Sweden was one of the top 20 global recipient countries of foreign direct investment (FDI) in 2018 and 2019, with inflows rising fivefold from $4bn in 2018 to $21bn in 2019, according to the United Nations Conference on Trade and Development (UNCTAD). Ranking 18th in UNCTAD’s 2020 World Investment Report, Sweden recorded its highest level of inward investment since 2008.
The Netherlands, Luxembourg and the UK were the three FDI source countries that made the largest investments in Sweden in 2019, accounting for 45% of investment stock in the country, according to Statistics Sweden. Though Chinese and Indian companies have increased investments in the country over the past decade, they still only make up about 4% of FDI in Sweden, with European countries dominating the investment landscape.
The services sector attracts 60% of the total FDI into Sweden, with the remaining 40% going to the manufacturing sector, according to Statistics Sweden. The segments attracting the most FDI in the services sector are finance and insurance, retail and services, and real estate. Foreign-owned companies employ 680,000 people in Sweden, according to the investment promotion agency Business Sweden.
European inflows to Sweden as a whole increased by 18% in 2019 to $429bn, but UNCTAD predicts the Covid-19 pandemic will precipitate a drop of between 30-45% of inward investment to Europe, significantly more than for other developed regions because Europe entered the crisis on a relatively more fragile footing.
Sweden’s changing FDI picture
Though FDI in Sweden has increased over the past two decades, the country has seen varying levels of investment, which mirror changing macroeconomic trends, according to Lena Sellgren, investment promotion agency Invest Sweden’s chief economist. These varying levels of FDI are compounded by the fact that large corporate acquisitions can leave a major footprint in statistics. For example, the increase in Sweden’s FDI for 2019 was partly driven by the fact that about 200 corporate deals involving foreign buyers were concluded during that year.
More positively, Sweden ranked second in the World Intellectual Property Organisation’s 2020 Global Innovation Index, which examines innovation as a key driver of economic development through analysis referencing about 130 economies. And Stockholm ranked tenth in Start-up Genome’s 2020 Global Start-up Ecosystem Report, which showed the city had a start-up ecosystem valued at $44bn.