• Sweden's news in English
 

'Too few of Sweden's billionaires are self made'

Published: 28 Apr 2014 11:20 GMT+02:00

“I want more entrepreneurs to dare to invest, create businesses based on their ideas and win ground in the international competition," wrote Fredrik Reinfeldt in the technology magazine NyTeknik earlier this month. The Swedish prime minister continued to list a number of reforms that the government has launched to reach this goal.

But many of policies, such as tax breaks making it more affordable to renovate a house or buy cleaning services, have more to do with encouraging self-employment than entrepreneurship.

At first glance, Reinfeldt's line of argument seems quite plausible. The government has introduced various measures to encourage work and business ownership. In a time when much of Europe is still struggling in the aftermath of the crisis, Sweden's economy is performing relatively well.

Reinfeldt makes the common mistake, however, of equating self-employment with entrepreneurship. In reality, the two are quite dissimilar. Reforms that encourage more people to work as taxi-drivers or start small cleaning companies are vital for promoting employment, but do not necessarily affect entrepreneurship.

In some ways entrepreneurship is like an elephant, hard to define exactly, but easy to recognize once you see it.

Starting a company may not really qualify as entrepreneurship if the company is a one-man operation. Even creative individuals cannot be described as entrepreneurs if they lack the skills required to convert a creative idea into a functioning business. Entrepreneurs are the rare individuals who combine these features, creating innovative businesses that manage to expand and create employment opportunities for others.

Self-employment is high in countries such as Turkey, Greece, Spain, and Portugal – which have low rates of innovative entrepreneurship. On the other hand, the US, which has high levels of innovative entrepreneurship, has a low share of self-employed individuals. Within the US, the entrepreneurial hotbed Silicon Valley has half the self-employment rate compared to the Californian average.

Why should we be concerned? The reason is simple: Successful entrepreneurs such as Ikea founder Ingvar Kamprad create job opportunities for others. Some who would otherwise have been small business owners instead become local managers. Others who would have been forced into self-employment as a last resort before unemployment, can find stable jobs in companies such as Ikea.

Although it's tricky to measure entrepreneurship, it is possible. One way is to look at all the people who have amassed a fortune of at least one billion dollars, and who have appeared on the Forbes lists of the world’s richest people since the mid-1990s.

It turns out that Sweden over the years has had 11 billionaires. But only four of them are self-made - hedge fund manager Thomas Sandell who is worth $1.3 billion, Gustaf Douglas who has amassed $4.2 billion through his security ventures, businessman and investor Melker Shorling who is worth $5.8 billion, and of course, Ingvar Kamprad who has gained $4.2 billion by supplying home furnishing to the world.

But that means only 36 percent of Sweden's billionaires are self-made.

This is slightly below the 42 percent average for Western European countries, and half the US 70 percent average.

The share of high-impact entrepreneurs in a population varies significantly across the world. Countries with high levels of entrepreneurship are characterized by low taxes and limited regulatory burdens. This suggests that the liberalizations and tax reductions introduced by the Reinfeldt government can have some effect on promoting entrepreneurship.

At the same time, the government has done little to reduce the high marginal taxes that affect in particular people who are creating new wealth. The financial benefits for an entrepreneur thus remain low in Sweden. Of course, financial incentives are not the only key factor. Entrepreneurship depends both on incentives and knowledge. Many high-impact entrepreneurs are themselves highly educated, and they often if not always rely on co-workers with expert knowledge.

Recent Swedish governments on both the right and the left have been unsuccessful preventing the deterioration of learning in the Swedish school system. Higher education is also lagging behind. As The Local recently reported, two out of the three Swedish universities have dropped out of the top 100 in the Times Higher Education’s 2014 World Reputations Rankings.

So, while the conditions for businesses have overall been improved, the same cannot necessarily be said about entrepreneurship.

Sweden has a long history of entrepreneurship and has the potential to foster new innovative businesses. But to reach that goal we must increase the rewards to the people who create new wealth and substantially increase the quality of education and research.

Otherwise, entrepreneurs from other parts of the world are likely to increasingly win ground on the competitive international marketplace.

Nima Sanandaji is a regular op-ed contributor to The Local. His latest book is called “Renaissance for Reforms”, co-authored with Stefan Fölster.
 

The Local (news@thelocal.se)

Your comments about this article

Today's headlines
Stockholm beggars hit in firecracker attacks
A person unrelated to the story begging in Stockholm. Photo: TT

Stockholm beggars hit in firecracker attacks

A beggar outside a Stockholm supermarket was targeted with a firecracker on Saturday, one of a spate of similar attacks. READ  

Hollywood stars join Stockholm Gumballers
Photo: TT

Hollywood stars join Stockholm Gumballers

The 17th Gumball rally starts in Stockholm on Sunday and among the more famous participants in their luxury rides are Hollywood notables Dolph Lundgren and David Hasselhoff. READ  

Armless man denied disabled parking spot
Photo: Magnus Manske/Wikipedia

Armless man denied disabled parking spot

A Swedish man has had his disabled parking permit revoked despite lacking both arms and thus unable to pay for a ticket. READ  

Armed robbers attack Stockholm money truck
Police investigating a previous raid in 2013. Photo: TT

Armed robbers attack Stockholm money truck

Police in the Swedish capital are investigating a raid on a van transporting cash in the city, with at least two robbers suspected to have made off with a bag of money. READ  

Swedes among least likely to die from cold
A woman stuck in snow in Malmö during the winter. Photo: TT

Swedes among least likely to die from cold

Cold weather kills 20 times more people as hot weather, according to a new global study, but despite Sweden's harsh climate its inhabitants are less likely to die in chilly temperatures than Brits, Spaniards or Italians. READ  

'It's good that Swedish defence is quick to react'
Swedish PM Stefan Löfven speaking to reporters on Friday. Photo: Wiktor Nummelin/TT

'It's good that Swedish defence is quick to react'

Sweden's Prime Minister Stefan Löfven has praised the Swedish Air Force after two Jas Gripen aircraft warned off a pair of Russian fighter jets that strayed close to Swedish airspace this week. READ  

Frozen berry sales up despite deadly sickness
Raspberries are a popular snack in Sweden. Photo: TT

Frozen berry sales up despite deadly sickness

UPDATED: Sales of frozen berries are rising at one of Sweden's biggest supermarket chains, despite the fruits causing a deadly bug outbreak at an elderly care home, which has led to other EU nations reviewing their safety guidelines. READ  

Interview
'Serious blow' to EU if UK leaves says minister
Sweden's foreign minister Margot Wallström. Photo: Janerik Henriksson/TT

'Serious blow' to EU if UK leaves says minister

Two months after one of Sweden's biggest diplomatic disputes in decades, foreign minister Margot Wallström is ready to look to the future. In an exclusive interview with The Local, she discusses Sweden's strong stance on the Mediterranean migrant crisis and why she wants the UK to remain in the EU. READ  

Refugees to Sweden left in six-month limbo
Sweden's migration officers face a huge workload. Photo: Maja Suslin/TT

Refugees to Sweden left in six-month limbo

UPDATED: Asylum seekers arriving in Sweden are now likely to face a wait of up to six-months before they can have their cases heard, as migration officers struggle to cope with the workload. READ  

Sweden's Eurovision star Måns through to final
Sweden's Måns Zelmerlöw is through to the Eurovision 2015 final. Photo: Jessica Gow/TT

Sweden's Eurovision star Måns through to final

Sweden's Eurovision hope, Måns Zelmerlöw, sailed through with his track 'Heroes' in a semi-final that was mostly lined with rock goth-inspired ballads. But will he nail his gnome fist bump in time for Saturday's final? READ  

RECEIVE OUR NEWSLETTER AND ALERTS
National
How two million Swedes are designing a 'house of clicks'
National
What's on in Sweden this week
Sponsored Article
Kristin Amparo: 'Swedes are afraid to be proud'
National
Five facts you need to know about Sweden's Eurovision entry
Bupa
Sponsored Article
Healthcare: Nine questions every expat should ask
Blog updates

22 May

Editor’s blog, May 22nd (The Local Sweden) »

"Greetings from Stockholm, The hot topic in Europe this week is whether or not the UK will..." READ »

 

8 May

 (Joel Sherwood) »

"Daycare called today. They ordered me to drop all activities and come pick up my child...." READ »

 
 
 
Sponsored Article
What it's like to be a student in Malmö
National
Why do one in three Swedes want to join Nato?
Sponsored Article
'No one tells expats about unemployment benefits'
Features
What to do in Stockholm this summer
Sponsored Article
Why expat women are choosing Swedish natural birth control
Gallery
People-watching: May 20th
National
How Sweden and Saudi Arabia got back on speaking term after row
Gallery
Property of the week: Västra hamnen, Malmö
Sponsored Article
'There is no such thing as Swedish values'
National
Why is support for the Sweden Democrats at a record high?
Sponsored Article
ConnectSweden: Examining Sweden's place in the world
Gallery
People-watching: May 15th - 17th
National
VIDEO: Swedish man's roar scares off charging bear
National
'Gang conflict' linked to latest Gothenburg attack
National
RECIPE: How to make Panna cotta with cloudberry jam
Sponsored Article
'Educated immigrants get stuck in limbo in Sweden'
Gallery
IN PICTURES: Your May sun snaps
National
Sweden backs migrant sharing plan
National
Swedish boozing on the rise
National
Why Sweden's deputy PM was forced to apologize for Auschwitz analogy
National
End of the road for Julian Assange's arrest appeal?
Features
Booked to go to one of Sweden's sizzling music festivals yet?
National
Is Avicii set to play at Sweden's royal wedding?
National
Meet the Swedish boy who used to be a girl
Sponsored Article
How to change the world: Malmö to Mogadishu
Gallery
IN PICTURES: Princess Estelle through the years
National
Why is obesity ballooning in Sweden?
National
VIDEO: The bizarre Swedish nurses song that's gone viral
National
Ecuador stray dog Arthur in Swedish charity race
National
UK expert: 'Sweden's current military state is alarming'
National
Elfdalian: a real language spoken in central Sweden in 2015
National
Is King's love for house tracks behind new military music?
Gallery
Property of the week: Hjortnäs, Leksand
National
Sex-crazed grouse terrorizes Swedes
National
IN PICTURES: Sweden's King Carl XVI turns 69
National
Dolphins spotted in Baltic
Gallery
People-watching: May 1st-3rd
Sponsored Article
'Never waste a good crisis'
National
Road trippers flock to 'The Bridge'
National
Why are Swedish supermarkets banning paracetamol pills?
Gallery
People watching: April 29th
National
"In many ways Swedes and Americans are kindred spirits"
Politics
Did you know four Swedish party leaders are women?
National
Swedish rescue team stuck on way to Nepal quake zone
National
Why Sweden's brown bear population is in danger
National
TIMELINE: Julian Assange sex allegations in Sweden
Gallery
Property of the week: Forshaga
National
Here's how a Swede became the world's boxing champion
Swedish Hasbeens
Sponsored Article
Is the world wrong to connect Sweden with sex?
Sponsored Article
'Impossible' to run Skanska without Bromma Airport
Sponsored Article
Want to study in Sweden? Read why Stockholm is the best choice
Sponsored Article
'Sweden must embrace openness and diversity'
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

3,351
jobs available
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
psdmedia.se