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CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University Papers in Innovation Studies, CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University

No 2008/14:
The paradox of high R&D input and low innovation output: Sweden

Pierre Bitard (), Charles Edquist (), Leif Hommen and Annika Rickne ()

Abstract: This chapter takes its point of departure in the so-called Swedish paradox, according to which the Swedish NSI is plagued by low pay-off in relation to very high investments in R&D and innovation efforts. Using new data, we show that this paradox is still in operation, i.e. the productivity or efficiency of the Swedish NSI remains low. We also specify the paradox in several respects. By focussing upon nine activities in the NSI, we attempt to explain why and how the paradox operates. The paradox is also related to the moderate growth of labour productivity in Sweden. Further, we show that the paradox is linked to globalization: internationalization of production by Swedish firms has proceeded further than the internationalization of R&D. On the basis of this analysis, we identify strengths and weaknesses of the Swedish NSI – many of which are related to the Swedish paradox. We take account of the history of innovation policy in Sweden and – on the basis of the analysis as a whole -- we identify future policy initiatives that might help to mitigate the Swedish paradox.

Keywords: Innovation; innovation system; Swedish national system of innovation; Swedish paradox; (follow links to similar papers)

JEL-Codes: O30; (follow links to similar papers)

79 pages, December 1, 2008

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