Headlines 2016

Digitization can benefit Swedish business


From left: Fredrik Heyman, Lars Persson and Pehr-Johan Norbäck, all researchers at IFN.

On June 16, the ESO report "Digitaliseringens dynamik” (Digitization dynamics) was presented. The study is authored by IFN researchers Fredrik Heyman, John Norbäck and Lars Persson. They are among the first to study the effects of automation over a longer period, from 1996 to 2013. The researchers explain that digitization can give Swedish companies competitive advantages. "Sweden has successfully leveraged automation," said Lars Persson at the seminar where the report was presented.

The researchers study how investments in digitization and automation influenced the Swedish business from 1996 to 2013. They have found that Swedish companies – especially in manufacturing – have benefitted from automation. Digital technology has also been used "to solve information and communication problems, create personalized products and services, and utilize untapped markets for private assets (mainly homes and cars; Airbnb and Uber)".

Heyman, Norbäck and Larsson write that the trend towards a more automated industry does not lack challenges. One is that small differences in quality and head start into a market can result in strong competitive advantages. This increases income and wealth gaps.

A high productivity in the digital economy requires, according to the researchers:

1) effective product market competition to avoid that a small number of dominant firms in network intensive industries generate the majority of the profits;

2) the ability of the labour market to adapt to changes in demand for various occupational skills;

3) well designed contract law, tax law and ownership regulations to ensure that the business opportunities offered by digitalization can be realized; and

4) that regulations are developed to achieve an internet that is reliable and protects privacy.

Heyman; Norbäck and Persson conclude: “Well-functioning institutions will ensure the growth of aggregate productivity, both by enabling individual firms to increase their productivity and by allowing less productive firms and occupations to be replaced by other, more productive, alternatives.”

Read the report (in Swedish)

View seminar

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