The Swedish R&D Paradox – The Basis for its Existence and its Policy Implications

Abstract: This paper explores the validity of assuming the existence of a Swedish R&D paradox based on the relationship between R&D expenditures and economic growth, and what implications the existence of such a paradox ought to have on policies that concern R&D expenditure. Consequently, in the first instance, the relationship between Gross Expenditure on Research & Development (GERD) and Gross Domestic Product (GDP) is de-obfuscated and empirically explored based on actual data from 2000 to 2008 for all EU countries as well as some other European and world leading economies. In the second instance there is a discussion of the 3% R&D intensity aim set up by the Lisbon agenda and of increasing R&D investment incentives through tax reductions in Sweden as recently has been proposed by VINNOVA.