In the debate is often seen that the later decades of positive Swedish prosperity depends on various macro-economic reforms. We believe, however, that this is just a part of the truth. Increased prosperity have, to a large extent due to an unusually successful transformation in the business sector after the crisis in the 1990s. This followed an entrepreneurship in the world.
New data shows, however, that the Swedish entrepreneurship stalled. It is time for a new package of reforms, with a focus on näringslivseffektivitet.
In a recent published research paper – ”Has the Swedish Business Sector to Become More Entrepreneurial than the U. S. Business Sector” – we are studying företagsdynamiken in the confederation of Swedish enterprise, and compares it with developments in the united states. Several research studies have demonstrated to declining entrepreneurship, in the form of reduced business start-ups, in the u.s. economy over the past few decades.
Reforms should be implemented that increase the incentive for companies to find new business opportunities, make use of the new technology, experiment and grow – locally as well as globally.
In our study, we show that the Swedish economy following the crisis in the 1990s and 15 years forward in several dimensions has been more entrepreneurial than the us economy. Sweden has had a significantly higher proportion of start-up businesses and more new jobs have come from these. In the USA the young company’s importance declined over several decades. Here is the development not the same. In particular this can be explained by a very dynamic service sector, where many new jobs have been created in small and medium sized Swedish companies.
the productivity increases were substantial also in international comparison. New companies do not create productivity growth in the short term but in the long term. More than half of the total increase of the average productivity in the industry comes from businesses started in 1996 or later. This reflects a selektionsprocess where only the most productive firms survive. The Swedish business sector has with other words, undergone a fundamental transformation in which small businesses have created jobs and small businesses that become big businesses have created productivity growth.
What explains this positive job and productivity growth in the Swedish business world? Institutional and technological conditions is essential for what companies that grow and create new jobs. The development of technology and globalization means that different types of firms will be more or less effective during different time periods. For example, the technical development in recent decades has meant that large Swedish manufacturing firms, with advantage, have outsourced parts of their operations to smaller specialist companies. This has meant that more have been employed in smaller companies, while larger companies have been able to raise their productivity.
Macro-economic reforms and the introduction of a floating exchange rate, a stable budget rules and an independent central bank is usually cited as explanations for how Sweden managed to reverse the trend after the 1990s crisis. Our research shows that a range of efficiency-improving reforms that were carried out during the 1990s, for example, deregulation of product markets, the introduction of a new competition law, the opening for fdi, a comprehensive tax reform and a more decentralised wage formation, was also crucial for the successful restructuring. Add to that the fact that Swedish companies faster than businesses from most other countries increased their use of the new information and communication technologies. All this had a positive effect on jobs and productivity growth in the Swedish companies.
According to the national institute of economic Research increased productivity in the Swedish business community with an average of 0.2 percent per year during the period 2007 to 2014, which is significantly slower than in the years that followed the crisis in the 1990s. Data from statistics SWEDEN show that the number of employees in start-up companies has declined continuously since the year 2010.
There are experts who believe that the growth rate will continue to decline over the next 25 to 40 years. The reasons for this is that a smaller proportion of the population will be working, a deterioration in the quality of education and a lower rate of innovation. Further, be warned that the ”smart” robots and artificial intelligence will replace a large part of today’s job and lead to high unemployment and increased income inequalities. But there are also experts which highlights the opportunities that new technology can give rise to in the form of cost savings and new business opportunities. The technological development sets the thus pressure on policy makers to propose measures which ensure the global competitiveness but who also helps the groups that stand to lose from the rapid development.
Sweden, then chose initially to ”burying your head in the sand” and tried to protect themselves against changes in the market through devaluation and a series of reforms and regulations that protected certain types of groups, companies and employees. After a long period of poor growth and also the dynamics of the business changed direction and Sweden and the Swedish business opened up and were opened up to competition. The result was many years of high productivity growth and a more entrepreneurial enterprise.
the Risk is imminent that the reaction to today’s changes will be cries for increased protectionism. Our analysis shows that this is the wrong way to go. Instead, reforms that increase incentives for enterprises to find new business opportunities, make use of the new technology, experiment and grow – locally as well as globally. At the same time, are reforms that will ensure increased quality, stronger incentives and better opportunities for education and training, perhaps even more important in the future of the industry, where new technology may replace more and more tasks and at the same time, push forward new entrepreneurship.
