Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

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

Pierre Bitard (), Charles Edquist (), Leif Hommen and Annika Rickne ()
Additional contact information
Pierre Bitard: LTH, Lund University, Postal: Faculty of Engineering, Box 118, S-221 00 Lund, Sweden
Charles Edquist: CIRCLE, Lund University, Postal: PO Box 117, Sölvegatan 16, SE-22100 Lund, Sweden
Leif Hommen: CIRCLE, Lund University, Postal: PO Box 117, Sölvegatan 16, SE-22100 Lund, Sweden
Annika Rickne: CIRCLE, Lund University and Dahmen institutet, Postal: CIRCLE, Lund University, PO Box 117, Sölvegatan 16, SE-22100 Lund, Sweden

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

JEL-codes: O30

79 pages, December 1, 2008

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200814_Bitard_et_al.pdf PDF-file 

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