A message from Jens Goennemann
The gradual but continued decline of Australia’s economic complexity in comparison to other countries bewilders me. It is startling to know that Australia is now on position 93 out of 133 countries in Harvard’s global ranking, released this week and down from 91 – as if we were on a race to hit 100 by 2030.
Our lack of a more complex economy was reinforced when I had the privilege of attending the recent European Australian Business Chamber’s (EABC) Mission to Europe. The list of dignitaries, places visited, and accomplished folks on the tour is long, and this article is short.
But first, I would like to note the sad passing of the Mission’s leader and EABC Chair, The Honourable Simon Crean, in Berlin on day one of the tour. My deep respect for him and my sincere condolences to his family. Simon’s wife Carol and their daughters strongly encouraged for the Mission to continue as this is what Simon would have wished.
The Stockholm phase of the trip included a Swedish Green Industry & Technology Forum hosted by the KTH Royal Institute of Technology, a Defence Industry Forum hosted by Saab, and a stop-over at Ericsson’s Innovation Studio.
Of all the countries visited, I found Sweden the most inspiring from an Australian perspective, and more so off the back of Harvard’s recent Economic Complexity Index (ECI) results.
The Nordic countries’ standards of living are known to be high. Their social safety nets and societal cohesions are strong. And their manufacturers have few options but to compete on value due to the high costs of doing business. High living standards come with a price tag.
There are a few things about Sweden that stood out for me, for example leading Scandinavia by being in the top 10 of the ECI for over 25 years.
Their big exports are reflected by some of Sweden’s globally known companies: Volvo, Atlas Copco, Sandvik, Electrolux, AstraZeneca, Saab, and Ericsson. Machinery, pharmaceuticals, defence, and ICT feature highly.
There are also low-complexity wares making it to the nation’s ports. The ECI notes, ‘Sweden appears to have the balance right.’ Put simply, while Sweden has stuff, it can also make stuff. And where Australia’s otherwise capable industrial landscape lacks scale, Swedish companies do not while possessing world-beating sophistication in design and engineering.
I would like to point out that Sweden’s demonstrated areas of strengths are not too dissimilar to the aspired strength in our nation’s seven priority areas. At least it appears that we have the right ideas.
The huge store of Sweden’s technical capability with a population less than half the size of ours is able to manufacture and export fighter jets as well as conventional submarines, allegedly the most complex thing for mankind to build.
I also admire the country’s collective pragmatism. When it joined NATO, it was with the approval of three-quarters of the population, and out the window went two centuries of neutrality.
Similarly pragmatic and free of dogmatism, Sweden is set to reverse a phasing out of its nuclear energy. Their target is to be 100 per cent fossil fuel free by 2040 and carbon neutral by 2045. For that to happen, the current share of 30 per cent of electricity from nuclear energy is likely to rise along the way.
It can be tempting to suggest that we copy what other countries do well, but as always, we need to find our own way. Our history, our neighbours, and our needs are different to Sweden’s.
Yet, I think there are a few things that we can learn from the Swedes and other small countries: They all know they are small, their industrial strategies usually entail focus, they stick to the strategies, and support them by investing into them over a long period – long as in decades.
Our dismal position in global complexity rankings will continue while we rely on a luck-based economy, which we largely owe to our overexposure to commodities. One thing is for sure, luck does not last forever, and we better act now.
Acknowledging a sense of urgency is uncomfortable while it feels rather cushy today. But when, if not now, is the best time to invest and to ensure that one day we have a robust, globally competitive and upscaled manufacturing industry?
An industry capable of making high value, highly complex items that we and the rest of the world need, thus leaving our country better off and our children with meaningful and resilient jobs.