Industrial Policy and Foreign Direct Investment

Multinational firms (MNEs) are key actors in the global economy, accounting for more than one-fifth of global output and more than two-thirds of global trade (Qiang et al., 2020). Moreover, approximately one-third of global trade is between firms within the same MNEs (World Bank, 2020, p.33). MNEs also conduct a large part of private-sector R&D and are of crucial importance in developing new technologies. Sweden is part of this development with large outflows and inflows of foreign direct investments (FDI). For instance, foreign-owned firms account for one-fifth of the total private sector employment in Sweden (Tillväxtanalys, 2021).