Scandinavian Working Papers in Economics

Lund Papers in Economic History,
Lund University, Department of Economic History

No 260: Fueling radical and renewable innovations? An analysis of public innovation funding in Sweden, 1970-2021

Johanna Fink () and Josef Taalbi ()
Additional contact information
Johanna Fink: Department of Economic History, Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden
Josef Taalbi: Department of Economic History, Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden

Abstract: In the face of climate change, governments are scaling up public investments in mitigation efforts and green technologies. However, critics question the ability of public funding agencies to promote the most promising innovations. This paper contributes to this debate by presenting a long-term database, that directly links Swedish innovations to public funding between 1970 and 2021. We use logistic regression models to analyze what innovations are most likely to receive public funding. A remarkably high share of the most radical innovations relied on public funding: 43% over the whole period, reaching 55% in the last decade. Moreover, renewable energy innovations attracted increasing public support over time. Those developed after 2000 are twice as likely to be publicly funded. Contrary to received notions that governments are unable to pick winners, our findings highlight that public spending in Sweden has shaped market conditions, aptly funding the most radical innovations, and that public funding agencies played a crucial role in climate change mitigation efforts by supporting the development of renewable energy technologies.

Keywords: climate change; innovations; public funding; Sweden

JEL-codes: O38

Language: English

36 pages, November 11, 2024

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