Global Competitiveness Report 2004-05:
Sweden’s Business Competitiveness
Christian H.M. Ketels, PhD
Institute for Strategy and Competitiveness
Harvard Business School
GCR Launch - Sweden
Chamber of Commerce, Stockholm
13 October 2004
This presentation draws on ideas from Professor Porter’s books and articles, in particular, “Building the Microeconomic Foundations of Prosperity,”
in The Global Competitiveness Report 2004-05 (World Economic Forum, 2004); “Clusters and the New Competitive Agenda for Companies and
Governments,” in On Competition (Harvard Business School Press, 1998); Clusters of Innovation Initiative (www.compete.org), a joint effort of the
Council on Competitiveness, Monitor Group, and ongoing research. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the author
Additional information may be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu
Global Competitiveness Report
•
•
Annual publication of the World Economic Forum since 1979; in recent
years academic guidance from
– Professor Michael E. Porter, Harvard Business School
– Professor Jeffrey Sachs (until 2002)/Professor Xavier Sala-i-Martin
(since 2003), Columbia University
Covers 104 economies; based on statistical data and global Executive
Opinion Survey of 8,729 respondents (84 per country)
Content
• Core chapters present the Growth Competitiveness Index and the
Business Competitiveness Index
• Nine other chapters by leading researchers on key competitiveness
issues
• Extensive data sheets on all economies covered
GCR Press Conference 2004 10-13-03.ppt
2
Copyright 2004 © Professor Michael E. Porter
Ranking Competitiveness
Business
BusinessCompetitiveness
Competitiveness
Growth
GrowthCompetitiveness
Competitiveness
The
Theset
setof
ofinstitutions,
institutions,market
market
structures,
structures,and
andeconomic
economicpolicies
policies
supportive
supportiveof
ofhigh
highcurrent
currentlevels
levelsof
of
prosperity
prosperity
The
Theset
setof
ofinstitutions
institutionsand
andeconomic
economic
policies
policiessupportive
supportiveof
ofhigh
highrates
ratesof
of
economic
economicgrowth
growthininthe
themedium
medium
term
term(coming
(comingfive
fiveyears)
years)
Michael
MichaelE.
E.Porter
Porter
Xavier
XavierSala-i-Martin
Sala-i-Martin
Focus of this presentation
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Competitiveness and Prosperity
• The Business Competitiveness Index
measures the level of prosperity
(GDP per capita) that an economy
can sustain
Prosperity
Prosperity
• Sustainable prosperity is set by the
underlying competitiveness of the
economy, which is determined by the
level of productivity and – over time
– innovation achievable by
companies
Productivity
Productivity
• Countries can overperform or
underperform true competitiveness
for substantial periods of time
Innovative
Innovative Capacity
Capacity
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Determinants of Productivity and Productivity Growth
Macroeconomic,
Macroeconomic, Political,
Political, Legal,
Legal, and
and Social
Social
Context
Context for
for Competitiveness
Competitiveness
Microeconomic
Microeconomic Foundations
Foundations of
of Competitiveness
Competitiveness
The
TheSophistication
Sophistication
of
ofCompany
Company
Operations
Operationsand
and
Strategy
Strategy
The
TheQuality
Qualityof
ofthe
the
Microeconomic
Microeconomic
Business
Business
Environment
Environment
• Nations or regions compete in offering the most productive
environment for business
• A sound macroeconomic, political, legal, and social context creates the
potential for competitiveness, but is not sufficient
GCR Press Conference 2004 10-13-03.ppt
5
Copyright 2004 © Professor Michael E. Porter
The Business Competitiveness Index, 2004
Measured Elements
Company
CompanyOperations
Operationsand
andStrategy
Strategy
National
NationalBusiness
BusinessEnvironment
Environment
•• Nature
Natureof
ofFirm’s
Firm’sCompetitive
Competitive
Advantages
Advantages
•• Extent
Extentof
ofInnovation
Innovation
•• Sophistication
Sophisticationof
ofProduction
Production
•• Sophistication
Sophisticationof
ofMarketing
Marketing
•• Sophistication
Sophisticationof
ofOrganizational
Organizational
Structures
Structuresand
andIncentives
Incentives
•• Extent
Extentof
ofInternationalization
Internationalization
GCR Press Conference 2004 10-13-03.ppt
•• Factor
FactorConditions
Conditions
–– Physical
PhysicalInfrastructure
Infrastructure
–– Administrative
AdministrativeInfrastructure
Infrastructure
–– Human
HumanResources
Resources
–– Technology
TechnologyInfrastructure
Infrastructure
–– Capital
CapitalMarkets
Markets
•• Context
Contextfor
forFirm
FirmStrategy
Strategyand
andRivalry
Rivalry
–– Incentives
Incentives
–– Policies
Policiesaffecting
affectingcompetition
competition
•• Demand
DemandConditions
Conditions
•• Related
Relatedand
andSupporting
SupportingIndustries
Industries
6
Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Index 2004
Relationship with GDP Per Capita
Norway
United States
35,000
y = 1549.9x2 + 8603.4x + 11188
30,000
Iceland Canada
R2 = 0.8064
Ireland
Italy
2003 GDP per
Capita 25,000
(Purchasing
Power Adjusted)
Taiwan
Spain
Greece
Cyprus
Malta
Portugal
Czech Rep
20,000
15,000
Hungary
Slovak Rep.
Poland
Argentina
Croatia
Uruguay Russia
Bulgaria
10,000
5,000
Bosnia
Paraguay
Bolivia
0
Austria
Belgium
France
Denmark
Switzerland
Netherlands
Finland
UK
Sweden
Singapore
Ethiopia
Mexico
Turkey
Jamaica
Vietnam Ghana
Kenya
Malawi
New Zealand
Israel
Slovenia
S Korea
Estonia
Lithuania
Chile
South Africa
Malaysia
Brazil
Tunisia
China
Jordan
Indonesia
India
Business Competitiveness Index
Source:Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
7
Copyright 2004 © Professor Michael E. Porter
Prosperity
40,000
Norway
United States
35,000
Netherlands
Ireland
Denmark
30,000
Japan
GDP per 25,000
capita
(PPP
adjusted) 20,000
in US-$,
2003
Switzerland
Italy
Germany
Canada
Iceland
Finland
UK
Sweden
New Zealand
Spain
Greece
Portugal
South Korea
Czech Republic
15,000
Hungary
Slovakia
Poland
10,000
Mexico
Turkey
5,000
0
0%
1%
2%
3%
4%
5%
6%
Compound annual growth rate of real GDP per capita, 1998-2003
Source: EIU (2004)
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Sweden’s Economic Performance
•
Swedish prosperity continues to be high but lags leading OECD peers
Key drivers of Swedish prosperity
•
Key strength is Sweden’s high labor productivity, among the best in the
world although the gap to the United States has widened in recent years
•
Labor input is also high – Sweden reports a high share of employees in
the population that is still compensating for low and falling work hours
•
Key weakness is the high level of local prices in Sweden, among the
highest in the world, that are reducing the benefits Swedes derive from
high productivity
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Sweden’s Economic Performance
Other Indicators
Or not so strong?
Strong
•
Sweden has a strong position in
international patenting
•
Patenting is reflecting high R&D
spending
•
FDI stocks and inflows are
substantial
•
FDI inflows are at the level
predicted given the structure of
the Swedish economy
•
Sweden’s world export market
share has stayed roughly stable
over the last decade
•
Sweden has lost ground on world
markets in some key clusters
•
Sweden continues to be home to
a relatively high number of
multinational companies
•
Increasing concerns and reports
about relocations, not only by
large companies
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
The Microeconomic Foundations of Economic Performance
Using the Business Competitiveness Index
•
Overall level of sustainable prosperity that can be supported given a
country’s current competitiveness
•
Strengths and weaknesses of a country’s business environment
relative to its overall level of competitiveness
•
Developments in the overall competitiveness and the strengths and
weaknesses of individual countries
•
Overall patterns in the competitive environment for locations in the
world economy
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Index 2004
Business
Competitiveness
Index
Rankings
Top
Country
Change
Top 25
25
Note: Constant sample
of countries
GCR Press Conference 2004 10-13-03.ppt
11
22
33
44
55
66
77
88
99
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
United States
Finland
Germany
Sweden
Switzerland
United Kingdom
Denmark
Japan
Netherlands
Singapore
Hong Kong SAR
France
Australia
Belgium
Canada
Austria
Taiwan
New Zealand
Iceland
Norway
Israel
Ireland
Malaysia
Korea
South Africa 12
+1
-1
+2
-1
+2
0
-3
+5
0
-2
+8
-2
-2
+1
-3
+1
-1
0
-5
+2
-1
-1
+3
-1
+2
Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Report 2004
BCI Rank Versus Value
US
Germany
Denmark
Sweden
Japan
Netherlands
High
Singapore
Finland US
Switzerland
Germany
Denmark
Japan UK Sweden
Netherlands
Norway
Israel
Ireland
Malaysia
South Africa S Korea
Estonia Spain
Slovenia
Chile
Portugal
India
Brazil
Italy
Cyprus
Greece
China
Indonesia
BCI Score
High Income
Middle Income
Low Income
Mexico
Malta
Kenya
Romania
Sri Lanka GhanaRussia
Argentina
Serbia
Tanzania
Pakistan
Vietnam
Venezuela
Bosnia
Low
Paraguay
93
BCI Rank
1
Source:Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Report 2004
The Prediction Gap: High Income Countries
$15,000
Current prosperity above
sustainable level
Current prosperity below
sustainable level
$10,000
$5,000
$0
-$5,000
17%
of GDP
Ita
N ly
or
w
Ir e a y
la
nd
M
a
C lta
yp
r
G us
re
ec
Ic e
el
an
d
Sp
a
Sl
ov in
e
C nia
an
ad
Au a
st
r
U Por ia
ni
t
u
te
d gal
S
ta
Au tes
st
ra
H
on B lia
e
g
K lgiu
on m
g
SA
Fr R
an
ce
N Ko
et
h e r ea
rla
D nd
en s
m
a
T a rk
Sw i w
i tz an
er
la
n
Ja d
pa
n
I
Si sra
n
e
N ga l
ew p
o
U
ni Ze re
te
d ala
K
in nd
gd
o
Sw m
e
G de
er n
m
a
F i ny
nl
an
d
-$10,000
Source:Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
14
Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Report 2004
Explaining the Prediction Gap
Factors Influencing the Prediction Gap
•
Location
– Prosperity of neighbors
– Population with access to ocean
•
Governance
– Government Accountability
– Government Effectiveness
•
Natural resources (NR)
– NR export revenues
Other
• Transitory impact of macroeconomic or
political climate
• Structural factors with no simple relationship to
prosperity, e.g. taxation, imbalance of
competitiveness profile
GCR Press Conference 2004 10-13-03.ppt
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Actual GDP per Capita
Predicted GDP per Capita
Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Report 2004
Explaining the Prediction Gap: Examples
Location
Governance
Natural resources
Other factors
Overperformer
Underperformer
Mix
Why is prosperity so high
Why is prosperity so low
What are the countervailing forces
China
Norway
India
Italy
Sweden
Germany
Note: Effect of each factor normalized by the average of all countries
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
16
Copyright 2004 © Professor Michael E. Porter
g
K
on
Si g S
ng A
ap R
Ic ore
Sl
el
ov
a
ak Es nd
t
o
R n
ep ia
u
Ta bli c
iw
Ire an
M la
Sw ala nd
U i t ys
U nite zer i a
ni d la
te S n d
d ta
K
N ing tes
et d
N he o m
ew rla
Z e nd
a s
Po lan
r tu d
Au gal
s
N tria
or
w
La ay
C tvia
an
a
Ja da
Li p
th an
u
Sl an
ov ia
Au en
s ia
D tr a
en lia
m
F i ark
G nla
er n d
m
a
F r ny
an
ce
I ta
Po ly
Sw lan
e d
G de
eo n
U rgia
kr
ai
n
Br e
Be az
lg il
iu
m
H
on
Business Competitiveness Report 2004
Explaining the Prediction Gap: Taxation
Positive
Incentive Effect
Complexity
Negative
GCR Press Conference 2004 10-13-03.ppt
Source: Global Competitiveness Report 2004
17
Copyright 2004 © Professor Michael E. Porter
Global Competitiveness Report 2004
Business Environment and Company Sophistication
The
Thenational
nationalbusiness
businessenvironment
environment
has
advanced
beyond
has advanced beyondcompany
company
sophistication
sophistication
Company
Companysophistication
sophisticationisis
more
moreadvanced
advancedthan
thanthe
the
national
business
environment
national business environment
Estonia
Estonia
Tunisia
Tunisia
Norway
Norway
Cyprus
Cyprus
Portugal
Portugal
Australia
Australia
Malaysia
Malaysia
Jordan
Jordan
Botswana
Botswana
Hungary
Hungary
New
NewZealand
Zealand
Algeria
Algeria
Hong
HongKong
KongSAR
SAR
Chile
Chile
Singapore
Singapore
Philippines
Philippines
Japan
Japan
Germany
Germany
Korea
Korea
Italy
Italy
Guatemala
Guatemala
Venezuela
Venezuela
Switzerland
Switzerland
Costa
CostaRica
Rica
France
France
Brazil
Brazil
Poland
Poland
Honduras
Honduras
Argentina
Argentina
Sweden
Sweden
Sweden
Note: Sorted by strength of imbalance
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Sweden’s Competitiveness Profile
Strengths and Weaknesses
Macroeconomic,
Macroeconomic, Political,
Political, Legal,
Legal, and
and Social
Social
Context
Context for
for Competitiveness
Competitiveness
Microeconomic
Microeconomic Foundations
Foundations of
of Competitiveness
Competitiveness
The
TheSophistication
Sophistication
of
ofCompany
Company
Operations
Operationsand
and
Strategy
Strategy
The
TheQuality
Qualityof
ofthe
the
Microeconomic
Microeconomic
Business
Business
Environment
Environment
• Relative strengths in areas of innovation, investment, and organizational
structures
• Relative weaknesses in marketing and the presence along the value
chain
GCR Press Conference 2004 10-13-03.ppt
19
Copyright 2004 © Professor Michael E. Porter
Company Operations and Strategy
Sweden’s Relative Position 2004
Competitive Advantages
Relative to GDP per Capita
Competitive Disadvantages
Relative to GDP per Capita
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Willingness to delegate authority
1
Extent of regional sales
16
Capacity for innovation
2
Extent of marketing
12
Production process sophistication
3
Value chain presence
10
Extent of staff training
3
Extent of incentive compensation
10
Company spending on research and
development
4
Nature of competitive advantage
9
Extent of branding
4
Reliance on professional management 9
Breadth of international markets
8
Degree of customer orientation
6
Control of international distribution
6
Note: Rank by countries; overall Sweden ranks 4 (5 on Company Operations and Strategy, 19 on GDP pc 2003)
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Sweden’s Competitiveness Profile
Strengths and Weaknesses
Macroeconomic,
Macroeconomic, Political,
Political, Legal,
Legal, and
and Social
Social
Context
Context for
for Competitiveness
Competitiveness
Microeconomic
Microeconomic Foundations
Foundations of
of Competitiveness
Competitiveness
The
TheSophistication
Sophistication
of
ofCompany
Company
Operations
Operationsand
and
Strategy
Strategy
The
TheQuality
Qualityof
ofthe
the
Microeconomic
Microeconomic
Business
Business
Environment
Environment
• Relative strengths in technology and innovation, level playing field for
competition, administrative infrastructure, physical infrastructure, and
basic financial market conditions
• Relative weaknesses in competition, human resources, advanced
demand conditions, and basic cluster conditions
GCR Press Conference 2004 10-13-03.ppt
21
Copyright 2004 © Professor Michael E. Porter
Factor
Factor
(Input)
(Input)
Conditions
Conditions
Factor (Input) Conditions
Sweden’s Relative Position
Competitive Advantages
Relative to GDP per Capita
Competitive Disadvantages
Relative to GDP per Capita
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Quality of scientific research institutions
2
Extent of bureaucratic red tape
23
Internet users per 10,000 people (2003)
3
Quality of math and science education
21
University/industry research collaboration 3
Local equity market access
18
Efficiency of legal framework
3
Air transport infrastructure quality
17
Ease of access to loans
4
Quality of public schools
15
Patents per million population (2003)
6
Quality of electricity supply
14
Availability of scientists and engineers
6
Venture capital availability
13
Quality of management schools
12
Reliability of police services
11
Cell phones per 100 people (2003)
11
Overall infrastructure quality
10
Telephone/fax infrastructure quality
9
Administrative burden for startups
9
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Context
Contextfor
for
Firm
Strategy
Firm Strategy
and
andRivalry
Rivalry
Context for Firm Strategy and Rivalry
Sweden’s Relative Position
Competitive Advantages
Relative to GDP per Capita
Competitive Disadvantages
Relative to GDP per Capita
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Intellectual property protection
1
Intensity of local competition
39
Tariff liberalization
2
Extent of locally based competitors
33
Hidden trade barrier liberalization
4
Decentralization of corporate activity
24
Cooperation in labor-employer relations
5
Centralization of economic policy-making 22
Favoritism in decisions of government
officials
5
Prevalence of mergers and acquisitions
20
Effectiveness of anti-trust policy
19
Business costs of corruption
6
Efficacy of corporate boards
17
Effectiveness of bankruptcy law
6
Foreign ownership restrictions
13
Regulation of securities exchanges
10
Protection of minority shareholders’
interests
9
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Demand
Demand
Conditions
Conditions
Demand Conditions
Sweden’s Relative Position
Competitive Advantages
Relative to GDP per Capita
Competitive Disadvantages
Relative to GDP per Capita
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Stringency of environmental regulations
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
6
Government procurement of advanced
technology products
19
Buyer sophistication
13
Laws relating to ICT
12
Presence of demanding regulatory
standards
11
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Related
Relatedand
and
Supporting
Supporting
Industries
Industries
Related and Supporting Industries
Sweden’s Relative Position
Competitive Advantages
Relative to GDP per Capita
Competitive Disadvantages
Relative to GDP per Capita
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows
indicate a change of 5 or more
ranks since 1998
Extent of collaboration among clusters
6
Local availability of components and parts 21
Local supplier quality
6
Local supplier quantity
20
Local availability of process machinery
14
State of cluster development
9
Local availability of specialized research
and training services
8
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Business Competitiveness Index
Sweden’s Position over Time
Rank
1
5
1998
1999
2000
2001
2002
2003
10
2004
15
BCI Rank
Company Operation &
Strategy Rank
National Business
Environment Rank
• Sweden’s overall BCI index value has dropped slightly (32 advancing/39
falling indicators), balanced across all elements of competitiveness
Note: Constant sample of countries
Source: Global Competitiveness Report 2004
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Swedish Competitiveness 2004
Key Observations
Level of competitiveness
• High and should support higher prosperity
• Prosperity held back by taxes and imbalance between company
sophistication and business environment quality
Strengths and weaknesses
• Strengths in areas related to technology and innovation, level playing
field for competition, administrative infrastructure, physical infrastructure,
and basic financial market conditions
• Weaknesses in areas related to competition, human resources,
advanced demand conditions, and basic cluster conditions
Trend
• Slightly positive development in the last few years
• But 2004 seems to have been a lost year for competitiveness upgrading
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Appendix
GCR Press Conference 2004 10-13-03.ppt
28
Copyright 2004 © Professor Michael E. Porter
Prosperity
40,000
Norway
United States
35,000
Netherlands
Ireland
Denmark
30,000
Japan
GDP per 25,000
capita
(PPP
adjusted) 20,000
in US-$,
2003
Switzerland
Italy
Germany
Canada
Iceland
Finland
UK
Sweden
New Zealand
Spain
Greece
Portugal
South Korea
Czech Republic
15,000
Hungary
Slovakia
Poland
10,000
Mexico
Turkey
5,000
0
0%
1%
2%
3%
4%
5%
6%
Compound annual growth rate of real GDP per capita, 1998-2003
Source: EIU (2004)
GCR Press Conference 2004 10-13-03.ppt
29
Copyright 2004 © Professor Michael E. Porter
Decomposing Prosperity
Prosperity
Prosperity
Domestic
Domestic
Purchasing
Purchasing
Power
Power
• Consumption taxes
• Level of local market
competition
• Efficiency of local industries
Income
Income
Labor
Labor
Productivity
Productivity
Labor
Labor
Utilization
Utilization
• Skills
• Capital stock
• TFP
GCR Press Conference 2004 10-13-03.ppt
•
•
•
•
30
Working hours
Unemployment
Participation rate
Population age profile
Copyright 2004 © Professor Michael E. Porter
Productivity
80,000
70,000
Netherlands
60,000
Spain
50,000
United States
Norway
Austria
Italy FranceBelgium
Finland
Switzerland
Canada
Sweden
Denmark
UK
Germany
Iceland
Japan
Ireland
Greece
New Zealand
GDP per
employee 40,000
(PPP
adjusted)
in US-$, 30,000
2003
South Korea
Hungary
Czech Rep.
Slovakia
Portugal
Mexico
Turkey
20,000
10,000
0
-1%
0%
1%
2%
3%
4%
Compound annual growth rate (CAGR) of real GDP per employee, 1997-2002
Source: EIU (2004), Groningen Growth and Development Centre and The Conference Board (2004)
GCR Press Conference 2004 10-13-03.ppt
31
Copyright 2004 © Professor Michael E. Porter
Swedish Labor Productivity Growth Versus the U.S.
Relative
Real GDP per Employee
(US=100)
77
Real GDP per Employee
(1990 prices)
$50,000
US $
$45,000
76
Relative
$40,000
75
$35,000
74
$30,000
73
$25,000
72
$20,000
71
$15,000
70
$10,000
$5,000
69
$-
68
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: Groningen Growth and Development Centre and The Conference Board (2004)
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Labor Utilization
Selected Countries
Annual Hours Worked
per Employee, 2003
2,400
2,200
2,000
Lithuania
Latvia
Estonia
Poland
Slovak Republic
Slovenia
US
Spain
Hungary
Japan
Canada
Portugal
UK
Ireland
Finland
Czech Republic
1,800
1,600
Sweden
France
1,400
Denmark
Germany
Austria
Norway
1,200
1,000
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
Growth of Annual Hours Worked per Employee, CAGR, 2000-2003
Source: Groningen Growth and Development Centre and The Conference Board (2004), authors’ calculations
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Domestic Purchasing Power of Income
Selected European Countries
Purchasing Power
Parity Factor, 2003
3.5
3.0
Higher local prices relative to
the United States
Lower local prices relative to
the United States
2.5
2.0
1.5
1.0
0.5
St
at
es
Au
st
ria
Fi
nl
an
d
G
er
m
an
y
N
or
wa
y
D
en
m
ar
k
Sw
ed
en
K
U
ni
te
d
U
Li
Sl
th
ua
ov
ak
ni
a
R
ep
C
ze
ub
ch
lic
R
ep
ub
li c
La
tv
ia
H
un
ga
ry
Es
to
ni
a
R
us
si
a
Po
la
nd
Sl
ov
en
ia
Sp
ai
n
0.0
Source: Groningen Growth and Development Centre and The Conference Board (2004), authors’ calculations
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Innovation
Annual U.S. patents per 1
million population, 2003
400
350
United States
300
Japan
250
Taiwan
(11.3%, 234)
200
Sweden
Switzerland
150
100
Finland
Germany
Canada
Netherlands
UK
50
South Korea
France
New Zealand
0
0%
Norway
Australia
Italy
2%
Singapore
(28.9%, 102)
Denmark
Austria
Ireland
(17.5%, 42)
Hungary
Spain
4%
6%
8%
Compound annual growth rate of US-registered patents, 1998 - 2003
10%
= 10,000
patents
granted in
2003
Source: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
R&D Spending Effectiveness
US Patents in 2003 per 1
Mio. R&D Spending in 2001
(or latest available)
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
Ja
pa
n
Sw
itz US
er
G l an
er d
m
C a ny
an
a
F i da
nl
an
S
N
d
K
ew o
Ze rea
a
D lan
N enm d
et
he ark
rla
S w n ds
ed
A u en
st
ria
Be UK
lg
iu
Ire m
la
nd
It
Fr aly
a
A u nc
st e
ra
N lia
or
w
H ay
un
g
Ic ary
el
an
d
S
C
ze p a
i
S l ch n
R
ov
a k e p.
R
P o ep
rtu .
g
P o al
la
nd
0.00
Source: OECD, USPTO, author’s calculation
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Comparative Inward Foreign Investment
OECD Countries
FDI Stocks as % of GDP,
Average 2000-2002
80%
Ireland (84%, 130%)
Netherlands
70%
60%
Czech Republic
50%
New Zealand
40%
Switzerland
UK
Portugal
Australia
Canada
Spain
France
Poland
Finland
Mexico
Germany
Norway
30%
20%
10%
Greece
Sweden
Denmark
Slovakia
United States
Italy
0%
0%
10%
20%
30%
40%
50%
60%
FDI Inflows as % of Gross Fixed Capital Formation, Average 2000-2002
Source: UNCTAD (2004)
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Comparative Inward Foreign Investment
Inward FDI Performance versus Potential
Rank Difference:
FDI Performance – FDI Potential,
2001
40
20
0
-20
-40
-60
Sp
ai
n
D
en
m
ar
k
La
tv
Sw ia
ed
en
Li
th
ua
ni
a
Po
la
nd
H
un
ga
ry
G
er
m
an
Fi y
nl
an
d
Au
st
ria
N
or
wa
y
R
us
si
a
K
U
C
ze
ch
R
ep
u
bl
Sl i c
ov
ak
i
Es a
to
ni
a
-80
Source: UNCTAD (2004), author’s analysis.
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Sweden’s Export Performance
World Export Market Shares
World export
share in %
1.8%
1.6%
1.4%
1.2%
Goods
Services
Total
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: WTO (2004), Institute for Strategy and Competitiveness (2004)
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Swedish Cluster Portfolio
Goods Exports, 1992-2002
Change in Swedish World Export Market
Share, 1992 - 2002: -0.2%
9%
8%
Forest Products
7%
6%
5%
Metal
Manufacturing
3%
2%
1%
Production
Technology
Furniture
4%
Communications
Equipment
Prefabricated
Enclosures
Pharmaceuticals
Aerospace
Engines
Swedish
World Export
Market Share,
2002: 1.46%
0%
-2.5%
Fish & Fishing
Products
Entertainment
Products
Automotive
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
Compound annual growth rate of Swedish world export market share, 1992 – 2002
Source: UNCTAD Trade Data. Author’s analysis.
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter
Multinational Companies’ Home Base
Business Week 1000
••
••
••
••
••
••
••
••
••
••
••
••
••
••
United
United States
States
United
United Kingdom
Kingdom
Canada
Canada
Germany
Germany
Sweden
Sweden
Spain
Spain
Finland
Finland
Norway
Norway
Denmark
Denmark
Ireland
Ireland
Austria
Austria
Portugal
Portugal
Poland
Poland
Hungary
Hungary
423
423
73
73
37
37
35
35
15
15
10
10
55
55
44
44
33
33
22
11
Note: Business Week ranks by Market Value
Source: Business Week (2004), author’s analysis.
GCR Press Conference 2004 10-13-03.ppt
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Copyright 2004 © Professor Michael E. Porter