Whither Sweden -- Sunset or Sunrise Industries?
Sweden faces a tough choice: support manufacturing or diversify to service industries. Although the government declined to bail out Volvo and Saab, its trade policies still favor "atoms" -- tangible goods that can be counted and exported. The trade minister admits that Sweden doesn't track or promote "bits" -- intangible service industries.
That's a pity since Sweden leads in many service industries, such as mobile communications, online gaming, rock music, design and the use of green technologies. In the growing Stockholm region, services --- research, education, finance, healthcare, design, consulting, media, and fashion -- probably account for 80% of all jobs.
In the New York Times, Harvard economics professor Edward L. Glaeser warns: "Beware industrial policies aimed at keeping America tied to heavy industry. The track record of manufacturing cities over the past 50 years is dismal; artificially boosting the automobile industry seems unlikely to do any long-term good."
http://economix.blogs.nytimes.com/2009/03/24/how-some-places-fare-better-in-hard-times/
This is good advice to Sweden and other European nations struggling with the worst recession since 1930. Unfortunately, many European governments are controlled by industrialists and labor unions who have a vested interest in saving "sunset" manufacturing jobs. For these aging politicians, it's a way to save their buddies' jobs until retirement. The problem is that they underinvest in the emerging industries and young people needed to drive future economic growth. Peter is being robbed to pay Paul.
Will Sweden decline with manufacturing or invest more in service industries? Right now, the Social Democrats still seem more content with saving sunset industries than investing in sunrise industries. Fortunately, ALMI (www.almi.se) are co-investing with private investors into small and medium enterprises (SMEs) and the Swedish Trade Council is promoting SME exports, but it's a race for time. Swedish exports are down sharply, probably for a long time, so a lot of SMEs will be required to lift the economy.
Moreover, immigrants account for 18% of Sweden's population and SEB bank forecasts them to reach 30% in the future. Although the government is getting immigrants off welfare, there has been little national effort to integrate them fully into the emerging sunrise industries. Unless this happens soon, Sweden faces serious economic decline during the next decade. After all, it is talented labor, not just technology, that drives industrial growth. In Silicon Valley, investors always say: "people, people, people"!
