13States or Sweden, tax policies aimed at the deduction of household personal computers or broadband have also been documented to generate innovative entrepreneurship in broader population strata, even if innovation was never a main goal of those policies (Fairlie, 2006; Olsson & Hallberg, 2018). Economists have also argued that broader institutional policies such as housing regulations or access to education may be sizably more important for innovation than any specific intervention (Bell et al., 2019; Bloom et al., 2019).

In short, innovation policy needs to move from a focus on support to a removal of barriers, and toward general improvements rather than specific technologies or missions. While such a recipe is less politically appealing and less tangible than spectacular-sounding moonshot policies, it nevertheless has the best track record. The contributions to this book tell precisely such a story.

5

Lessons from Sweden

Several cases in this book concern the Swedish economy. Despite its small size, Sweden has become somewhat of an entrepreneurial powerhouse over the past two decades, especially within IT and software. The country has become one of Europe’s most dynamic startup hubs, experiencing the largest inflow of venture capital in the EU. Why is this the case? Central to the success of the Swedish technology sector are, first, the large general investments in IT infrastructure and education made back in the mid-1990s. Broadband access throughout the country was highly prioritized, it was possible to deduct taxes on home computing, and educational efforts regarding IT were directed toward the general population, meaning that a new generation of self-taught developers emerged in the early 2000s (Olsson & Hallberg, 2018). Access to free and high-quality university education, as in many European countries, has also been important.

14K. Wennberg and C. Sandström

Second, conditions and incentives for starting and running business have been greatly improved. Sweden is still often mistakenly regarded as a semi-socialist economy. Corporate taxation has gone from 50% in 1990 to below 20% today. While taxes on employment remain high, taxes on ownership, capital, and dividends are much lower. The combined effect of high taxes on labor and lower taxes on ownership means that incentives for entrepreneurship have improved greatly (Henrekson & Sanandaji, 2016). Beyond strong incentives for entrepreneurship and a comparatively efficient and transparent government administration, the country has also undergone a process of privatization and deregulation over the past three decades, effectively opening up markets and making them contestable for entrepreneurial activity. The country was the first to create a fully private and electronic stock exchange in 1992. The postal and shipping market was opened up for competition in 1992, and several welfare