Manufacturology

EU">Sweden most competitive nation in the EU

The World Eco­nomic Forum (WEF) has just released its 2010 Lis­bon Review. Accord­ing to this report, Swe­den is the most com­pet­i­tive nation in the EU [SvD].

Accord­ing to the WEF press release, Swe­den is “the most com­pet­i­tive econ­omy as mea­sured by the Euro­pean Union’s (EU) own com­pe­ti­tion bench­mark, the Lis­bon cri­te­ria”. As I under­stand it, accord­ing to the cri­te­ria used, WEF also ranks Swe­den as the most com­pet­i­tive nation in the world.

As a Swede, I’m of course happy to read about how great things are over here. But seri­ously, it all depends on how you define com­pet­i­tive­ness. And is it even pos­si­ble, or even mean­ing­ful, to mea­sure the com­pet­i­tive­ness of nations? Many argue that it’s not.

How­ever, I’m not going to enter that dis­cus­sion. Instead, I’ll use the results of the report to reflect on the new Euro­pean cri­sis. (In today’s Swedish news: SvD, SvD, DN, Expressen)

The Lis­bon Strategy

The Lis­bon Review is a bi-annual eval­u­a­tion of the out­come of the Lis­bon Strat­egy. The Lis­bon Strat­egy aimed “to make the EU ‘the most com­pet­i­tive and dynamic knowledge-based econ­omy in the world capa­ble of sus­tain­able eco­nomic growth with more and bet­ter jobs and greater social cohe­sion,’ by 2010.” In 2009, Swedish prime min­is­ter Fredrik Rein­feldt admit­ted that the Lis­bon Strat­egy had been a fail­ure. [Wikipedia]

I down­loaded the report and looked it through for myself. It con­tains scores for each indi­vid­ual coun­try in the EU, which could be used for rel­a­tive com­par­i­son of com­pet­i­tive­ness. Because of the cur­rent eco­nomic tur­moil in Greece, I thought it would be inter­est­ing to com­pare Swe­den and Greece.

Com­par­ing Swe­den and Greece

I made an over­lay of the plots for Swe­den and Greece, which is shown below. Data for the U.S. and East Asia are included for comparison.

Lis­bon treaty dimen­sions of com­pet­i­tivenes: Swe­den (blue), Greece (red), USA (grey) and East Asia (black).

Eight dimen­sions of com­pet­i­tive­ness are measured:

1. Cre­at­ing an infor­ma­tion soci­ety for all
2. Devel­op­ing a Euro­pean area for inno­va­tion and R&D
3. Lib­er­al­iza­tion (com­plet­ing the Sin­gle Mar­ket; state aid and com­pe­ti­tion policy)
4. Build­ing net­work industries
5. Cre­at­ing effi­cient and inte­grated finan­cial services
6. Improv­ing the enter­prise environment
7. Increas­ing social inclusion
8. Enhanc­ing sus­tain­able development

As seen in the plot above, Swe­den per­forms bet­ter than or equal to East Asia on all dimen­sions of com­pet­i­tive­ness. Swe­den also per­forms bet­ter than or equal to the U.S. on all dimen­sions except inno­va­tion and R&D. Greece, on the other hand, is far behind Swe­den in all dimensions.

Does this reflect real dif­fer­ences in com­pet­i­tive­ness between nations?

Crit­i­cism

There are plenty of hooks for the crit­i­cally inclined to pick up. I’ll use the goal of “build­ing net­work indus­tries” as an example.

To start with, it’s not intu­itive to me what “build­ing net­work indus­tries” means. When I look into the report, I under­stand that it has to do with inter­con­nected mar­kets, with telecom­mu­ni­ca­tions and avi­a­tion as exam­ples of mar­kets that have already been suc­cess­fully liberalized.

The report goes on and states that “a sin­gle Euro­pean energy mar­ket [is] not yet a real­ity. Build­ing up these indus­tries at an EU level would pro­mote greater effi­ciency and qual­ity of ser­vice, and bet­ter sup­port a com­pet­i­tive eco­nomic environment.”

Any­one who fol­lowed the Swedish debate about the dereg­u­la­tion of the power mar­ket knows that there is no con­sen­sus that the cur­rent dereg­u­lated sys­tem is an improve­ment. From most cus­tomers’ per­spec­tive, I’d say that the result has been higher energy prices and annoy­ance when a few com­pa­nies can dic­tate their terms of busi­ness on an oli­gop­o­lis­tic market.

Con­clu­sion

I think that the Lis­bon Review mea­sures some indices of com­pet­i­tive­ness that may be poorly sup­ported by facts at best, and plain wrong at worst. Still, I find the review to be inter­est­ing and worth con­tem­plat­ing. I’m not going to join those who say that such com­par­isons are of no value.

Instead, I feel pretty con­fi­dent that the data indi­cates real dif­fer­ences between coun­tries. My plot above sug­gests that there is some sort of struc­tural prob­lem in Greek pol­i­tics. Invest­ments in national devel­op­ment of infor­ma­tion tech­nol­ogy, inno­va­tion & R&D, mar­ket inte­gra­tion, etc. have been insufficient.

Swe­den has appar­ently man­aged to develop capa­bil­i­ties that accord­ing to the cri­te­ria of the Lis­bon Strat­egy, makes it more com­pet­i­tive gen­er­ally speaking.

Remains the ques­tion whether Swe­den is the world’s most com­pet­i­tive nation? Of course it is! Or is it? Well, who knows. Next ques­tion please…

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