HANNOVER MESSE 2019, 01 - 05 April
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Partner Country Sweden

Europe's next supermodel or how to speak with dolphins

Sweden is the Partner Country at HANNOVER MESSE 2019. It was a logical choice as Scandinavia, and Sweden in particular, has always occupied a leading place in the international league for technological prowess, innovation and start-ups. What do weassociate Sweden with? A popular royal family, an even more popular princess? Idyllic summers or Nordic crime stories? Or the “other” Sweden of famed global brands such as IKEA, Spotify and Skype? Is this a model we should all be emulating?

14 Nov. 2018
Prof. Volker M. Banholzer
IP_Schweden

Sweden aims high, not least with respect to technology and research, and notably in research into artificial intelligence. Now a Swedish start-up, Gavagai AB, is on the verge of a revolutionary breakthrough. The company specializes in the analysis and translation of various languages using AI applications. Its founder, Jussi Karlgren, explains that the goal, which it hopes to realize in collaboration with the Royal Institute of Technology, is to make the language of dolphins comprehensible to humans by 2021. This would seem like a tall order were it not for the spectac-ular progress that Sweden has made towards the energy transformation. Sweden is quite capable of achieving targets before the deadline.

In 2012 the Swedish and Norwegian governments drew up a joint Renewable Energy Policy, agreeing to increase energy generation from renewables by 28.4 terawatt hours (TWh) by 2020. In fact, the Swedish parliament changed its own target in 2017, pledging to increase output from renewables by 18 TWh by 2030. A recent report from the World Economic Forum suggested that this target could conceivably be met by the end of 2018. Is Sweden the country in which the future is happening now? Many political commentators think this is the true appeal of the Swedish model. Could Sweden be “The next supermodel”? This description of the Nordic countries is not the creation of a marketing agency, but the title of a special report on Scandinavia in the Economist in 2013. The EU Commission observed that the Swedish model seems better prepared for periods of crisis and that it is entirely possible for market mechanisms to work alongside a modern welfare state. Is this true or is it, as Bernd Henningsen from the Department of Northern European Studies in Berlin once critically observed, some collective wishful thinking in a Nordic utopia? The fact is that Sweden soon recovered from the economic shocks of the 1990’s and early 2000’s and has, for many years, not only topped the Innovations In-dex, but also achieved a good record with respect to introducing digitization and start-ups.

The Nordic countries also come out on top in a comparison of innovative development. Accord-ing to the 2018 EU Innovation Index Sweden is, in fact, the most innovative of the EU member states, followed by its neighbours Denmark and Finland. This lead position is by no means accidental but is underpinned by what EU commenators have identified as Sweden’s outstandingly positive climate for innovation, excellent schools and vocational education, as well as a vibrant R&D sector. Importantly, SMEs have proven very adept at networking and successful in their research efforts.

Digitization, artificial intelligence and Industrie 4.0 are high up on the list of business priorities. Of course, digitization is extremely important in Sweden and – naturally – the country has made a lot of progress in this area. Sweden’s overall digital strategy is based on the development of a faster glass fibre network. As long ago as the 1990’s, an IT Commission set up by the Swedish government passed its first strategy paper aimed at the creation of an “information society for all”. Experts maintain that Sweden is now more than ten years ahead of Germany in digitization. It is envisaged that by 2020, 90 percent of all private households will have a minimum broad band connection speed of 100 Mbps (megabit per second). In 2013, more than 98 percent of all Swedish homes and workplaces already had 4G standard mobile phone network coverage.

In that same year the Production 2030 Initiative was launched with the goal of making Sweden a frontrunner in sustainable production by 2030, in particular through the introduction of digitization and Industrie 4.0 concepts. Research and innovation would therefore not simply target efficiency, but develop sustainability. It took Germany much longer to embrace this kind of holistic approach, whereas in Sweden it seemed obvious. For example, in 2017 Volvo Car was the first traditional automobile manufacturer to announce the electrification of its entire range of models by 2019. To this extent Volvo was meeting the targets outlined in the Production 2030 strategy to promote sustainable solutions in all areas of the economy, as well as in society at large. Although Volvo is now owned by the Chinese company Geely Cars, the European R&D centre remains in Sweden.

Steel production, biotechnology, environmental technology and medical technology rank among the other key industries in Sweden. In July 2018 Stockholm provided an important focal point for other future-oriented technologies as the world’s biggest conference for artificial intelligence IJCAI-ECAI-18 was held in the Swedish capital. It is not surprising, therefore, that the authors of a study carried out by Accenture predicted a 37 percent growth in productivity in Sweden by 2035 due to the use and development of artificial intelligence.

Traditionally export-oriented

While thinking about what appears to be a f lawless Swedish success story it is impossible to ignore the gathering clouds of protectionism. Lena Sellgren, chief economist at Business Sweden, the Swedish Chamber of Commerce and Industry, is concerned by this threat, not least because the economy is so dependent on global trade. Due to its small domestic market the country has always been forced to compete on the international marketplace and foreign trade has long been the bedrock of Sweden’s strong economy. On the plus side, Swedish companies are accustomed to the rough waters of market f luctuations, disruptive transformations and the constant need to innovate. Nonetheless, the Swedish business sector and government must be watchful: despite impressive economic performance in recent years and good results in the second quarter of 2018, Swedish per capita GDP seems to be levelling off. Professor John Hassler from the Stockholm Institute for International Economic Studies attributes this to a rapid population growth due to high levels of migration and high birth rates in recent years. Hassler and his colleagues expect some problems as the Swedish economy has long depended on the recovery of the euro area. Sellgren fears that while the record low in Swedish Reichsbank interest rates has supported the economy, there is a risk of the property market overheating.

Investing confidence in a unique system for driving innovation

The reputable Fraunhofer Institute IPT considers Sweden to be an ideal test market for innovation in Europe. The generally f lat organizational – less hierarchical – corporate structures, a f lexible work culture and a population attuned to technology are all seen as powerful factors in Sweden’s favour. Working methods tend to be more result-driven than process-based, which the Fraunhofer experts feel affords a strong foundation for Industrie 4.0. In addition, the Swedes tend to see the broader picture and take a more holistic, forward-looking view, which is demonstrated by the country’s innovation strategy. In 2015 Sweden set up its National Innovation Council, which is chaired by the Prime Minister. Members of the government, employers’ organizations, trade unions and the research community work together on a comprehensive, long-term innovation strategy that covers all departments and interests. Measures will be taken to improve risk capital funding in addition to the introduction of an innovative public procurement system. The Council is committed to the bold objective of a new innovation strategy that will lead to the creation of jobs and secure the lowest rate of unemployment in the EU by 2020. Sweden is thus preparing itself for a knowledge-based society.

Sweden’s education system is geared to sustainability and the culture of innovation. Entrepreneurship and business skills are part of the school curricula, with the emphasis on creativity and a productive “error culture” that encourages the formulation and testing of ideas. Failure is permitted, as long as you keep trying. This approach nurtures the innovative spirit and start-up culture exemplified by businesses such as Spotify, Klarna or Skype. Sweden heads the World Bank Knowledge Economy Index, is among the top 10 on the World Economic Forum’s Global Competitive Index and among the top 5 on the Global Creativity Index based on creativity, technology, talent and tolerance.

Tolerance and social harmony characterize the Swedish model and define Sweden’s welfare state. Scientists and academics in the fields of economics, political science, sociology and innovation research agree that the success of Swedish society lies in the ability to find consensus and equilibrium. A high level of taxation is socially acceptable in Sweden because it is seen as a means to greater equality, commitment and social fairness. Swedish people exhibit a lot of confidence in state institutions and the media. This confidence is a firm basis for exploring the new and unknown.

Daring to experiment

Sweden is a society which readily accepts and tries out new technology and innovations enthusiastically. In 1661 the Kingdom of Sweden introduced Europe’s first paper money. In 2019 Sweden is planning to test its own cryptocurrency, the e-Krona. Like the digital currency Bitcoin, the e-Krona will be based on blockchain technology. We can learn a lot from Sweden about digitization, the innovative spirit and export-driven enterprise, but also the understanding that technology and society should not be viewed separately but as part of a whole. Trade visitors coming to Hannover in 2019 should take a good look at the Swedish exhibitors. Perhaps some will be surprised to find how many global players are from Sweden. This may explain why the New York stock exchange initially hoisted the Swiss f lag when Spotify had its stock market launch – and then, after some embarrassment, rectified the error. The AI researchers from Stockholm might therefore be hoping to establish Sweden’s name as a crucible of innovation and technology worldwide. Jussi Karlgren, founder of Gavagai AB, is not only interested in the linguistic and zoological value of deciphering how dolphins communicate. His vision goes further. He thinks that in future this achievement might facilitate communication with other forms of life in space. If Sweden really is the place where the future is happening today, we should take notice.