Performance overview: Sweden
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Sweden moves up three places to 6th with improvements in the basic factors of competitiveness, especially the macroeconomic environment. Growth has been robust, at 3.7 percent in 2016,29 and the country has managed to significantly decrease its deficit in 2015, jumping 30 places to 22nd on this indicator. The labor market functions reasonably well and Sweden has a high employment rate, with a high level of women’s participation in the workforce. However, there is still room for improvement in labor market flexibility: Sweden has dropped 26 places to 120th in terms of the effect of taxation on incentives to work, and restrictive labor regulations are perceived as the second most problematic factor for doing business. The country also faces a difficult housing market: a continued increase in house prices could impede mobility and negatively impact labor market efficiency.30 Sweden is well equipped to embrace the Fourth Industrial Revolution, with a strong score on technological readiness and ranked within the top 10 in innovation. However, the availability of scientists and engineers is falling (down six places to 20th)—a reminder that renewed efforts to invest in human capital and skills are necessary to ensure long-term competitiveness and innovation capacity.