Gothenburg, Sweden’s second-largest city in terms of population, has been forced into a reinvention in recent years. Its once-prosperous shipbuilding industry went into terminal decline in the second half of the 20th century, but from these ashes emerged a hub of innovation and start-ups.

The crisis in shipbuilding saw some 2,000 people employed in the industry lose their jobs in the 1980s, but thanks to the creation of the Lindholmen Science Park, built in the city’s defunct docks in the 1990s, the area is now booming with R&D, according to Per Österström, head of foreign direct investment (FDI) and establishments at Business Region Göteborg.

“The Gothenburg region has become a locomotive for Swedish innovation and R&D,” he says. “International stakeholders are attracted to running operations in a region with a knowledge-intensive workforce and which is open to the world, and this is reflected in foreign investment in the region.”

Since the 1990s, FDI in Gothenburg has been growing to the point where today one out of five employed people in the region works for a foreign-owned company, explains Österström. 

Welcome to 'Volvo Town'

One of the biggest employers in Gothenburg is the city’s industrial crown jewel, carmaker Volvo.

Volvo Cars, now owned by China’s Geely, manufactured its first car in Gothenburg in 1927, and at the beginning of 2022, the company announced an investment of SKr10bn ($1.06bn) to upgrade its Torslanda manufacturing plant in the city, as part of its plans to become a fully electric car company by 2030.

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Gothenburg-enthusiasts David and Rob Griffith-Jones, founders of the website This is Gothenburg acknowledge the importance of Volvo to the city when speaking to Investment Monitor. “It is Volvo town”, says David. “[Volvo] is the big draw, you get loads of international talent coming in to work for Volvo, but then there is an ecosystem around Volvo, like the IT consultancies, and then there are the science parks, big drivers of international activity here.” 

Österström explains that the city has three science parks: Johanneberg Science Park, Lindholmen Science Park and Sahlgrenska Science Park, with a fourth under development.

The latest Volvo Cars-driven investment in Gothenburg is also currently under development: a battery manufacturing and R&D centre in conjunction with Northvolt. The battery plant is expected to be operational by 2025 and will employ up to 3,000 people within production, support and management, with a joint investment of SKr30bn.

Announcements such as this are putting Gothenburg high up on the FDI map and Österström is seeing foreign companies show real interest in moving to the region. 

“The interest is huge," he says. "I do not think we have ever had so many large enquiries, historically, and it could mean thousands of new jobs for the region." Österström adds that although he cannot reveal which companies have contacted Gothenburg, he can say that the potential investments are in logistics operations, research and development (R&D) for the green transition, tech companies and the life sciences cluster

A hub for R&D

Gothenburg’s transformation over the past few decades to become an innovation hub is partly linked to the importance Sweden places on R&D, ranking third globally in terms of R&D budget-to-GDP ratio in 2018 – and first in Europe – according to the World Bank, behind only Israel and South Korea. 

“We are a leading region in terms of private R&D expenditures and have the highest volume in corporate R&D expenditures among all Sweden’s regions,” says Österström. 

R&D is also linked to another of the big names in Gothenburg, pharmaceutical and biotech company AstraZeneca. The company has three R&D hubs in the world: one in the UK, another in the US and a third in Gothenburg, explains Christian Borg, head of media relations at Business Region Göteborg. 

To support Gothenburg’s continuous growth and international business hub status, the region has also been investing in infrastructure in a push that, according to Österström, will translate into 120,000 new jobs created by 2035. 

It is estimated that between 2016 and 2035, Gothenburg will spend approximately €100bn (SKr1.044trn) on property and infrastructure development.

First in green bonds and prioritising sustainable development

Beyond automobiles and R&D, Gotherburg has also been taking steps towards building sustainable growth

The region was the first in the world to issue green bonds to finance sustainable initiatives in a wide range of areas, from renewable energy to public transport and waste management.

“We are a region that has decided on a green transition plan," says Österström. "Several companies show ambassadorship in the adjustment required for the global environmental challenges, they show evidence of wanting to create history, and not just talk about what needs to be done. It is liked by international investors."

The first set of bonds was issued in 2013, a total of SKr500m, followed by a second issuance in 2014 of SKr1.8bn, a third in 2015 for SKr1bn and a fourth in 2016 for SKr1bn.

As a whole, Sweden ranks second – just behind its neighbour Finland – when to comes to the progress made in achieving all 17 of the UN’s Sustainable Development Goals

Gothenburg’s reinvention over the past few decades, and the prosperity it is enjoying as an R&D hub, is a testament to its commitment to sustainable development and the potential that exists in focusing on policies and projects that not only come with financial gains but also work towards resolving the world's climate crisis.

This article forms part of Investment Monitor's Future of Nordic Cities series. We have already profiled Reykjavik, Stockholm, Helsinki, Copenhagen and Bergen, and in the coming weeks we will cover Malmo and Oslo.