Jewelry &
Schematic Representation Forest
Precious Products
Metals
Apparel Footwear
Leather Plastics Construction
and Materials
Furniture
Related
Products Building
Textiles Chemical Oil and
Fixtures,
Products Gas
Equipment
Sporting Financial and
and Recreation Services Pharma- Services
ceutical Heavy
Goods
Construction
Services
Publishing Education Prefabricated
and Printing and Medical
Enclosures
Knowledge Devices
Creation
Note: Clusters with overlapping borders or identical shading have at least 20% overlap (by number of industries)
in both directions. Clusters in which Stockholm has a strong position within Sweden are in bold
Sweden Globalization Council 2007 04-17-07.ppt 12 Copyright 2007 © Professor Michael E. Porter
Cross-National Collaboration of Cluster Initiatives
SWEDEN
SWEDEN FINLAND
FINLAND
Biotech
Biotech Umeå
Umeå Centre
Centre of
of Expertise,
Expertise, Gene
Gene Technology
Technology
Uppsala
Uppsala BIO
BIO and
and Molecular
Molecular Biology
Biology
Biomedical
Biomedical Development,
Development, West
West Sweden
Sweden FIVDIC,
FIVDIC, In
In Vitro
Vitro Diagnostics
Diagnostics Industry
Industry Cluster
Cluster
Livets
Livets Nya
Nya Verktyg
Verktyg Culminatum,
Culminatum, Medical
Medical &Welfare
&Welfare Technologies
Technologies
Healthcare
Healthcare Technology
Technology Alliance
Alliance Technology
Technology Centre
Centre Teknia
Teknia Ltd
Ltd
BioMedley
BioMedley
NORWAY
NORWAY
ESTONIA
ESTONIA
BIOINN
BIOINN
BCNorth Estonian
Estonian Biotechnology
Biotechnology Association
Association
BCNorth
Tartu
Tartu Biotech
Biotech Cluster
Cluster
DENMARK
DENMARK
bioTEAMsouth
bioTEAMsouth
BioMedico
BioMedico Forum
Forum
CROSS-BORDER
CROSS-BORDER EFFORTS
EFFORTS
ScanBalt
ScanBalt
Medicon
Medicon Valley
Valley Academy
Academy
NORTHERN
NORTHERN GERMANY
GERMANY
MedCoast
MedCoast Scandinavia
Scandinavia
Life
Life Sciences
Sciences SH
SH &
& HH
HH
BioCon
BioCon Valley
Valley
medRegio
medRegio Luebeck
Luebeck
Sweden Globalization Council 2007 04-17-07.ppt 13 Copyright 2007 © Professor Michael E. Porter
The Process of Economic Development
Shifting Roles and Responsibilities
Old
Old Model
Model New
New Model
Model
•• Government
Government drives
drives economic
economic •• Economic
Economic development
development is is aa
development
development through
through policy
policy collaborative
collaborative process
process involving
involving
decisions
decisions and
and incentives
incentives government
government at at multiple
multiple levels,
levels,
companies,
companies, teaching
teaching and
and
research
research institutions,
institutions, and
and
institutions
institutions for
for collaboration
collaboration
Sweden Globalization Council 2007 04-17-07.ppt 15 Copyright 2007 © Professor Michael E. Porter
Productivity versus Working Hours
Selected Countries
Real GDP per Hour Worked, PPP adjusted, 2005
70
Norway*
60
France Ireland
50 Belgium NL
Germany United States
SWEDEN Denmark
Italy UK
40 Finland
Switzerland Canada Australia
Iceland
Greece Spain Japan
30 New Zealand
Hungary Portugal Slovenia
Czech Republic S Korea
20 Poland Slovakia
Estonia
Lithuania
Latvia
Russia*
10 Mexico
0
500 600 700 800 900 1000 1100 1200
Hours worked per Capita, 2005
Note: Affected by oil revenues
Source: Groningen Growth and Development Centre and The Conference Board (2006), authors’ calculations
Sweden Globalization Council 2007 04-17-07.ppt 16 Copyright 2007 © Professor Michael E. Porter
Long-Term Trends in Labor Productivity
GDP per hour worked
US-$, PPP-adjusted
60
40
30
Sweden
United States
20
EU-15
10
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Groningen Growth and Development Center, The Conference Board, 2006
Sweden Globalization Council 2007 04-17-07.ppt 17 Copyright 2007 © Professor Michael E. Porter
Long-Term Trends in Labor Mobilization
Gap in %,
Sweden versus EU-15
Sweden versus EU-15
35%
30%
Unemployment
Net Gap
25%
20%
15%
10%
5%
Employees as % of Population
0%
-10%
-15%
-20%
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Groningen Growth and Development Center, The Conference Board, 2006
Sweden Globalization Council 2007 04-17-07.ppt 18 Copyright 2007 © Professor Michael E. Porter
G
re
0%
5%
10%
15%
20%
25%
30%
ec
e
I
Po tal
C l en
yp
er
C S n
Share of Entrepreneurs in the
ze pa
ch Ire in
R lan
ep d
Li ubl
th i c
ua
n
M ia
H al t
un a
Be gar
lg y
Sl ium
ov
ak
19
ia
Au UK
s
Fi tri a
N nl
et an
he d
G rlan
Entrepreneurship
er d
m
a
Fr ny
a
Sw nc
ed e
e
La n
Lu Slo tvia
xe ve
m nia
b
D ou
en rg
m
Es ark
to
N nia
or
wa
y
Copyright 2007 © Professor Michael E. Porter
Sweden
Cluster Export Portfolio, 1997-2005
8%
Forest Products
7%
Sweden’s world export market share, 2005
5%
Furniture
Communications Equipment
4%
Business Services
Communications Services
3% Biopharmaceuticals
Manufacturing
Automotive
120%
Ireland
100%
Estonia
80%
Chile
Netherlands
60% Hungary
New Zealand
SWEDEN
Denmark Switzerland Czech Republic
40% Thailand UK
Slovakia
Australia Finland
Germany Iceland
20% US
Italy China
Japan
India
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Japan
250
Taiwan
150 Israel
SWEDEN Switzerland Finland
Wages
• Swedish wages are broadly in line with the level of competitiveness but
wage growth has recently been stronger than the speed of
competitiveness upgrading
Challenges
• Sweden continues to suffer from an imbalance between sound
macroeconomic policies and strong companies on the one hand and a
weaker business environment conditions on the other
• Key weaknesses are educational quality, government efficiency, and
infrastructure
Sweden Globalization Council 2007 04-17-07.ppt 25 Copyright 2007 © Professor Michael E. Porter
Medium-Term Dynamism in Competitiveness
Hourly Wage in
Manufacturing, 2004
$40
Denmark
Belgium
$35 Norway Germany
Netherlands
Austria Switzerland Finland
$30 Iceland SWEDEN
France UK
$25 Australia
Italy Ireland United States
Japan
$20 Canada
Spain
$15 Greece
Cyprus Israel New Zealand
Korea
Slovenia
$10 Malta Portugal Singapore
Hungary
Slovakia Czech Republic Taiwan
Poland Hong Kong
$5 Estonia
Mexico Lithuania
Bulgaria Latvia Brazil
Romania
$0 Sri Lanka
Low Business Competitiveness Index 2004 High
Note: Rank versus 121 countries; overall, Sweden ranks 7th in Business Competitiveness and 18th in 2005 PPP adjusted GDP per capita.
Source: Global Competitiveness Report 2006-2007.
Sweden Globalization Council 2007 04-17-07.ppt 28 Copyright 2007 © Professor Michael E. Porter
Context
Contextfor
for
Firm Strategy
Firm Strategy
and
Context for Firm Strategy and Rivalry
andRivalry
Rivalry
Sweden’s Relative Position 2006
Note: Rank versus 121 countries; overall, Sweden ranks 7th in Business Competitiveness and 18th in 2005 PPP adjusted GDP per capita.
Source: Global Competitiveness Report 2006-2007.
Sweden Globalization Council 2007 04-17-07.ppt 29 Copyright 2007 © Professor Michael E. Porter
Demand
Demand
Conditions
Conditions Demand Conditions
Sweden’s Relative Position 2006
Note: Rank versus 121 countries; overall, Sweden ranks 7th in Business Competitiveness and 18th in 2005 PPP adjusted GDP per capita.
Source: Global Competitiveness Report 2006-2007.
Sweden Globalization Council 2007 04-17-07.ppt 30 Copyright 2007 © Professor Michael E. Porter
Related
Relatedand
and
Supporting
Supporting Related and Supporting Industries
Industries
Industries Sweden’s Relative Position 2006
Note: Rank versus 121 countries; overall, Sweden ranks 7th in Business Competitiveness and 18th in 2005 PPP adjusted GDP per capita.
Source: Global Competitiveness Report 2006-2007.
Sweden Globalization Council 2007 04-17-07.ppt 31 Copyright 2007 © Professor Michael E. Porter
Action Priorities
Sweden Globalization Council 2007 04-17-07.ppt 32 Copyright 2007 © Professor Michael E. Porter
Moving Towards a New Model for Sweden
Key Themes
• Capital-intensive • Knowledge-intensive
multinationals drive the clusters of entrepreneurs
economy drive the economy
Sweden Globalization Council 2007 04-17-07.ppt 33 Copyright 2007 © Professor Michael E. Porter
Competitiveness Councils
Finnish Science
and Technology
Council
Sweden Globalization Council 2007 04-17-07.ppt 34 Copyright 2007 © Professor Michael E. Porter
Background Data
Sweden Globalization Council 2007 04-17-07.ppt 35 Copyright 2007 © Professor Michael E. Porter
Comparative Economic Performance
Selected Countries
$45,000
U.S.
Norway
$40,000
Denmark Ireland
Switzerland Iceland
$35,000 Austria
NL
SWEDEN
$30,000 Japan France Finland
Germany Spain
GDP per Italy
capita New Zealand
$25,000 Australia,
(PPP Greece
adjusted) Canada, Slovenia
in US-$, S Korea
2005 $20,000 U.K. Czech Rep.
Portugal Hungary
$15,000 Slovakia Estonia
Poland Latvia
Lithuania
$10,000 Mexico
Turkey
$5,000 China
India
$0
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Source: Groningen Growth and Development Centre and The Conference Board (2006), authors’ calculations
Sweden Globalization Council 2007 04-17-07.ppt 36 Copyright 2007 © Professor Michael E. Porter
Long-Term Trends in Labor Mobilization
Annual hours worked
per capita
1200
1000
United States
800
Sweden
600 EU-15
400
200
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: Groningen Growth and Development Center, The Conference Board, 2006
Sweden Globalization Council 2007 04-17-07.ppt 37 Copyright 2007 © Professor Michael E. Porter
0
1
2
3
4
5
6
In
d
Ch ia
So R ina
ut u s
h si
Sl Ko a
ov
Factor, 2005
a k B rea
Re raz
Purchasing Power
p u il
b
38
d Ita
St ly
a
Ne Ca te s
w na
Ze da
Au ala
n
Si stra d
n
Lu g lia
xe ap
m ore
bo
Ire urg
l
Au an d
s
Ne Be tria
th lgiu
er m
Domestic Purchasing Power
G lan
er d s
Un m
ite F an
d ra y
Ki n
ng ce
d
Fi om
nl
Normalized Purchasing Power Across Countries
Sw an
d
De ed
nm n e
Ic ark
el
a
Ja nd
p
Sw No an
itz rwa
er y
la
nd
Copyright 2007 © Professor Michael E. Porter
Sweden’s Export Performance
World Export Market Shares
World export
share in %
1.8%
1.6%
1.4%
1.2%
1.0% Goods
Services
0.8% Total
0.6%
0.4%
0.2%
0.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
6 Flat-rolled products of alloy steel Metal Mining and Manufacturing 8.74% 1.09% $3,532,018
9 Miscellaneous paper and paperboard, coated Forest Products 10.66% 1.31% $2,051,603
10 Kraft paper and paperboard, uncoated Forest Products 20.19% -0.83% $1,726,457
12 Chemical wood pulp, soda, bleached Forest Products 9.65% 0.38% $1,580,115
16 Iron Ore and Concentrates Metal Mining and Manufacturing 4.18% -1.68% $1,123,839
17 Iron or steel bars, rods, angles, shapes and sections Metal Mining and Manufacturing 2.24% -0.94% $1,120,379
22 Fish, fresh, chilled, or frozen Fishing and Fishing Products 2.77% 1.68% $850,010
24 Work trucks, tractors, and parts Production Technology 6.54% 0.87% $778,778
Source: Prof. Michael E. Porter, International Cluster Competitiveness Project, Institute for Strategy and Competitiveness, Harvard Business School;
Richard Bryden, Project
Sweden Globalization Director.
Council 2007 04-17-07.ppt 40
Underlying data drawn from the UN Commodity Trade Statistics Database and the IMF BOP statistics. Copyright 2007 © Professor Michael E. Porter
Sweden
Leading Goods Export Industries, 2005 (continued)
World Change in
Export Share, Export Value
Industry Cluster Share 1997-2005 (in US$1,000)
26 Insulted wire, cable and conductors Communications Equipment 1.45% -0.51% $752,156
28 Flat-rolled iron, not clad, plated or coated Metal Mining and Manufacturing 1.17% -0.49% $722,591
29 Electric current Power and Power Generation Equipment 3.35% 3.35% $719,514
31 Paper and paperboard, coated, other Forest Products 7.51% 2.42% $654,918
36 Miscellaneous articles of pulp, paper and paperboard Forest Products 4.49% 0.20% $589,734
37 Other recorded media Entertainment and Reproduction Equipment 2.47% 1.26% $584,794
38 Parts of jet, gas turbine engines Aerospace Engines 1.60% -1.11% $568,076
39 Seamless tubes, pipes and hollow profiles of iron or steel Metal Mining and Manufacturing 2.52% -1.46% $521,242
41 Miscellaneous machinery with individual functions Production Technology 1.40% 0.05% $512,652
45 Color television receivers Entertainment and Reproduction Equipment 0.93% 0.46% $481,866
47 Miscellaneous parts of civil engineering machinery Heavy Machinery 1.62% 1.60% $480,504
48 Instruments for analysis, measuring viscosity, expansion Analytical Instruments 2.60% -0.35% $479,735
49 Electric, laser or plasma arc soldering, welding, brazing machines Production Technology 5.86% -0.34% $467,533
50 Miscellaneous articles of iron or steel Metal Mining and Manufacturing 1.61% 0.01% $465,437
80%
European Union
60%
40%
20%
World
U.S.
0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
0%
a
y
y
nd
d
a
ia
d
en
ni
an
wa
ar
an
si
an
n
la
ed
ua
us
m
to
m
nl
or
el
Po
Es
en
Sw
th
R
Fi
er
Ic
N
Li
G
D
W
N
N
Source: UNCTAD, national statistical offices, author’s calculations
Sweden Globalization Council 2007 04-17-07.ppt 43 Copyright 2007 © Professor Michael E. Porter
Prosperity
GDP per Capita, Euro European Regions
(PPP adjusted), 2002
70,000
Sweden
Swedish regions
Other EU-15 regions
60,000 EU accession country regions
50,000
40,000
Stockholm
30,000
Sweden
20,000
10,000
0
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Annual Growth Rate of GDP per Capita (PPP adjusted), CAGR, 1995 – 2002
Source: Eurostat, 2005
Sweden Globalization Council 2007 04-17-07.ppt 44 Copyright 2007 © Professor Michael E. Porter
Composition of the Traded Economy
Stockholm Cluster Portfolio
Share in National
Cluster Employment, Change in Stockholm’s overall share of
2003 National Cluster Employment: -0.5%
60%
Financial Services
Biopharmaceuticals
50%
10%
0%
-15% -10% -5% 0% 5%
Change of Share in National Cluster Employment, 1995-2003
Note: Bubble size is proportional to employment levels
Source: Statistics Sweden (2005), author’s calculations
Sweden Globalization Council 2007 04-17-07.ppt 45 Copyright 2007 © Professor Michael E. Porter
Global Competitiveness Report 2006-07
Sweden
Rank
1
5
3
7 7
2005
10
2006
11
15
20
Global Competitiveness Index Business Competitiveness Index
Source: Global Competitiveness Report (2006)
Sweden Globalization Council 2007 04-17-07.ppt 46 Copyright 2007 © Professor Michael E. Porter
Sweden’s Profile in the Global Competitiveness Report
Rank
1 Global Competitiveness Index Business Competitiveness Index
2 2
5 3
5
7 7
10 8
15
20
GCI Efficiency Innovation Basic BCI Company Business
Enhancers Drivers Requirments Operations & Environment
Sophistication Quality
Source: Global Competitiveness Report (2006)
Sweden Globalization Council 2007 04-17-07.ppt 47 Copyright 2007 © Professor Michael E. Porter
Global Competitiveness Index
Sweden
Rank
1
10
15
20
e
s
n
gy
ns
s
ts
ss
s
ts
ur
er
er
io
tio
tio
ic
en
ke
tio
lo
e
riv
ct
at
nc
om
ca
ca
sin
no
irm
ru
itu
ar
ov
D
ha
du
du
on
M
st
ch
Bu
st
n
n
qu
En
fra
,E
In
rE
io
In
ec
Te
Re
at
In
ro
lth
y
he
ov
nc
ac
sic
ea
ig
n
ie
M
H
H
In
Ba
fic
Ef
Estonia
Trinidad & Tobago
15,000 Argentina South Africa
Chile
Malaysia
10,000
Turkey Thailand Brazil
China
5,000 Jordan Indonesia
Jamaica India
0
Low High
Business Competitiveness Index
Source: Global Competitiveness Report 2006
Sweden Globalization Council 2007 04-17-07.ppt 51 Copyright 2007 © Professor Michael E. Porter
Economic Sustainability of Current Prosperity
BCI Value, 2006
Untapped potential Sustainability in question
High-income
United States Middle-income
Germany Low-income
Finland
SWEDEN
Iceland Norwa
Malaysia y
Ireland
Estonia
Tunisia Chile Spain
India
U.A.E.
Qatar
Indonesia Italy
Greece
Kenya
Tanzania Argentina
Rank
1
BCI
NBE
COS
10
15
2001 2002 2003 2004 2005 2006
-$20
-$15
-$10
-$5
$0
$5
$10
$15
$20
iu
m
N Ita
D or w ly
en a
m y
A u ar
Ki ed s
ng e
n
Podom
la
justified by competitiveness
n
Sl Ma d
ov l t
54
C en a
a
Bu na ia
d
Au lga a
Sr st ria
Sl r
ov Ri La alia
ak om nk
R an a
e
Ko H pubia
re ung lic
a, a
r
M Repy
ex .
U P Ja ico
C nit o pa
ze ed rt n
Wage Differentials by Country
ch S ug
Re tat al
pu es
b
Li Isr lic
th a
N u e
ew an l
B i
Ze ra a
al zil
La and
Wage advantage
E
Si st tvia
H ng on
given competitiveness
on
g Tapo ia
Ko a re
ng iwa
SA n
R
Copyright 2007 © Professor Michael E. Porter
Company Operations and Strategy
Sweden’s Relative Position 2006
15 Belgium Italy
10
Wages above
productivity level Austria Changed sign
indicated by BCI since 2001
Greece Denmark France
5
SWEDEN Netherlands
Germany Iceland
Poland Spain
0 Malta
Bulgaria Slovenia Finland
UK
Romania
Slovakia
-5 Changed sign Portugal Hungary
since 2001
Wages rising more quickly
Lithuania Czech Republic than productivity growth
-10
indicated by BCI
Latvia
-15 Estonia
-20
-15 -10 -5 0 5 10 15
Change in wage gap 2001 - 2004
Note: Countries in the grey area have changed their sign between 201 and 2004
Source: Global Competitiveness Report 2006 and Eurostat
Sweden Globalization Council 2007 04-17-07.ppt 56 Copyright 2007 © Professor Michael E. Porter
Business Environment and Company Sophistication
High-income
Middle-income
Low-income
Category Rank
Enforcing Contracts 2
Registering Property 7
Trading Across Borders 9
OVERALL 13
Closing a Business 17
Dealing with Licenses 17
Starting a Business 20
Getting Credit 33
Paying Taxes 39
Protecting Investors 46
Employing Workers 94
Positive
34
Negative
a
y
il
d
na
le
es
ia
k
n
a
nd
n
Sw a
d
en
az
ni
wa
an
ar
an
pa
tio
ni
di
an
tv
hi
at
hi
la
ed
ua
In
m
Br
to
La
m
ra
Ja
nl
or
el
C
St
Po
Es
en
th
Fi
er
de
Ic
Li
d
G
D
Fe
te
ni
an
U
si
us
R
Note: Number refers to rank among 124 countries
Source: Global Competitiveness Report (2006), author’s analysis.
Sweden Globalization Council 2007 04-17-07.ppt 63 Copyright 2007 © Professor Michael E. Porter
Business Competitiveness
Incentive Effect of Taxation, Selected Countries
Positive
111
Negative
a, i a
er y
ng n
il
C ny
R nd
M da
La e
es
N via
Li xico
k
Ic ng
U Es nd
te Ta ia
Sw sia
Ire re
Fi nd
m
St ia
ng nd
Po p.
en n
az
G rwa
Ki wa
ar
D de
r e an
hi
d
te ton
do
e
o
a
at
a
a
la
Ko
la
Si el a
us
In
m
Br
ap
R
C
m
an
nl
Ko thu
e
e
i
o
g
d
on
d
H
ni
ni
U