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Innovation in Sweden

Sweden’s vital startup scene has garnered much international attention, but the country has a long history of innovation. How to explain Sweden’s spirit of innovation and entrepreneurship?

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Photo: Jann Lipka/

Innovation in Sweden

Sweden’s vital startup scene has garnered much international attention, but the country has a long history of innovation. How to explain Sweden’s spirit of innovation and entrepreneurship?

The welfare state

Swedish society has long been fostering innovation and entrepreneurship. There are several factors that might explain why, for example the country’s social stability and the access to government support, as well as a high degree of equality.

The welfare state has been key to developing Sweden’s low-stakes business environment. The fact that there is a social safety net to fall back on if a venture fails to take off, offers the freedom for entrepreneurs to experiment and take risks.

Education and research

Sweden’s long-term focus on education and research has also had a major impact on the capacity for innovation. In 1842 the country introduced compulsory schooling for 7- to 13-year-olds. This was a game-changing move, as it raised the overall level of education among the people, and became a vital component in Sweden’s journey from poor agricultural nation to prosperous innovation leader. Today about one-third of the population has post-secondary education.

When it comes to research and development (R&D), Sweden proves its commitment by investing, as a rule, more than 3 per cent of the country’s growth domestic product (GDP) in R&D. This is more than many other countries, as shown in the chart above.

Green technology and life sciences are two fields in which Swedish researchers and companies excel. The government has created an office of life sciences dedicated to developing a national strategy for the life sciences to further promote the field.

Key players

Government agency Vinnova plays a central part in Swedish research. The innovation agency promotes and funds research projects in a wide range of fields, from health and transport to industrial material and smart cities.

To strengthen Sweden’s competitiveness, the Knowledge Foundation (KK-stiftelsen) funds research and competence development at Sweden’s university colleges and new universities.

The Swedish Agency for Economic and Regional Growth (Tillväxtverket) also strengthens competitiveness and facilitates entrepreneurship around Sweden.


Sweden is a large country, stretching far from north to south. This is why a well-functioning infrastructure has been vital to Sweden’s development – from railways to telecommunications and broadband. Policies offering access to technology and the internet have contributed to making Sweden the innovative nation it is today.

In the 1990s, the Swedish government pushed out a widely developed broadband network and Swedes’ early access to fast internet coupled with subsidised computer-lending programmes helped cultivate a society of early adopters. In 2016, the government also adopted a new broadband strategy. It aims to get all of Sweden connected to high-speed internet by 2025.

Ranking high

Considering that Swedes represent just 0.13 per cent of the global population, the Nordic nation has a disproportionate amount of influence on global innovation. Sweden tops the European Innovation Scoreboard, an index published by the European Commission. It assesses the strengths and weaknesses of national innovation systems and helps countries identify areas they should address.

Sweden has also achieved high rankings in innovation surveys such as the Global Innovation Index and the Legatum Prosperity Index.


The World Economic Forum (WEF) ranks Sweden as one of the most competitive countries in the world, with top grades for macroeconomic stability and innovation capability. Challenges include relatively high taxes and labour regulations.

Other potentially negative factors are steep rents and a lack of housing in the bigger cities, which in some cases makes it hard for Stockholm in particular to attract young talent in competition with other European cities. High tuition fees for students from outside the European Union may also have a negative effect on Sweden’s attraction.

Another cited challenge is the weather. Sweden’s persistent, dark and cold winters might be a tough selling point. At the same time, those harsh winters are given as an explanation for the high degree of creativity in Sweden. Some argue that the long, cold season encourages would-be innovators to stay indoors to hone their skills and develop their ideas. If that’s true, the Swedish spirit of innovation may just be a force of nature.

Last updated: 3 September 2020


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