Sweden Risks Falling Behind the Technology Race


For a long time, Sweden has been a leading innovation economy, known around the world for its technological competences. My first personal association of Sweden, as a child before I came to Europe, was as a country with talented engineers. But Sweden's position as a leading European engineering country is being undermined. Among the young generation, the country is no longer the European leader in technological skills. Neighboring Estonia, where the incentives for becoming an engineer or researcher is higher and where the education results are better, today in fact have a higher share of engineers and researchers amongst the young generation than what Sweden does. Sweden can still retain its position as Europe´s leading knowledge economy, but that requires a no-excuses school policy, more mathematics, and lowered taxes which incentives education and jobs in technology.

Sweden is currently dealing with numerous challenges, including the lowest rate of economic progress in the EU and a crime wave. The country, which in 1970 before the shift to high taxes ranked as the fourth most prosperous in the world, now ranks at 12th place in a comparison of economic production per capita. Sweden’s greatest strength is that it is the leading knowledge economy of the EU, but right now even this position is being challenged.

Six years in a row Sweden was ranked as the nation in the EU with the greatest innovative potential, by the European Innovation Scoreboard, but this year Denmark has surpassed Sweden. In terms of the proportion of the adult population who work in very knowledge-intensive jobs (so-called brain business jobs), Sweden is still by narrow margin the leading EU-member state, but Ireland has nearly caught up.

Why is Sweden stagnating? High levels of immigration coupled with lacking integration is part of the explanation, but it is also a generational issue related to technological competencies. Much of the economic change happening around the world is currently related to so-called STEM (science, technology, engineering, and math).

Among the older generation (45–64-year-olds), Sweden is at the top — no other member state has as high a proportion of its older population in STEM-jobs as Sweden. If, on the other hand, we look at the younger generation (25–34-year-olds), Sweden is no longer on top. Luxembourg has a considerably higher percentage of young people in STEM-jobs and the Netherlands is also ahead. Norway and Lithuania in fourth and fifth place have almost as high a share as Sweden. Amongst the new generation, Sweden is losing its leading position.

Top 5 countries with the highest share of STEM-jobs among the older population (percentage of 45–64-year-olds) 2022 Top 5 countries with the highest share of STEM-jobs among the older population (percentage of 25–34-year-olds) 2022
Sweden 27.8% Luxembourg 47.7%
Finland 26.4% Netherlands 41.7%
Luxembourg 26.0% Sweden 37.5%
Norway 25.5% Norway 36.9%
Iceland 23.9% Lithuania 36.2%

Those individuals who are university-educated and work in science and technology are defined by Eurostat, the EU's statistical authority, as having STEM jobs.

A narrower group of STEM jobs, which play a particularly important role in the development and implementation of new technology, are engineers and scientists. Here we see the same pattern, for the older generation, Sweden has the first place among the EU countries, but among the younger generation ranks on third. The Netherlands and also Estonia have a higher share of the young generation who are engineers and scientists, as compared to Sweden.

Top 5 countries with the highest share of engineers and researchers among the older population (percentage of 45–64-year-olds) 2022 Top 5 countries with the highest share of engineers and researchers among the older population (percentage of 25–34-year-olds) 2022
Sweden 11.2% Netherlands 17.3%
Norway 9.2% Estonia 16.3%
Switzerland 9.0% Sweden 16.1%
Netherlands 8.9% Slovenia 14.8%
Finland 8.4% Switzerland 14.8%

It is worth remembering that Estonia, a neighbor of Sweden, until 1990 was part of the Soviet Union, which then collapsed. At the time, just over 30 years ago, Estonia was very far behind Sweden in economic development. Since then, Estonia has focused on developing into an advanced and knowledge-intensive economy by promoting entrepreneurship and education. The fact that Estonia has more young engineers and researchers among young people is a clear illustration of the rapid changes happening in Europe, with growth in countries with lower tax burdens and stagnation in higher tax nations.

In a comparison of EU-nations, just over 50 percent of the variation of score in the European Innovation Scoreboard can be explained by the variation of share of STEM-employees in the population. If the innovation capacity is related to the proportion of engineers and researchers among the population, the degree of explanation increases to just over 60 percent. Having a high share of the population employed in technologically advanced jobs is, as one might expect, strongly linked to innovative capacity. This relation is found in a comparison of the EU-member states, most likely a similar relation exists also in comparison of US states. In a world economy driven by technological change, having a high share of the young generation engage in engineering and sciences is a recipe for success.

What then is needed for Sweden to become the number one European nation, amongst technological competencies of also the young generation? Three changes need to happen. Firstly, marginal taxes need to be reduced, so that individual gain a greater income advantage by studying to become a mathematician, engineer, or scientist. Estonia, where the incentives are much higher, can be a role model in this regard. The next inhibiting factor is that too little mathematics is taught in the early school years. The students who have a head for mathematics in particular need to be pushed extra. The third change that needs to happen is focus on grit in schools.

Education is not only about fostering knowledge, but also fostering grit – the ability to work hard and consistently. In the modern pupil-focused pedagogical model of Sweden, there is limited focus on this, even though the research shows that persistence in itself and separately from the level of knowledge has a very large impact on the individual's success in school and later in life. Young individual who after high school who have a good knowledge basis, but lack grit, will find it difficult to pass masters of science engineering educations, since they become overwhelmed by the amount of work they need to put into their studies. A non-excuses model for schools, where no bullying, vandalism or violence is tolerated, is needed so adult supervision replaces the pupil-focused pedagogical model. Students can then focus more on studies, learn more mathematics, and build up the grit they need for the future.

To sum up, Sweden can still retain its position as the most knowledge intensive country in the EU. It is however hard to see this happening without more adult supervision in schools, more mathematics in classrooms, and lowered taxes which strengthen incentives to become engineers and scientists. Economic incentives and how classrooms are run, play an important role for the future talent pool.

Nima Sanandaji, Director, European Centre for Entrepreneurship and Policy Reform (ECEPR)

Photo: Stockholm, Sweden via Flickr under CC 2.0 License.