This chapter focuses on Gotland’s business environment. Considering specificities of “insularity”, such as limited knowledge exchange networks and a geographically constrained market, it proposes policies that encourage innovation and entrepreneurial activity on the island. The chapter starts by analysing the existing business support ecosystem and identifies potential gaps for support and barriers to innovation and entrepreneurship that currently exist. It then discusses specific business areas that have the potential to further contribute to regional development, including the agro-food and hospitality industries, the creative and cultural industry, the bioeconomy and the circular economy. Skills and education, which play a central role in a healthy business environment, are considered in the last section of the chapter.
OECD Territorial Reviews: Gotland, Sweden
3. Gotland’s business environment: Fostering innovation and entrepreneurship
Abstract
Assessments and recommendations
Assessments
For island economies, boosting innovation and entrepreneurship are essential to staying competitive and overcoming disadvantages such as lacking agglomeration effects. On Gotland innovation and entrepreneurship have helped to diversify the local economy (agriculture, agro-foods, limestone and cement industry, forestry, creative and cultural industry, digital services and tourism). In some cases, it has also determined the survival of small rural communities by assuring basic services or developing new business models. The fact that the island functions as a national testbed for renewable energy and hosts emerging clusters in the blue and agro-food economies are essential assets that can offer significant potential if developed strategically.
Gotland enjoys one of the highest rates of start-ups in Sweden, yet entrepreneurs are older than in other Swedish regions and small and micro businesses make up the majority of businesses. Gotland has the second-highest share of start-ups per capita in the country (12.5 per 1 000 inhabitants just after Stockholm with 14.8). Ninety-one percent of all privately owned workplaces have 0‑4 employees and less than 1% have over 50 employees. While not all local firms have the capacity or willingness to grow, it is important to identify the ones with potential and help them obtain the resources to allow for growth and add employees, moving beyond the limits of their home market.
Although start-ups have good support structures and early entrepreneurs’ access to the university, support for business growth and scale-ups are still under-developed and only punctually covered. The incubator programme by Science Park Gotland is renowned as one of the best in Sweden, as well as for its remarkable potential for research and skills development through the university, which are at the heart of entrepreneurship support on Gotland. Yet, the system is not equipped to follow the business life cycle and provides consecutive support with every step of the way, especially for growth and scale-ups. This holds the risk of being stuck at the pilot stage for many of the ongoing projects and rarely having businesses that allow for more job creation. On Gotland, more needs to be done to understand where there is an ambition to grow, motivate entrepreneurs and offer them the needed support.
Enhancing innovation can help mitigate seasonal effects on Gotland, which may create precarious income situations. A large part of the local economy is seasonally defined, growing during the summer months and shrinking in the winter. Enhancing innovation in the region can add more value to established and niche markets, helping to diversify the labour market around areas of specialisation. Constraining factors to this include the difficulty of developing a distribution channel for small-scale food products, establishing close links between the agro-food and hospitality industries to attract tourists thought the year, as well as drawing on creative and cultural industries, especially the games design university track.
Gotland is well positioned to advance its bioeconomy and circular economy in consolidation with its ongoing status as a national pilot for a sustainable energy system and ambitions for attaining a fully renewable energy system by 2040. The geographical and social closeness of the island provides a suitable environment for circular economy development that rely on material flows and synergies between users. The island is also home to a range of sectors that belong to the bioeconomy, including crop and animal production, forestry, manufacturing of food products, beverages and tobacco products and aquaculture.
Gotland records lower levels of education than the Swedish average and faces relatively high student drop-out rates before reaching university or other forms of tertiary education, making it difficult for employers to find highly skilled workers. Upskilling local employees and building a local workforce that fits the needs of the local economy is of increased importance for Gotland. Even more so, in the coming years, large numbers of teachers (and other professions) need to find successors.
Recommendations
To boost productivity and achieve sustained growth in the medium and long terms, the region should expand and better integrate its entrepreneurial support system, strengthen innovation capacity and assure skills development. To this end it should:
Provide business support across all relevant stages of the business life cycle, focusing on island-specific challenges and fostering interaction between existing stakeholders:
Assuring the business support system covers all business life cycle stages and facilitates collaborative action for innovation by:
Advancing the setup of an accelerator programme, complementing the existing incubator.
Strengthening the interaction among Gotland’s various business ecosystem actors, pilot projects and initiatives to avoid duplication and assure consecutive support for businesses entering the system.
Supporting the upgrade of the emerging clusters, the Green and Blue Centres, strengthening their business engagement and developing them into single access points for knowledge.
Strengthening collaboration between the university and business community in strategic areas, facilitating continuous stakeholder engagement roundtables on innovation facilitated by the region.
Supporting the establishment of strong “off-island” business partnerships and networks by:
Upgrading the local export office by focusing on export awareness campaigns that can help break down mental barriers and more specifically provide information specific to Gotland’s industries and Baltic markets.
Setting up a Stockholm or mainland broker. The broker should support small- and medium-sized enterprises (SMEs) in promoting local products and directly liaising with possible buyers, such as supermarket chains, restaurants and stores, and can provide advice on marketing strategies and up-to-date market and sector information.
Improving municipal services for entrepreneurs by:
Building capacity of administrative staff through peer learning with other municipalities.
Increasing SMEs’ digital skills by:
Continuing to roll out targeted programmes that combine information and communications technology solutions with management training, making better use of young people’s digital skills (i.e. in apprenticeships) and setting up advisory services to develop individualised training paths.
Updating the region’s digital agenda to incorporate learnings and changes from the COVID-19 crisis.
Encouraging young people to become entrepreneurs by:
Promoting youth entrepreneurship in formal educational programmes and extracurricular activities (e.g. model firms, entrepreneurship clubs, business plan competitions).
Setting up a mentoring programme to match younger entrepreneurs with those who have more experience, especially retired business owners, as part of a voluntary programme.
Developing co-working spaces across the island to allow for social interaction and networking amongst young entrepreneurs.
Helping local businesses better plan for succession by:
Developing systematic support to promote succession planning as part of the services provided to business, including developing ownership and leadership transition plans.
Facilitating matchmaking for succession, creating a single directory of businesses seeking successors and potential buyers/entrepreneurs across the island.
Add value to sectors of specialisation and further develop niche markets that allow for strategic diversification of the local economy. Specifically, the region should focus on:
Developing a “farm-to-table” culture in the agro-food and hospitality industries and support farms in applying technological innovations to stay competitive by:
Continuing development of a “sustainable food development office” that can support the development of local distribution pathways for small farm produce and contributes to educating the local hospitality industry about the benefits of buying local.
Further developing food-tourism routes through branding and identity, including wayfinding strategies and signage, and marketing and communications.
Continuing to support innovations in farms by helping to apply technology that already exist elsewhere. The Green Centre could leverage its university contacts and become a learning and mentoring hub for this.
Utilising the creative and cultural potential of the island, further developing the creative and cultural sectors (CCS) and fostering cross-sectoral innovation programmes:
Elaborating a CCS strategy, defining concrete measures and roles for the development of the CCS involving relevant local stakeholders. Establish closer co‑operation between the university game design programme and Region Gotland to develop possibilities around a potential games cluster.
Setting up a specific incubator/accelerator (track) for the CCS that, among others, supports game design students in their transition into professional game developers. The existing cultural entrepreneurship centre or Science Park Gotland can be a platform for this.
Supporting cross-sectoral and interdisciplinary projects involving creative industries to bolster innovation in tourism, education, mining, energy and agriculture through the creation of platforms, organisation of events for matchmaking and links with traditional sectors.
Strengthening the bioeconomy and circular economy alongside further pushing the renewable energy transition by:
Further combining technological perspectives and research with regulatory framework conditions to allow for experimentation and applied research, for instance through further developing the planned Industrial Symbiosis Park and offering local innovators an entry point.
Establishing effective governance arrangements through harmonising regulatory requirements and assuring sufficient policy co‑ordination across different circular and bioeconomy sub-sectors, such as agriculture, food, forestry, marine, waste and energy, and developing a circular economy strategy based on the regional development strategy.
Enhancing collaboration between the emerging agro-food and aquaculture clusters, the Green and Blue Centres, regarding support for innovation and entrepreneurship around the food industry and saving scarce water resources.
Developing coaching and support on circular and bioeconomy development, i.e. on waste efficiency in businesses and across value chains, helping them to minimise waste, saving water and other materials. To realise this, the region would need to find financing support from the national government or be allowed to loosen the tax regulations for such a service.
Address future labour market and skills needs by adjusting Gotland’s training and education system and help attract and retain a skilled workforce needed for businesses to thrive by:
Reinforcing the anticipatory planning and strategic understanding of future skills needs in the region by:
Building a solid evidence base on current and future demand for skills and engaging in foresight exercises to guide both public and private sectors to work hand in hand on skills development, recruitment and engagement with educational institutions to provide the necessary education and training.
Raising the level of education and allowing for more up- and reskilling through local SMEs by:
Providing a regular opportunity for young people, from primary education onwards, to reflect on and discuss their prospective futures, allowing students to consider the breadth of the labour market and particularly occupations which are of strategic economic importance, facilitating contact with role models and providing application support.
Guiding SMEs to provide upskilling opportunities to their staff and assuring reskilling programmes are compatible with the part-time and long-distance learning needs of the island.
Making the island more attractive for teachers by:
Setting up experience-sharing networks amongst teachers of different communities, considering compensation for accommodation, supporting flexible work hours and rotation systems for itinerant teachers or/and accommodation support.
Further developing the national policy that supports study loans for educational professionals moving to rural municipalities, considering that delineation according to different parts of the island might be needed to adjust for inter-regional differences.
Introduction
Gotland has a diverse economy (agriculture, agro-foods, limestone and cement industry, forestry, cultural industry, digital services and tourism). It further functions as a testbed for multiple industries including the blue and green economies that can offer significant development potential if scaled up and synergies created with other business sectors. Yet, local firms are often very small, lack the capacity or willingness to grow and are limited, with the labour market fluctuating with the seasonal economy, making it less competitive than other regions. This chapter investigates how to address barriers to business development, including market limitations, skills gaps and administrative challenges. It also suggests how to make existing innovation and entrepreneurship support networks more effective.
Innovation and entrepreneurship make regional economies more productive, more resilient and adaptive to change (OECD, 2015[1]). This is because both form the basis for new businesses and new jobs, and help to address and deal with megatrends (OECD/EC, 2019[2]). On Gotland, innovation and entrepreneurship help to diversify the local economy and make the island more attractive, for visitors and residents alike. In some cases, they even determine the survival of small rural communities by assuring basic services. For an island economy in particular, innovation and entrepreneurship are essential to stay relevant on the market and make up for the disadvantages of being a small economy without the benefits of agglomeration effects. Hence, innovation as well as the entrepreneurs who realise these innovations are crucial for the future well-being of regions.
Gotland has several strengths when it comes to entrepreneurship and innovation. Relative to other counties in Sweden, Gotland is characterised by an astounding entrepreneurial spirit. In 2019 and 2020, around 430 businesses were started each year on the island. This is the second-highest share of start-ups per capita in the country (12.5 per 1 000 inhabitants just after Stockholm with 14.8) and also more than other more urbanised regions like Skåne (12) and Västra Götaland (9.5) (Tillväxtanalys, 2021[3]). The island also benefits from a university campus, an important asset for a small population, bringing national and international students to the island and acting as a hub for knowledge exchange and creation. Good digital connectivity as well as the island’s premium brand identity and cultural heritage, both as a destination and in terms of goods produced, are essential to its current success and popularity.
Gotland also has a range of challenges. As an island, the local market is physically limited by space and there is a very large number of small and micro businesses. Many firms on the island might stay small because the market is small and they do not dare to make the leap off the island, let alone to another country. In per capita terms, Gotland is the Swedish region that exports the least (SEK 17 990 per capita, far from the country’s regional average of SEK 130 960 in 2018). Yet, some of the exported goods might not be counted as they pass through the neighbouring region of Västra Götaland: according to Region Gotland, the amount accounts for approximately 10-15% of potatoes that leave the island. Also, a large part of the labour market is seasonally defined, expanding during the summer months and shrinking in the winter, creating more precarious income situations. In the coming years, essential occupations including farmers, teachers and other occupations need to find successors. Gotland records lower levels of education than the national average and also face relatively high student drop-out rates before reaching university, making it difficult for employers to find highly skilled workers.
If Gotland wants to remain competitive with other regions, it needs to make improvements to its business support ecosystem, to help already existing industries and services to scale and strategically support the creation of new ones. Innovation support and fostering the skills needed for businesses to thrive are part of this. To advance along this line, this chapter identifies a number of recommendations that can help:
Refine Gotland’s business support ecosystem that enables entrepreneurs across different stages of the business life cycle and encourages innovative firms to experiment with new ideas, technologies and business models, which allows them to move from early stages towards growth, their market share and reach scale by reaching new markets and benefit from digitalisation.
Add value to sectors of specialisation and niche markets that allow a strategic diversification of the local labour market. In specific, the chapter will focus on: agro-food and hospitality, creative industries, as well as the bioeconomy and circular economy.
Address future labour market and skills needs by adjusting its training and education system, and help attracting and retain a skilled workforce needed for businesses to thrive.
To do this, the chapter will firstly identify a range of barriers to innovation entrepreneurship that currently exist on the island and then suggest actionable policies at the national and regional levels to address them. The chapter will also draw on important international leading practice examples Gotland could learn from.
The role of innovation and entrepreneurship in regional economies
Innovation and entrepreneurship are two complementary dynamics that feed off each other. Innovation is the process of knowledge accumulation and a new combination of existing knowledge. Firms can use this to seek new opportunities and competitive advantage. For instance, it allows them to generate more profits, through increased sales, greater brand awareness, a new customer base or higher market shares (i.e. product innovation) or through greater cost efficiency and improved productivity (i.e. business process innovation). The entrepreneur, in this context, is the driving force of the process. Entrepreneurs are the human force that identifies opportunities, takes risks and disrupts. Entrepreneurship also plays an important role in the diffusion of innovation. Innovation diffusion is a process through which firms gather knowledge, information and innovations from outside the organisation and use them to introduce their own innovative products or processes (OECD, 2020[4]). In short, entrepreneurship is fundamental to the innovation process and innovation is the driver for entrepreneurship (OECD, 2021[5]).
For countries and regions, innovation and entrepreneurship are of crucial importance to strengthen economic growth and foster competitiveness. Entries of new firms boost job opportunities and through a process of creative destruction raise aggregate productivity. They also contribute to market dynamism, improving the breadth of choices available to consumers, and increase competition, incentivising existing businesses to improve and drive inefficient firms out of the market (OECD, 2020[6]). In times of crisis recovery, for instance from COVID-19, the creative destruction process that supports innovation endeavours is of particular importance, as it allows a reallocation of assets and resources to the more productive (efficient) firms, which in turn will be able to grow and create jobs for the recovery period (OECD, 2021[5]).
Innovation and entrepreneurship are also increasingly valued for their wider social benefits, as means to address pressing environmental and societal challenges (OECD, 2021[5]). For instance, entrepreneurship provides opportunities to people who are disadvantaged in the labour market but still may be able to create successful businesses, allowing alternative pathways to employment. Entrepreneurship also offers greater flexibility and autonomy in structuring work and can be more inclusive of social objectives than a standard employment relationship. Sometimes starting a business can also become a substitute for a small labour market. Especially, in regions that are going through economic transition, entrepreneurship and innovation can contribute to these processes and can help introduce innovative solutions to economic and social challenges to the market, in areas such as driving the green transition and creating services for ageing populations (OECD, 2020[6]).
OECD research has shown that SMEs are often at the productivity frontier and amongst the most innovative firms, jump-starting entire new industries (OECD, 2015[1]). Still, it has to be noted that innovative start-ups and SMEs only represent a small subset of start-ups. Most firms have limited ambitions to grow. To encourage entrepreneurship and allow for innovation at the heart of companies with the potential and willing, appropriate policy interventions are required. These include establishing the right framework conditions for new firm development and offering direct support to help entrepreneurs and start-ups overcome specific barriers, for example in areas such as innovation and skills (OECD, 2020[6]). A sound entrepreneurship system that encourages innovation and that enables firms and founders to experiment with new ideas, technologies and business models, helps them to grow, increase their market share and reach scale, and allows for the flow of knowledge linking the private sector to research institutions and universities (Cusmano, Koreen and Pissareva, 2018[7]).
There are significant and longstanding geographical variations in entrepreneurial and innovation activity within countries (OECD, 2015[1]). As a result, OECD research has established that is important for national programmes for entrepreneurship and innovation support to account for regional differences and geographically variable impacts. National-level entrepreneurship and innovation policies often benefit from taking into account regional variations. Further, regional policy and local programmes need to reflect the special needs of the entrepreneurship landscape as well as the innovation potential in the region and communicate this effectively (OECD, 2020[6]).
Research has shown that SMEs that are able to come up with innovative products and services have the greatest potential to benefit rural regions through job creation. This is because they are likely to develop a product or service for which there is less competition and a market with growth potential. Yet, at national levels, there is often little support for specific rural innovation. In most OECD countries, the focus is on innovation systems that operate at the national or large regional level and might not be adjusted to rural types of innovation. Many of these systems are exclusively structured as complex interactions among public universities, large businesses with formal research and development (R&D) activity and government agencies. The idea that SMEs in rural regions can produce innovations and might require different or more targeted support is seldom considered (Freshwater et al., 2019[8]).
Most innovations developed in rural areas have small markets and mainly benefit the innovating firm and its direct customers. Few involve formal R&D efforts or patent applications. Rather, innovation in rural regions often results from company branches adopting innovations from their parent organisation or SMEs adopting innovations from other regions. In other cases, they involve user innovation where the rural SME produces innovations of direct value to the firm. Table 3.1 summarises some characteristics of rural innovation that should be considered in providing support:
Table 3.1. Characteristics and bottlenecks of rural innovation
Source: Mayer, H., A. Habersetzer and R. Meili (2016[9]), “Rural-urban linkages and sustainable regional development: The role of entrepreneurs in linking peripheries and centers”, http://dx.doi.org/10.3390/su8080745; Freshwater, D. et al. (2019[8]), “Business development and the growth of rural SMEs”, https://doi.org/10.1787/74256611-en; Jungsberg, L. et al. (2020[10]), “Key actors in community-driven social innovation in rural areas in the Nordic countries”, http://dx.doi.org/10.1016/j.jrurstud.2020.08.004; Lee, N. and A. Rodriguez-Pose (2012[11]), “Innovation and spatial inequality in Europe and USA”, http://dx.doi.org/10.1093/jeg/lbs022; Mahroum, S. et al. (2007[12]), “Rural innovation”, National Endowment for Science, Technology and the Arts (NESTA), London; Wojan, T. and T. Parker (2017[13]), “Innovation in the rural nonfarm economy: Its effect on job and earnings growth 2010-2014”, ERR-238; Shearmur, R. and D. Doloreux (2016[14]), “How open innovation processes vary between urban and remote environments: Slow innovators, market‑sourced information and frequency of interaction”, http://dx.doi.org/10.1080/08985626.2016.1154984.
Overall, a comprehensive business environment and a well-functioning entrepreneurial “ecosystem” for business include institutional and regulatory settings, facilitate conditions to access markets and provide needed resources such as access to finance, incentivise risk-taking and experimentation by entrepreneurs, connect them to knowledge creation and ensure that business growth potential can be realised. This also involves co‑ordinated policy in a range of different areas, for example skills and education policy which promotes business and entrepreneurial skills and infrastructure policy to improve digital access and physical transportation links (OECD, 2017[15]). Regional entrepreneurial culture is also important to offer attractive opportunities for entrepreneurship and develop the abilities and attitudes among the population and administration needed to seize them (OECD, 2020[6]). Figure 3.1 depicts different business conditions for improving the business environment for SMEs and entrepreneurship. Many of these are dealt with in this review. While this chapter largely focuses on access to innovation, access to skills and market conditions in Chapters 2 and 4 are also relevant, especially the chapter on infrastructure.
Figure 3.1. OECD SME and Entrepreneurship Concept Framework
Source: OECD (2019[16]), OECD SME and Entrepreneurship Outlook 2019, https://doi.org/10.1787/34907e9c-en.
Better integrating Gotland’s business support ecosystem and helping Gotland’s business reach new markets and innovate more
Many Gotland enterprises stay small: expanding support for enterprises in their growth stage and strategically using innovation can help them advance to the next level
As mentioned above, entrepreneurship that supports regional development requires a strong business environment. This can be conceptualised as the set of factors and actors that together contribute to the emergence of productive entrepreneurship in a particular territory. Brown and Mason (2017[17]) identify four key components of entrepreneurial ecosystems whose presence and linkages affect entrepreneurs:
1. Entrepreneurial actors, which provide incubation, acceleration, coaching and mentoring services to entrepreneurs.
2. Entrepreneurial resource providers, which support entrepreneurship with financial resources (e.g. banks, business angels) and knowledge and opportunities for collaboration (e.g. large firms, research institutions).
3. Entrepreneurial connectors, fostering linkages in the ecosystem (e.g. professional associations, business brokers).
4. An entrepreneurial orientation, which includes an entrepreneurial culture (Brown and Mason, 2017[17]).
Gotland has many important business support services that provide a range of what is mentioned above. Especially regarding its small size, the range of offers is impressive (for an overview of all relevant actors involved in supporting business development on Gotland, see Table 3.2). The two most comprehensive ones will briefly be described. First, Science Park Gotland (SPG), an incubator programme linked to the university, provides workspaces, coaching and business advice as well as financial support to start-ups. The six-week incubator programme (SPG Start-up) offers ongoing business advice, access to office space and a network of contacts and helps to develop a first business model, concept and pitch. If needed, the programme can be extended into a follow-up programme lasting up to two years (SPG Summit), which aims to help develop and launch a product/service and create sustainable sales. An investment arm of Science Park Gotland provides funding between EUR 20 000 and EUR 500 000. Second, Almi, a national business development advisory and loan service, also has a regional office on Gotland. They provide funding and advice for companies through coaching (online) seminars and mentoring services. While the service had an innovation advisor until 2018, this role is currently vacant.
Table 3.2. Key actors in Gotland’s innovation and entrepreneurship support system
Source: Author’s elaboration based on Region Gotland questionnaire responses and interviews in 2021.
Gotland is also home to two emerging cluster initiatives, the Gotland Green Centre and Blue Centres. Both centres work to strengthen and modernise existing local sectors and seek to find solutions to local development challenges. The Green Centre focuses on securing the future of the green economy on Gotland, providing educational programmes and acting as a business network for the local agro-food and animal industries. In recent years, it has put a focus on developing its education and training offer and has now turned to advancing its business network and developing more innovation centred activities through participating in LEADER projects. The Blue Centre is slightly more research-oriented, seeking to find solutions to water-related issues and aquaculture, including building knowledge about sustainable food production from lakes and oceans. It is part of the University Campus Gotland and aims to bring together academia, business and industry, and industry associations along with regions and municipalities. The larger University Campus Gotland, part of Uppsala University, offers 11 degree programmes (bachelor’s and master’s) and conducts research in 20 departments.1 The university has 2 400 full-time students, approximately 1 500 of whom are on-campus students, and around 230 employees. The campus also ascribes itself a special focus on sustainability, 12 study programmes with a special focus on sustainable development and 5 major research and collaboration projects being conducted on sustainability issues, including energy transition, destination development and management of natural resources.
Businesses require different types of support throughout their business life cycle. The needs of an entrepreneur just starting their own business differ from the needs of a business owner wanting to expand their operations. For example, a start-up might require greater support in promoting their product, or service or to develop a business plan, whereas a more established business might require support in accessing talent to grow the business or access to short-term finance to support cash flow in periods of growth. Traditionally, the life business cycle is mostly described as a development of several stages. These stages are referred to as the: i) seed stage; ii) start-up stage; iii) growth stage; iv) expansion stage; v) established stage; vi) maturity stage; and vii) exit stage (EC, 2018a[18]).
Gotland’s current system provides good support structures for start-ups and early entrepreneurs and holds remarkable potential on the research and skills development side. Yet, in the system, support for business growth and scale-up in terms of business acceleration and growth are still under-developed and only punctually covered. The system is not yet set up in a way that follows a business life cycle and provides consecutive support every step of the way. This holds the danger of being stuck in a constant chain of pilots and having many start-ups but rarely having businesses in a stage where they allow for more job creation. On Gotland, more needs to be done to understand where there is an ambition to grow and motivate entrepreneurs that would like to grow in a way that offers them the needed support. Especially, Gotland needs to create more enabling conditions for post-entry growth, growth of small firms into mid-size ones and the scaling up of mid-size companies, as a lever to boost aggregate productivity growth and competitiveness.
While many rural places are home to a majority of micro SMEs that are focused on the local market and have little scope or desire to grow or expand the firms, there are generally some firms that have growth potential. This is also the case on Gotland. As mentioned in Chapter 1, small and micro businesses make up a large majority of all companies in the municipality of Gotland. Ninety-one percent of all privately owned workplaces have 0-4 employees and less than 3% have over 50 employees. It is important to consider that while each individual firm may not add many employees, a high number of small additions makes the difference: in other words, “many cents make a euro”. Because of the limited potential of the home market, a characteristic of these firms is their potential to move beyond the limits of their home market and serve external markets (Freshwater et al., 2019[8]). A 2017 survey with entrepreneurs from Gotland indicated that there is a will to grow, with 82% of small business owners demonstrating a willingness to grow and 74% seeing good expansion opportunities (Företagarna, 2018[19]).
To improve the overall offers, there is also potential to strengthen the interaction among different actors engaged in Gotland’s business support as well as the various pilot projects. Doing so can create greater cohesion and synergy in overall support and activities, which at times seem disconnected and fragmented. Common reasons for this are different authorising environments as well as reporting and funding obligations. On Gotland, more could be done to align business development agendas and offers, scan for businesses with potential and ensure consecutive support for businesses that might be able to graduate from one offer to the next. In this context, the region has a role in connecting loose ends and encouraging all actors in the system: notably Almi, SPG, Gotland Green and Blue Centres can do more to work systematically together. Regular exchanges and meetings could benefit the system and help identify gaps, duplications and options to combine strengths to boost the local economy. This can encourage a perspective where actors see themselves as one body contributing to the broader regional innovation and entrepreneurship ecosystem. Furthermore, institutions must collaborate closely in advising potential customers on what support they could benefit from best. For instance, a “no wrong door” principle for business support could be implemented, so that businesses that seek support can find it wherever they go.
One solution to this can be complementing physical presence with online services that allow easy navigation of business services according to particular needs. This can reduce complexity, help identify gaps and help direct people to the “right” offer. A local vocational college in St. Lawrence, Canada, has developed a business ecosystem pathfinding tool to assist start-ups and scale-ups in connecting with available resources. The tool called SwitchBoard2 provides navigation support and visibility to all relevant public support activities in the area of Kingston. Results are clustered and displayed according to which stage of the business circle entrepreneurs are in. In case entrepreneurs are unsure where they fit, the tool also provides assessment help and lets people research for support directed at specific groups including women.
Developing support for different types of scaling and growing
Gotland, as an island, might face specific challenges in terms of business growth or scaling. The physical limits of the land and market seize might influence how entrepreneurs think about the scale of the business, especially considering additional costs for transport export (around 30%) and challenges in skills recruitment. Further, it might be that firms stay small because the local market is small or because they see their business as a lifestyle endeavour and are merely interested in supporting themselves. They might also think that growth will require them to move off the island at some point. A combination of one or many of these regions can lead to business owners underestimating their potential or possibilities. It is therefore possible that mental barriers or questions need to be addressed before actual business support can help them. It is important for Region Gotland and actors in the regional business support system to better understand the main growth challenges and investigate how they can be addressed. If mental barriers play a role, an information or marketing campaign can help. Such a campaign could provide encouragement, provide positive examples and point to the services available.
Once businesses have set their ambitions to grow or scale, they generally have different ways, objectives and reasons for doing so. It can be the result of an inwardly targeted strategy to transform the business, for example through changes in management or composition of the workforce, or could be the result of external demands, for example through increased market share and sales. Scaling up could fundamentally change the structure and day-to-day operations of a business, or could leave these structures intact (OECD, 2021b[20]). Consequently, understanding differences in transformation models is key for developing the right support structures (for different modes, see Box 3.1). Hence, striking the right balance between R&D/technology-driven innovation support and other forms of innovation, especially incremental and social innovation which may be more suitable to Gotland’s business fabric – one that is populated by a high share of micro and small enterprises –, is important when thinking about setting up a business support ecosystem and the different offers the actors provide. At the moment is not very clear on Gotland which services target what kind of business needs.
Box 3.1. Transformation models underpinning scaling up
Recent work at the OECD has looked to capture evidence on the different transformation models underpinning businesses scaling-up activities. It identifies four stylised models:
The first model is “disruptive innovators” that invest in technological innovations, typically R&D-based, which result in disruptive changes to their product range or the ways they produce.
The second model is “gradual innovators” that prepare to scale by investing in human capital and upgrading their production processes with gains in new market shares arising from gradual improvements in the productivity of existing processes rather than from disruptive innovation.
The third model is scalers that do “more of the same”, i.e. expansion without changes in the composition of the workforce. For example, a manufacturing firm might add a second production facility or a local retailer might add another store.
The fourth model is “demand-driven scalers” that faces an external and temporary increase in demand that translates into a sales windfall.
While these models are stylised in the sense that most businesses will utilise a combination of the above models or may pursue different models as their business evolves, they demonstrate that supporting business growth requires consideration of the differing needs of businesses undergoing different forms of transformative growth.
Source: OECD (2021[21]), Understanding Firm Growth: Helping SMEs Scale Up, https://doi.org/10.1787/fc60b04c-en.
Focus on gradual innovators – Developing an accelerator and upgrading clusters
To complement the existing business support system, Science Park Gotland (SPG) should continue its plans of developing an accelerator linked to the incubator. The accelerator could cover growth needs for entrepreneurs that are looking to steadily improve their business and possibly grow from a micro business to a small business. An accelerator programme could provide an enhanced, more intensive business support service to potential growth enterprises on Gotland and deliver the following support:
Specialist advice.
Recruitment advisory service and support.
Growth workshops.
Key sector entrepreneurial support.
It could also help support building the capacity of small and even micro enterprises to recognise innovation opportunities and not consider them irrelevant or infeasible to their businesses. One aspect of this can include supporting the adoption of knowledge or technologies that have already been generated and linking them to networks where they can learn about these through the university. Many businesses could also benefit from building managerial and organisational practices to manage and accumulate knowledge and organise the business routines needed for innovation within their businesses. For small business innovation, managerial skills and formal management practices play a key role in leveraging internal strategic resources towards inhouse innovation and collaboration with external partners. For example, target setting or quality management and monitoring, are key activities to manage innovation projects and business growth. In setting up this service, it is important to co-ordinate between Almi, which is also providing growth support, and SPG, to avoid overlap and seek complementarity. Strengthening collaboration between the university and businesses community around strategic areas and upgrading centres to clusters – to foster innovation.
Furthermore, the emerging clusters, the existing Gotland Green and Blue Centres, could do more to upgrade their activities. One essential service they could offer is to build knowledge bridges between off-island knowledge institutions and the business community, thereby enabling new research and knowledge to be quickly and efficiently shared and utilised. One particular task of the centres could be to offer enterprises a single access point to the various knowledge institutions that exist within the centre’s professional field. While at a different scale, Box 3.2 provides an example of a Blue Economy Cluster Builder initiative taking place in Scotland. The important aspect of the Scottish programme describes the potential to add the business perspective to the currently rather research-focused endeavour of the Blue Centre Gotland.
Box 3.2. Blue Economy Cluster Builder, Scotland
The Blue Economy Cluster Builder is a 3-year programme to communicate and raise awareness of the benefits of the blue economy in Scottish SMEs and enable them to take advantage of new opportunities. It seeks to increase the number of Scottish companies operating in the blue economy and support the growth of the blue economy in Scotland. It will provide an inclusive and free-of-charge service to ensure that Scotland’s SMEs gain the optimum share of market growth and compete with international blue economies.
This programme aims to connect SMEs from across different sectors, including low carbon energy, subsea engineering, offshore renewable energy, marine shipping, power in the sea, fish processing, aquaculture, marine transport, oil and gas, marine protection, sensors, Internet of Things, new materials and more.
In this way, the cluster builder can identify new products, technology and services, as well as possible skills gaps and barriers to growth. It can then prepare SMEs for future opportunities and facilitate collaborations.
Cluster builder activities include:
Events for SMEs.
One-to-one support for SMEs.
Building a sustainable cluster and raising awareness of SME capabilities in the Scottish blue economy.
Establishing collaborations between SMEs and research institutes, including academia and innovation centres, and market intelligence for SMEs.
Source: Blue Economy Cluster Builder (n.d.[22]), Homepage, https://www.scottishblueeconomy.co.uk/.
Focus on more disruptive innovators – Linking to the university
For firms that are larger or looking to grow through more radical innovations, university connections play an essential role. To do that, the university needs to establish itself as a hub for more R&D intensive innovation, supporting businesses to make changes that are more radical and that heavily rely on research-based knowledge generation and experimentation. These are likely to be more attractive to more mature businesses that are looking for greater change. While measuring innovation is challenging, patents can give some indication of new technology creation and R&D expenditures provide a measure of the inputs into the innovation process (Acsa, Anselinb and Vargac, 2002[23]). Current, measurements for patents show low results on Gotland. Between 2011 and 2021, businesses from Gotland registered 30 patents, which is the lowest number of patients compared to all counties, in total and per capita. The national average lies at 1 014 for 10 years and the median at 331. The countries with the next lowest ratings are Jämtland (84), followed by Blekinge (184) and Kronoberg (198) (Patent Och Registerings Verket, 2021[24]).
The regional government of Gotland should encourage greater engagement between the university and the local business community. The three areas identified in the smart specialisation strategy can function as a framework to promote dialogue among research institutions and Gotland’s SMEs that do not currently engage with them. To structure the dialogue between the university and the business community, the region could, for example, integrate both local business and university representatives in continuous stakeholder engagement roundtables on regional innovation. Doing so would enable the university to reach out to companies, particularly SMEs, in the region that does not yet work with the university. Other possible measures include student placement schemes or the development of curricula that are more closely linked to industry needs.
Further, high levels of R&D expenditure are viewed as a vital enabling factor for innovation. On Gotland, R&D expenditures as a percentage of gross domestic product (GDP) are extremely limited. While there is no data on private sector expenditures, public sector expenditure per GDP stands at 0.03% and higher education expenditure at 0%. This is significantly lower than in many other regions and might also be a reason for the limited growth of SMEs. To increase funding or R&D on the island, more national support could be investigated. For instance, belonging to Uppsala University, the campus on Gotland does not benefit from support from the Swedish Knowledge Foundation. The foundation provides funding when activities are conducted in collaboration between academic staff and business sector partners for university colleges and new universities. Gotland should investigate if there are similar programmes it could benefit from. Alternatively, national regulation should consider the specific status of Campus Gotland and think about adjusting the rules of the Knowledge Foundation due to its particular situation.
Establishing strong off-island business partnerships and networks – Stockholm broker and local export office
Geographic proximity matters for innovation and business growth. Agglomeration or clustering can permit locally concentrated labour markets, specialisation in production and the attraction of specialised buyers and sellers (OECD, 2015[1]). As an island, Gotland can only benefit from this to a limited extent. While networks on the island are strong, tapping into knowledge systems and markets on the mainland or in other counties can be difficult, hence a barrier to business growth. In light of this, the importance of off‑island links that are conducive to knowledge flows and offer effective commercialisation of products is increased.
Research on rural innovation has shown that urban-rural linkages are important for businesses from the entrepreneurial perspective, notably because they allow for three things (Figure 3.2):
Sensibility for core market demands and trends.
Valuation of rural assets.
Combination of rural and urban sources of knowledge for innovation.
Engaging in rural-urban linkages and market extension activities is not easy for SMEs, which often find it difficult to identify and connect to appropriate partners and networks at the local, national and global levels. Entering unknown markets and expanding a business in off-island territories can be challenging and requires additional resources. Businesses may lack knowledge on how to market their business, what regulatory barriers they may face if they move abroad, and the logistical requirements of exporting goods. Additionally, businesses may require substantial financial investment to enter new markets and may face increased financial constraints as their activities expand. The physical limitations of the island might further influence how businesses think about the scale of the business and might make the mainland market seem further away than it is. Further, some might simply prefer to only sell to the local market.
Selling products (or services) to foreign markets can be an important way to scale up for SMEs in the tradeable sector. Going global can increase the potential for firms to scale up through several mechanisms. Beyond having the opportunity to sell their products or services to more consumers, they can also “learn from exporting” – i.e. improve product quality and adopt higher-quality standards – and optimise their sourcing strategies by choosing higher-quality inputs. A sudden surge in export – e.g. because some trade barriers are removed – can underpin a demand-driven scaling model. At the same time, accessing global markets is an innovative marketing strategy that requires dedicated investments and can thus be part of a gradual innovator growth pattern.
Figure 3.2. Rural-urban links from an entrepreneurial perspective
Source: Mayer, H., A. Habersetzer and R. Meili (2016[9]), “Rural-urban linkages and sustainable regional development: The role of entrepreneurs in linking peripheries and centers”, http://dx.doi.org/10.3390/su8080745.
Data on exports, for instance, show that SMEs are important for exports on Gotland: approximately 60% of international exports come from businesses with fewer than 250 employees. Yet, internationally, Gotland’s SMEs export the least compared to other regions (SEK 17 990 per capita, far from the country’s regional average of SEK 130 960; see also Chapter 1). To address challenges related to exporting goods and creating business links across borders and into international markets, islands across the world have developed trade commissions based on their islands. These offices help local businesses to acquire foreign investments and bridge links to innovation to ensure their businesses maintain a competitive advantage and are able to export. Two examples from Canada and the Virgin Islands are described in Box 3.3.
Box 3.3. Island Trade Commission examples – Price Edward Island, Canada, and the Virgin Islands
On Prince Edward Island in Canada, the trade commissioner’s office provides local businesses with trade, investment and innovation opportunities. They specifically focus on the following sectors: i) advanced manufacturing technologies; ii) aerospace and defence; iii) bio-industries; iv) building products; v) environmental industries; and vi) information, and communications technologies. The role of the trade commissioner is to develop a first-hand understanding of the business – meeting with you in person or visiting facilities. Having received a good understanding of your business requires support from the commissioner for the following:
Determining international competitiveness.
Deciding on a target market.
Collecting market and industry information.
Improving international business strategy.
Connecting businesses to international opportunities.
Introducing businesses to its network of Canadian trade commissioners around the world.
Providing referrals to other government agencies or organisations depending on the nature of the business’ request.
Similarly, the Virgin Islands have set up a trade commission, with the responsibility for all activities related to trade and economic development, which will function as a “one-stop-shop” for trade, business, investment, fair competition and consumer affairs. The six functional areas of focus of the trade commission include:
Policy planning R&D.
Trade and export development.
Business development.
Investment promotion and facilitation.
Licensing and regulation.
Fair trade (fair competition and consumer protection).
Source: Government of Canada (n.d.[25]), Canadian Trade Commissioner Service - Prince Edward Island, https://www.tradecommissioner.gc.ca/prince-edward-island-ile-du-prince-edouard/index.aspx?lang=eng; Government of the Virgin Islands (2021[26]), “Virgin Islands Trade Commission launched”, http://www.bvi.gov.vg/media-centre/virgin-islands-trade-commission-launched.
On Gotland, export support is channelled through the regional export office. The export office is led via the business support system Almi, mentioned earlier. The office is part of a larger network of regional export centres that were created by the Swedish government, alongside the setup of Team Sweden, a network of public organisations, agencies and companies that promote Swedish exports and investments in Sweden. The aim of the regional office is to support companies to get in touch with promotional contacts within 24 hours. The work of the regional export centre focuses on customer interactions, seminars and conferences. The Gotland office has held an export technology training and set up a stand on Gotland’s Entrepreneurs Day.
Developing a mainland broker/trade commissioner and upgrading the local export office
Gotland aims to further specialise in foodstuffs, beverages, arts and crafts that are part of high-quality, niche products. The island also has long-established mainland export businesses like the abattoir producing for Sweden’s largest organic meat brand (Smak av Gotland) and exports large quantities of carrots to the mainland. Yet, some businesses only serve the local market and do not have international reach. Making use of Gotland as a premium-quality brand identity, many of these products could be interesting for a broader market. Particularly, urban areas like Stockholm have wealthy customers who like to support locally produced, high-quality goods and food and are able to spend more. Customers these days also increasingly value transparent value chains and like to know where their product is coming from. Gotland has an advantage in this context and can easily demonstrate where products come from and who has produced them. Furthermore, people living in other countries or on the mainland might also associate Gotland’s products with experiences from their holidays or from having holiday homes/apartments on the island. Purchasing Gotlandic products (in their location) might allow them to benefit from the “Gotland feeling” on the mainland. Other potential off-island customers might not know about Gotland’s products and could therefore be targeted. Hence, there is probably potential for Gotland to reach out to other markets.
Currently, individual companies organised themselves for entering the mainland market and create several individual channels specific to their products or needs. To consolidate forces and systematise reaching the mainland market, particularly Stockholm and other major Swedish cities, the region should look into establishing something like a trade commissioner office in Stockholm. Essentially, it could function as a link between the island’s business and the Swedish mainland market, facilitating business relations, especially for SMEs. This office, functioning as an umbrella, could be responsible for promoting local products and directly liaising with possible buyers, such as supermarket chains, restaurants and other stores on the mainland. The office could also provide advice on marketing strategies and up-to-date market and sector information to help smooth Gotland companies’ path to doing business on the mainland. At the same time, this office could co-ordinate activities that help familiarise the mainland population with Gotland products and the island as a destination, including at trade fairs and local markets for instance.
In this broker role, the commissioner should also tap into already existing networks and activities that seek to promote Gotland’s products and support SMEs in their scale efforts. For instance, the LEADER project Goda Gotland has started to bring together the business community around food and seeks to help them increase visibility and competitiveness in the food business (Box 3.4). Co‑operating on these activities can help initiatives based on Gotland increase their impact and achieve greater results. Furthermore, Goda Gotland could think about extending their brand further to other products, so as to create a common brand for a greater variety of Gotland products, including arts and crafts. The Gotland Green Centre and its newly established subsidiary Matbyrån should also be involved in this as they are building expertise for marketing and promotion and could strengthen their support for territorial product branding.
Box 3.4. Goda Gotland – LEADER project for creating a strong food brand and viable option for small food producers
The projects and initiatives surrounding Goda Gotland, which is part of the Green Centre, are already starting to move in this direction for food products. The LEADER-supported project facilitates Gotland companies to work and collaborate on increasing visibility and accessibility for the wide range of Gotland-produced food. It seeks to create stronger and more competitive food businesses. Part of this project also aims at increasing collaborations between producers on Gotland, creating contacts and sustainable collaborations with producers in the rest of Sweden, and creating contacts and knowledge exchanges with producers in other countries. To develop its professional network, the project organises study trips, fair participation and meetings of producers and consumers. Part of this is also to develop joint communication and marketing. In addition to building connections and a brand, the project also aims to develop an e-commerce solution that enables small- and medium-sized Gotland-based food producers to have access to a larger market at a reasonable cost.
Source: Goda Gotland (n.d.[27]), About Goda Gotland, https://www.godagotland.se/valkommen/goda-gotland/.
To help businesses access other markets (this can be on the mainland as well as across the Baltic region), the island could further assess if the business service on the island works effectively in supporting SMEs reach new markets through its existing export centre. The current offer works as a collaboration of national and regional services but does not seem to focus on Gotland-specific industries or geographical considerations, i.e. investigating possible demand from the Baltic region and brokering relationships with potential business partners. Exporting activities could be supported more prominently. The office could also take up an advocating role for Gotlandic products with Team Sweden – the network of government authorities, agencies and companies that all work to promote Swedish exports abroad. Specifically, they could target existing sub-groups of Team Sweden that are focusing on industries of interest to Gotland such as the food and creative industries. Other examples to support internationalisation from OECD countries include: exporting awareness campaigns that can help overcome mental barriers, provision of information and advice on how to start exporting, and logistical support through trade support desks and trade trips. Governments may also offer financial support to entrepreneurs seeking to export, or offer guarantees to help them access finance exporting or reduce the risks involved (e.g. insurance to businesses exporting to certain countries, guarantees to banks providing loans to export businesses, foreign exchange rate risk cover) (OECD, 2020[6]).
Italy has adopted a unique approach to helping SMEs overcome barriers to accessing foreign markets through a programme that supports the costs of hiring a temporary export manager (as part of the 2015‑17 Special Plan for the ‘Made in Italy’ promotion). The programme helps SMEs to hire a full-time or part-time temporary employee to work in the small business in order to help them establish marketing, sales, accounting, information technology (IT) and other processes needed to export to a new market. There is an element of training involved in the programme as well. Once the individual has developed systems to support or enhance a firm’s export capacities, this knowledge is passed on to existing staff in the business and the temporary export manager goes on to support other small businesses. The programme entails two components: a training programme for temporary export managers and a voucher for SMEs to partially cover the cost of employing a temporary export manager. This programme serves to help firms access new markets and build their internal capacity to continue to do so through employee training (OECD, 2018[28]).
Improve municipal services for entrepreneurs
Gotland needs to improve its administrative services provided for businesses. The island does not perform well in the local business environment rankings of the confederation of Swedish enterprises (63% of Gotland’s businesses answered the questionnaire).3 It ranks 236th out of 290 municipalities and 22nd out of 29 municipalities of comparable population size. Overall, however, Gotland improved, climbing 27 points in comparison to the previous year (Svenskt Näringsliv, 2021[29]). Low rankings for the business environment might deter entrepreneurs from the mainland to set foot on the island and make the island less attractive for investments. It also puts small entrepreneurs and newcomers at a disadvantage, as many of them have fewer resources to navigate complex systems and might not be able to draw on an already established social capital.
The biggest challenges are recorded with regards to services provided by the administration, attitudes towards entrepreneurs and working with the administration. These are ranked low, including the efficiency and availability of knowledge of the business environment (for instance for building permits or licences), as well as public procurement processes. It hence seems to be cumbersome to start, run or develop companies when interacting with the local administration is required. Improvements also need to be made concerning the dissemination and provision of information. Other factors mentioned are linked to connectivity and access to employment and skills. Best results are achieved for business climate and security, and the share of goods and services purchased by the municipality from companies (Svenskt Näringsliv, 2021[29]).
While some challenges are likely linked to national regulations and troubles with permitting processes that are not of regional responsibility, the region can try to better steer local entrepreneurs through permitting and licencing processes smoothly, providing clear and easy to understand information and mitigating unpredictability, clarity and legally uncertain situations in the best possible way. This can be done by increasing the capacity of administrative staff and continuing to provide training and skills upgrades on business needs, and clearly communicating to staff that a good business climate is essential for the region’s attractiveness. It might also help to set up peer learning programmes with municipalities that rank particularly well on administrative services and attitudes towards businesses and learn from how they have been able to deal with common challenges, potential partners might be Falkenberg in Halland or Mariestad in Västra Gotland. As staff in the local administration already face capacity challenges (see also Chapter 4), having someone leave the island to join other municipalities to learn for a limited time could be challenging; to top up resources and enable learning at the same time, a model where administrative staff from other municipalities comes to visits might be more suitable.
Digitalisation offers opportunities for Gotland’s businesses to participate in the wider economy, innovate and grow
Widespread digitalisation has increased access to markets and audiences (e.g. through online shopping, online exhibitions and online performances) and pathed the way for the arrival of new technologies (e.g. three-dimensional (3D) printers, delivery drones, autonomous vehicles and augmented reality). Many of these can reduce the cost of moving people and goods. This can make rural environments more attractive to people and to firms, and has lowered the barriers to settling in rural places. Furthermore, digitalisation and its technologies continue to offer a large potential for innovation and growth of SMEs. In fact, fast Internet access has become a necessity for many who wish to exploit their full economic potential. Digitally enabled enterprises use a variety of technologies to facilitate key aspects of their business including communication, collaboration and the co‑ordination of activities.
Gotland has a very well-developed fibre optic network throughout the island and occupies a leading position among the regions of the country. In 2020, 88% of the population/households had access to the fibre optic network: almost 92% of the permanent population/households have access to the network and just over 60% of all properties with holiday homes (see Chapter 1). This is a large advantage over many other rural regions and has the ability to reduce the geographic gaps between the mainland and, indeed, the rest of the world. While Internet access is good, providing a stable electricity supply is a precondition for Internet operation and this has presented itself as challenging in recent years on Gotland. For an in-depth discussion on energy supply, please refer to Chapter 2.
In order for SMEs to engage with the digital economy, grow and innovate, they need to be equipped with the necessary digital literacy skills to adopt digital technologies. OECD data show that rural areas lack digital skills (see Chapter 1). In addition, research has also shown that many SMEs lack a strong understanding of how the adoption of digital technologies will improve their business productivity and efficiency (Ollerenshaw, Corbett and Thompson, 2021[30]). Digital competency includes the ability to keep up with digital developments in a way that provides opportunities to be able to start and run companies or to strengthen companies’ ability to innovate and be competitive. It also means being familiar with digital tools and services and having the ability to follow and participate in digital development. The effective adoption of automation and digitalisation requires strong managerial skills in SMEs.
To be able to take advantage of the existing Internet connectivity, digital skills and knowledge about digitalisation need to increase, also on Gotland. Targeted programmes that combine information and communication technology (ICT) solutions with management training and advisory services can be especially effective for successful digitalisation. The Gotland Green Centre, as well as other business support services, could look into developing constant activities to strengthen SMEs’ management capabilities, including for example technology adoption and IT engagement, which is often a leading enabler for productivity-enhancing activities. Currently, processes are often one-off offers dependent on project-related funding and therewith only provided intermittently. Furthermore, the digital skills of young people can be strategically used in businesses. In Germany, the programme Apprentices as Digitalisation Scouts (Digiscouts) promotes digitalisation in companies using the knowledge of digital natives. Projects are to be initiated and also implemented by the trainees themselves and accompanied by virtual forms of co-ordination. In order to better assess the individual needs of businesses on the island, providing individualised training paths in a concept similar to the Web Association Bergerac in France could be an option for Gotland (Box 3.5).
Box 3.5. Initiative for developing digital skills
Web Association Bergerac, “La Wab” or “WAB”, Digital Training Hub (France)
The WAB is a hub for innovation and digital training operating in rural Bergerac, France, that supports local enterprises and helps them make progress towards a digital transition. The WAB offered free digital audits to small rural businesses that resulted in a personalised report on the company’s digital preparedness. It is also a “web school” that helps young people to become web experts following a two-year training course in the digital field. Through digital training, it teaches local businesses how to design effective digital strategies and identify new opportunities and markets for their business development. The WAB is also a business accelerator and a co-working space that offers support for the development of small enterprises.
WAB work involves:
Mapping the needs of all businesses in their area through a survey. In partnership with the employment department of the local government four main categories of questions investigate: i) the perception of digital tools; ii) equipment and budget dedicated to digital tools; iii) digital needs; and iv) challenges.
Carrying out in-depth digital audits of interested companies. These consist of a two-hour interview with the business manager and a personalised report on the company’s digital preparedness, both in terms of the quality of its equipment and skillsets. The audit also assesses the benefits and costs of digital transition for the individual company.
Producing individualised digital roadmaps and training paths. The “digital roadmap” consists of an individually tailored course taken from a selection of 30 vocational courses on digital skills. So far a total of 48 managers took advantage of this opportunity within the project.
Source: EU (2018[31]), Digital and Social Innovation in Rural Services, https://enrd.ec.europa.eu/sites/default/files/enrd_publications/publi-eafrd-brochure-07-en_2018-0.pdf.
Between 2015 and 2020, Gotland had a Regional Digital Agenda (RDA). The purpose of the agenda was to create a strategy and action plan to effectively utilise the opportunities of digitalisation throughout society including business digitalisation, public e-services, broadband expansion, general IT usage, e-health, digitally supported community planning and digitally supported education. The agenda presented 30 focus areas with 76 concrete sub-goals. Of these, a total of 57 (75%) have been completed. Work is underway in 10 (13%) areas. For 5 (6.5%) areas, work has not yet begun. Most of the uncompleted or underway work is in the area of e-health, which has shifted its targets to 2030. Considering this digital strategy is now expired and many advancements have been made with regard to digitalisation since the COVID-19 pandemic, it might be important for Gotland to evaluate the strategies outcomes more closely and develop an update to this important digital agenda.
Missing entrepreneurs – Encouraging young people to become entrepreneurs
Despite having many entrepreneurs relative to its population size, Gotland does not have very many young entrepreneurs. The island has the lowest rate of young start-up founders compared to other Swedish regions. It reaches a rate of 20% for the under 31-year-olds, compared to the Swedish average of 25% for under 31-year-olds (Tillväxtanalys, 2021[3]). Furthermore, a larger than average share of start-ups is founded by people over the age of 50 with 31% in comparison to 24% in Sweden (Tillväxtanalys, 2021[3]).
This suggests, that more can be done on Gotland to support youth in realising their entrepreneurial potential. At the European level, estimates suggest that about 40% to 45% of young people have an interest in pursuing entrepreneurship but only a few youths are self-employed or actively work on a business start-up (OECD/EU, 2020[32]). Important barriers for youth entrepreneurs include lack of experience and skills, low levels of collateral and savings and under-developed professional networks. According to OECD work, key actions to support youth entrepreneurship include addressing the finance gap faced by young entrepreneurs and improving the appeal of support initiatives by better capturing youth perspectives in the design of initiatives. It is also stated that financial support tends to have a greater impact on the sustainability of the business but evaluations note that training, coaching and mentoring are often more valued by youth entrepreneurs (OECD/EC, 2021[33]).
To better understand the challenges for youth entrepreneurship on Gotland, the island might want to further investigate the concrete challenges for their young entrepreneurs. Common reasons can include:
Low levels of awareness and few entrepreneurship role models, due to a small professional network and little contact with business owners. Young people may also lack awareness of the availability of programmes that support new business ventures.
Lack of entrepreneurship skills, for instance, in opportunity recognition, business planning, financial management, sales and marketing, inducing a lack of appropriate education and training offers to provide a strong foundation to support young people’s entrepreneurial ambitions.
Difficulty in accessing finance due to their lack of proven experience and lack of personal savings, collateral and credit history.
In small professional networks, due to their limited work experience, young entrepreneurs have had less time than older entrepreneurs to build a professional network and rely to a larger extent on the support of their families (OECD/EU, 2020[32]).
To improve levels of awareness and encourage understanding of entrepreneurship for youth, Gotland could investigate if more could be done in the formal education system to promote youth entrepreneurship. The aim of this should be to inform youth about the role of entrepreneurship in the economy and explain what it takes to start and run a business to inspire and interest them. This can be done in two ways: i) integrating it into educational programmes; and ii) through extracurricular activities. At the secondary school level, the Youth Entrepreneurship Theme Year was organised in the Helsinki-Uusimaa Region in Finland. As part of the European Commission (EC) European Entrepreneurial Region (EER) project, the region organised a multitude of events with the aim of increasing high school students’ exposure to entrepreneurship. These types of activities are important because it makes entrepreneurship more tangible and creates links to role models that come to speak in schools about their stories. To appeal to the youth, this can also be complemented by social media campaigns (OECD/EU, 2020[32]).
Success factors for entrepreneurship education include the incorporation of experiential learning and practical activities (e.g. model firms, entrepreneurship clubs, business plan competitions) into theoretical teaching to enable students to generate viable business ideas and equip them with the tools for the start‑up process. This needs to be accompanied by practice-oriented student start-up programmes that support students who wish to engage with the start-up process with training, coaching and access to resources (OECD, 2020[6]). At the higher education level, the OECD Entrepreneurship Education, Collaboration and Engagement (EECOLE) network might be interesting for Gotland stakeholders, especially the university, to benefit from policy dialogue on entrepreneurship education and university-business collaboration (Box 3.6).
Already existing programmes in schools, such as Young Enterprise (Ung Företagsamhet) Gotland which promotes entrepreneurship among young people in schools with competitions, could be followed up with offers from Science Park or Almi that could specifically target young people, by designing in-person courses, thematic workshops and online classes for instance. That way youth might feel more at ease learning about accounting and finance, law and legal issues, team building and personal development for example. As there seems to be a high number of older entrepreneurs (over 50) across the island, they could also function as a source for boosting young entrepreneurship. As part of their mentoring programme, Almi could strategically try to match younger entrepreneurs with those with more experience. Furthermore, it could seek to draw on retired business owners spending their retirement years on the island. Many of them likely have very valuable experiences they might want to share with young people for free as part of a volunteer programme.
Box 3.6. Supporting the development of entrepreneurial skills through the OECD EECOLE network
Entrepreneurs are not born, they are made. Over the past decades, a number of education and training programmes have focused on entrepreneurship to promote spin-offs and start-ups, and to provide individuals with a bundle of skills that can help them with regard to the future of work and society. Within this context, the OECD has developed programmes such as HEInnovate (in co-operation with the EC) and the Geography of Higher Education to identify good practices and generate data. Capitalising on these initiatives, the OECD recently launched a new network called Entrepreneurship Education, Collaboration and Engagement (EECOLE) to strengthen the evidence on entrepreneurship education, facilitate the sharing of good practices and offer a platform for policy dialogue on entrepreneurship education and university-business collaboration. The network is built around higher education institutions (HEIs) but also includes national and subnational authorities, private sector businesses, banks, venture capitalists and business angels, non-government actors and foundations.
A core priority for the network is to support youth in a post-COVID-19 economy. This includes strengthening connections between HEIs and their students, the business community and policy makers to identify innovative approaches to internships and career guidance services. EECOLE also focuses on mainstreaming entrepreneurship education and supporting start-ups and spin-offs as means to promote jobs and innovation in all regions.
EECOLE will work through task-and-finish groups (TFGs). TFGs will work on defining entrepreneurship and measuring the effects of entrepreneurship education on individuals and on the “geography of higher education” to assess the way in which HEI resources can be mobilised to promote entrepreneurship ecosystems. Another TFG will focus on the United Nations Sustainable Development Goals (SDGs) and in particular on the role HEIs can play in helping communities to decarbonise (evidence-based policy making).1
1. For more information, please see http://www.oecd.org/cfe/smes/geo-higher-education.htm.
Source: OECD/EC (2021[33]), The Missing Entrepreneurs 2021: Policies for Inclusive Entrepreneurship and Self-Employment, https://doi.org/10.1787/71b7a9bb-en.
Generally, co-working spaces and maker spaces offer the opportunity for start-ups and businesses to directly interact with other professionals, promoting the cross-fertilisation of ideas which spurs innovation. Considering the high concentration of micro enterprises on Gotland, co-working spaces across the island can provide a valuable mechanism for social interaction and networking. Makerspaces are similar to co‑working environments but typically involve more direct support for collaboration and the provision of equipment for collective use. These spaces operate on diverse business models, including paid and unpaid memberships, voluntary or employed staffing and greater or lesser reliance on government support (Niaros, Kostakis and Drechsler, 2017[34]). They also lower barriers to entry for entrepreneurs as they gain access to tools, equipment and technology which would be costly to purchase (Van Holm, 2015[35]). To finance these hubs and make them economically viable, they could brand themselves as hubs for mainland people and “digital nomads” to telework in rural places for some time. In Germany, first and most, well‑known rural co-working space is situated in Bad Belzig, Brandenburg. The Community and Concentrated Work in Nature (Coconat) functions as a temporary workstation in a remodelled estate. Since 2017, it has become a meeting place for digital nomads, urban working tourists and regional dwellers working for the digital and knowledge industry (Coconat, 2022[36]).
Further ways to increase young entrepreneurship are outlined in Box 3.7 below.
Box 3.7. Measures for supporting youth entrepreneurship
Supporting youth entrepreneurship
Develop a vision for youth entrepreneurship support.
Embed entrepreneurship promotion and support within youth employment strategies.
Communicate the objectives of youth entrepreneurship policies and programmes to youth, youth organisations and the community.
Have government actors and other stakeholders define complementary roles in supporting youth entrepreneurship.
Building a supportive institutional environment
Ensure that the regulatory environment does not discriminate or provide disincentives for youth entrepreneurship.
Be supportive of youth entrepreneurship in welfare, tax and regulatory systems.
Ensure that bankruptcy laws do not prevent young entrepreneurs from having a second chance.
Promote a positive image of entrepreneurship to build a culture of entrepreneurship amongst youth.
Inform youth and society about the potential of youth entrepreneurship.
Celebrate young entrepreneurs as role models.
Ensure that youth can access information and resources about entrepreneurship.
Provide ready information on how to start up a business.
Make business start-up support easily accessible to youth.
Improving entrepreneurship skills
Provide entrepreneurship education in schools, vocational training and higher education.
Develop entrepreneurial mindsets as well as new ventures.
Provide opportunities to learn through experience (e.g. business simulations and competitions).
Include low educational achievers.
Provide coaching and mentoring for young people with interest and potential for sustainable projects.
Use an appropriate matching mechanism to ensure a good fit between coachee/mentee and coach/mentor.
Encourage networking.
Create links with other young entrepreneurs, senior entrepreneurs, investors and partners.
Facilitating access to finance
Provide financial literacy education to all youth.
Ensure youth can access loans and microfinance.
Use grants when loans are not feasible.
Encourage alternative financing methods such as guarantees, crowdfunding, peer-to-peer lending and business angel investment.
Complement financial support with business training and mentoring.
Source: OECD/EU (2020[32]), Policy Brief on Recent Developments in Youth Entrepreneurship.
Help companies strategically plan for succession
At the end of the business life cycle stands the exit stage. Gotland is the county with the fastest growth rate of the elderly population, increasing 4.8% between 2010 and 2020, whereas the Swedish average only increased by 2.2% (see Chapter 1). This means that Gotland’s population is ageing fast and in the near term, many enterprises on Gotland will have to close if they do not succeed in handing over to new generations and business owners. Many will have to look for possible candidates and prepare for corporate succession in a way that secures future business viability. Succession is a complex and long-term process that requires the transfer of responsibility, capital and competencies. Supporting businesses in their succession can be crucial for their survival and for transferring important local knowledge while assuring they are competitive in the future. To help local businesses better plan for succession, the region in co‑operation with the local business association, could:
Consider hosting an event for businesses highlighting the importance of business succession planning and where businesses can begin. In addition, consider promoting succession planning through one-on-one meetings.
Promote business health and readiness for transition prior to succession through advice on developing ownership and leadership transition plans.
Facilitate matchmaking for succession by creating a directory of businesses seeking successors and potential buyers/entrepreneurs.
Investigate if people who want to close down their business still want to remain active in advising young start-up owners in matters of business development and set up a mentoring system.
Adding value to sectors of specialisation and developing niche markets that allow for strategic diversification of the local economy
Gotland has a diverse economy (agriculture, agro-foods, limestone and cement industry, forestry, cultural industry, digital services and tourism). This is beneficial to the island because economic diversification helps to make regions more resilient to external shocks. Still, apart from a growing public sector, which provides stable incomes and is set to increase further with military presence and a growing university, a large part of the local economy is seasonally defined, expanding during the summer months and shrinking in the winter, including agriculture and tourism. Enhancing innovation in the region can add more value to established and niche markets and diversify the labour market. This is also important because specialisation in specific areas can be a key driver for productivity and growth and generally includes a type of diversification within similar activities to reduce sectoral vulnerability.
Recognising the importance of innovation, the regional development strategy Our Gotland 2040 also includes a smart specialisation strategy. Gotland has identified three areas of smart specialisation they are looking to develop further: i) hospitality industry; ii) food and agro-food industry; iii) business community’s energy transition (Box 3.8). Smart specialisation is a tool for regions to become more competitive in international markets and aims to identify local assets in order to increase competition. It is a process of “entrepreneurial discovery” whereby market forces and the private sector discover and produce information about new activities, while the government assesses the outcomes and empowers the actors most capable of realising the potential. Generally, the strategy aims to identify the regional strengths in the form of activities – rather than sectors per se – by conducting an exploratory approach in which public decision-makers listen to market signals using a range of assessment tools and mechanisms such as public-private partnerships, technology foresight and road mapping.
Gotland should continue its journey of entrepreneurial discovery and further consider options for specialised diversification. This means unlocking synergies among related activities to promote new growth opportunities, rather than just focusing on single economic sectors. To this end, this section offers considerations for the region on how it can further substantiate growth in a range of identified areas of specialisation and where it could seek new related areas of growth. It specifically addresses factors such as the difficulty of developing a distribution channel for small-scale agro-food products, establishing closer links between the agro-food and the hospitality industries as well as drawing on creative and cultural industries for innovation, especially the games design university track, and consolidating bioeconomy and circular economy approaches with its ongoing transition to renewable energy.
Box 3.8. Gotland’s three areas of smart specialisation
Hospitality industry
Gotland wants to be perceived as northern Europe’s most sustainable travel destination. This means becoming an attractive tourist year-round destination for Swedish and international visitors to all parts of the island. To achieve this, the region wants to strengthen the destination’s development through innovation and internationalisation around Gotland’s authentic values. Part of this will be advancements in exports, IT, marketing communication and sales, which will increase the opportunities for co‑ordinated marketing and distribution. To achieve these goals, there is active collaboration between the hospitality industry, Region Gotland, the academy and other stakeholders.
Food and agro-food industry
Gotland’s food industries span several industries, from primary production to the food industry, shops and restaurants. As part of this sector, the region seeks to strengthen product, process and brand development through innovation and investments to attain smarter growth and enhanced access to markets. Developments will benefit the primary-stage (grain, green matter and animal) production, which is considered the basis for a strong sector, as well as the processing stage, where there is still potential on which to build. The food and grocery industry contributes to Gotland’s attractiveness, degree of self-sufficiency, innovation potential, transition to a sustainable society and rural development. The development of these areas is accompanied by research from the Swedish University of Agricultural Sciences and Uppsala University.
Energy transition of the business sector
In light of the climate emergency, goals for energy and climate change have also become more ambitious on Gotland. The island has been designated an energy transition pilot area through a government assignment to the Swedish Energy Agency and has accelerated the business community’s energy transition. It wants to become a pioneer in adapting technology and seeks to further develop collaborative initiatives for climate and energy change in the business sector. Research in this area is available on Gotland and actors are strongly committed. Developments in the mineral industry towards climate-neutral cement are an essential part of this process. Indeed, there are opportunities to broaden Gotland’s business life, increase its attractiveness as a place of work and create creative innovation environments for continued business development.
Source: Region Gotland (2021[37]), Our Gotland 2040 – Regional Development Strategy for Gotland, https://www.gotland.se/110992
Hospitality and agro-food: Developing a “farm-to-table” culture and make use of technological applications in larger farms
There are at least 1 400 farms on Gotland, many of which are small farms that produce high-quality meat, dairy and produce. This is one of Gotland’s assets and contributes to the island’s premium brand identity. It is the island’s unique geographical location that creates particularly good conditions for growing a variety of fresh produce. During the summer, the hours of sunlight are long and in the winter the climate is mild in comparison to other regions of Sweden. This allows farmers to grow a large variety of food. For instance, Gotland is home to a type of dark blueberry called blåhallon (or salmbär in the Gotland dialect), ramsons (a type of European wild garlic) and truffles, as well as wheat, legumes and asparagus (Dean, 2021[38]).
Generally, a central problem for small-scale producers is the difficulty of developing a marketing channel for their products. An individual smallholding has a relatively small amount of surplus production that can be sold after household consumption is met and usually finds it hard to develop a relationship with a broker, distributor or processor that allows the remaining production to be sold. The typical fallback option is to rely on direct marketing, either through a farm stand or a farmer’s market. From the perspective of the commercial food distribution channels, dealing with individual smallholdings is also challenging due to the high fixed costs of contracting for a small volume of product, potential problems with farmers meeting required quality standards and intermittent supply from a single farm (OECD, 2018[28]). On Gotland, the number of farm stands and backyard sales have increased significantly in the past years, suggesting that small farms are forced to take that route to market their products. A farmer’s market does not exist on the island and direct sales are mostly organised through so-called REKO Rings, where farmers sell directly to consumers using Facebook groups. In the group, the buyer gets information on what goods are in the local REKO ring and how to order. This solution is limited in capacity and requires quite a bit of transactional effort both from consumers and producers; this is a challenge for Gotland’s regional economy, as it leaves much of the high-quality produce outside the food processing chain and distribution system.
The gap between producers and markets is particularly relevant to regional development, as Gotland wants to be perceived as northern Europe’s most sustainable travel destination, yet, little of the locally produced meat, dairy and vegetables, actually reach the tourists. In essence, the island is missing a fully developed “farm-to-table” culture, present in many other OECD countries, particularly in North America. Currently, restaurants and farmers, looking to do business with each other have to go to great length. First, they need to find each other and agree on the quantity and quality of products they are wishing to buy or sell and then either restaurants have to pick up the produce themselves or the farmers have to make deliveries. Both are rather time- and cost-intensive (Dean, 2021[38]). Furthermore, it seems that restaurants have little economic incentive to go the extra mile to obtain local ingredients, nor is there a widespread understanding of just how much better those ingredients can be and how they could add value to the restaurants.
Market imbalances in bargaining power between small farmers relative to large food processing companies is a sensitive policy issue. To improve the functioning of the agro-food chain, one possible solution is for farmers to form a production and marketing co-operative that provides advice to farmers on production methods to assure uniform and high-quality products, and pools production to facilitate sales to distributors and processors. Because the farmers own the co-operative it has no incentive to extract a profit margin, which should maximise benefits to the individual farmer. However, while co-operatives are in principle attractive solutions to the marketing challenge of small-scale farms, they have been found to be difficult to operate due to low volume, large numbers of producers and challenges in maintaining consistent quality. All of these add costs that have to be spread across all producers, which can reduce a farmer’s interest in participation. The public sector can play an important role in both strengthening these initiatives and encouraging them where they are less prevalent by creating platforms to share knowledge between groups and determining best practices in order to better understand the risks involved in setting up and participating in co-operatives or other groups and the benefits they can bring to members.
More could also be done to support the creation of an alternative distribution channel, catering to small local produce and creating links with the local hospitality industry. While a large-scale farm may be able to contract directly with a processor or distributor, small-scale farms require an intermediary who can aggregate small amounts from multiple producers. Introducing an intermediary adds cost, leaving farmers with lower revenues. Here, the region could play a role in supporting the setup of a system, helping small farms to shoulder this cost and distribute their goods across the island to the hospitality industry. For instance, the region could support setting up a structure such as a sustainable food development office/distribution centre, linking the loose ends between producers, businesses and consumers. The aim of such as office could be to better structure and integrate food sales on the island and create a farm-to-table mentality. There are already advancements in this direction from local stakeholders, the company called Bondens Skafferi, already present in other parts of Sweden, is talking to some producers on the island to develop an alternative distribution system. The system would more clearly identify the provenance of ingredients and would be more dedicated to making sure that products are fresh, seasonal and of high quality (Dean, 2021[38]). There might be an opportunity for the region to become part of this initiative and support it with seed funding.
Furthermore, if the island seeks to live up to the goal it has set for sustainable tourism a mindset change is needed. The hospitality industry (hotels, restaurants, diners and chefs) needs to learn and be convinced that buying local has benefits. The food development office could help in this regard, running campaigns and helping market local foodstuffs to the permanent and non-permanent populations on the island. There is also potential in increasing the level of experimentation and flexibility granted to entrepreneurs who want to develop niche products that do not directly fit the industries’ processing standards. Policy makers need to acknowledge, that this type of flexibility can generate innovations that can make products stand out from mass, be specific to Gotland and in this way add value to the local economy.
Another increasingly important strategy to support the links between the agro-food industry and tourism is developing curated experiences that revolve around food production and farm stays or that cover one particular product. Rural offers often face obstacles to setting this up themselves as food and tourism policy are not yet sufficiently intertwined. Yet there is significant potential for savings and economies of scale through improved co-ordination; institutional and management systems, for instance, can boost opportunities for improved efficiency. Region Gotland could also further develop its food-tourism routes by further developing branding and identity; wayfinding strategies and signage; and marketing and communications strategies in collaboration with tourism businesses. Some areas are more advanced than others in undertaking such activities. The development of rest areas or points of interest, or sub-route experiences can help to revitalise villages and towns in rural areas through increased demand for tourist services such as hotels and restaurants, and wider supply chain opportunities to support these services.
The island also has large food production and processing facilities, for instance most of the dairy production on the island goes into making powdered milk in a local factory. This is a type of business with only limited value addition in comparison to other ways of refining the product, for instance into cheese. For farmers to stay relevant in the market, it is important to invest in the modernisation of facilities and to be up to date with technological advancements. For Gotland, water retention and irrigation are of particular importance due to water stress situations. While in many cases the technology is already available, skills for applying it might not.
The local Gotland Green Centre already functions as an educational base and a starting point for growing into an agro-food development cluster on the island. To further push innovations into farms and help them apply technology that already exists elsewhere, the centre needs to be taken to another level, becoming a hub for technology transfer and implementing adaptation to climate change for the local food industry. They could also advise businesses on adding more value to products by further refining them, together with creating a strong local brand. To do this the centre can leverage already existing links with the Agricultural University in Uppsala with the help of the region, bringing people in to demonstrate how things work and help innovation diffusion on the island.
Tapping into the games industry and other creative sectors
Cultural and creative sectors (CCS) are a significant source of jobs and income, and also generate important spill-overs to the wider economy. In 2018, CCS businesses directly contributed an average of 2.2% of gross value added (GVA) in OECD countries, representing almost USD 666 billion among 28 countries. In addition to creating jobs and revenues, the benefits the sector brings also include encouraging inward investment, attracting high-skilled labour and contributing to local innovation ecosystems (Box 3.9). Beyond their economic impacts, they also have significant social impacts, from supporting health and well-being to promoting social inclusion and local social capital. Realising this, more and more regions are seeking to capitalise on the important benefits these sectors can offer for instance by making it part of their smart specialisation strategies (OECD, forthcoming[39]).
Gotland has a vibrant creative and cultural sector. In per capita terms, Gotland has more CCS operations than other regions. In total, the island counts just under 1 000 organisations (companies, associations, etc.) that generate a turnover of SEK 1 billion per year. In the past 10 years, the sector has also experienced significant growth of approximately 20% both in terms of operations and turnover (Region Gotland, 2021[40]). In terms of sub-sectors, turnover is largest in fashion (leather, textiles, wool and garment industry) and literature and press. Audio, film and gaming are third, followed by literature and artistic creation. Yet, like in many other places, literature and the press have been declining. The vast majority of operations consists of micro and small enterprises with few or no employees. Most workplaces are in performing arts, literary and artistic creation and fashion, followed by literature and press as well as advertising (Region Gotland, 2021[40]). As common for the sectors, the CCS on Gotland are also often project-based and frequently work with freelancers and other businesses in temporary arrangements.
Gotland is particularly well known for its medieval United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage Site Visby and its medieval churches. The well-preserved medieval Hanseatic town dates back to the 12th century and has a 3.5-kilometre-long medieval ring wall with many of its original towers still intact. Cultural activities linked to this theme draw many visitors every year, the most renowned being the annual medieval festival. As one of Sweden’s biggest historic festivals, it offers over 500 events offering medieval music, theatre, markets, crafts, tournaments, lectures and courses. In addition, the island also offers a variety of concerts, art, performances and major events linked to contemporary popular culture, many of whom are connected to local culinary specialities, landscapes or cultural heritage. Some also include dedicated weeks such as the Truffle Festival, which offers not only truffle hunts but also seminars on truffles, a truffle market and opportunities to learn how truffles can be used in many different dishes. As part of the week, many different chefs will offer truffle-after-work meetings or specific truffle menus in restaurants. Furthermore, the yearly Bergman Week plays a homage to the film director who moved to the island in the 1960s. The event is organised by the Bergman Centre on the small island of Fårö and celebrates the director’s artistry, with films, lectures and discussions.
To support cultural life, Region Gotland, supports structures that include Gotlands Musiken, Art Week, Gotland County Theatre and around a hundred cultural organisations and associations such as the Bergman Centre, the Hemse film studio, Bunge Museum and three international artist residences. For instance, it supports Film Gotland a local film resource centre that functions as a network of skilled film professionals and production companies that provide the necessary resources to produce films on the island and support talent development. Among other things it offers, a regional film fund, location scouting and professional production services as well as coaching and education for all people interested in entering the film industry (Film Gotland, 2022[41]). Gotland is also home to the oldest university track for games development run by Uppsala University Campus Gotland and Kulturskolan a cultural and art school. Kulturskolan Gotland is a voluntary structure with almost 1 800 participants offering activities including courses in various instruments, singing/choir, dance, theatre and film. In addition, extracurricular activities with the compulsory school take place through Kultur-i-skolan: most activities are targeted at children but there are also some adult classes.
A recent study of the CCS identified that while there are many operations collaboration in the industry as well as between other industries is scarce (Region Gotland, 2021[40]). Many participants have expressed a need and interest to further develop collaboration and develop skills. Further sustainability seems to be a reoccurring theme across the sector. To address this challenge the current project Conversion Culture runs from August 2021 to April 2023 seeking to establish a “talk culture” and a development hub for ideas with a focus on sustainability.
An important step to support the CCS on Gotland was the creation of a new centre for cultural entrepreneurship Gotlands Kulturrum as a meeting place for the sector. In 2015, the aforementioned Kulturskolan moved from its previous location and liberated space in the centre of Visby. Following the non-profit association, Kulturklustret Visby (which then formed Gotlands Kulturrum) became engaged and advocated for preserving the space for the cultural sector. Since 2020, the space functions as a meeting place for the island’s cultural cluster and offers co-working for companies in the CCS. Current tenants include a magazine, an archaeology company, photographers, sound design, music production and ceramics. The house’s slightly larger rooms are not rented out for business activities but are used for concerts, performances, rehearsals, workshops, exhibitions, etc.
On the policy side, Gotland does not have a specific CCS strategy. Yet, the regional development strategy Our Gotland 2040 and the Cultural Plan 2021-2024 both mention their importance, stressing the need to promote entrepreneurship in tye CCS. Concretely, the cultural plan states: “we want to promote entrepreneurship in the cultural and creative industries and support networks and meeting places that enable meetings between actors in the cultural and creative industries and between these and other businesses” (Region Gotland, 2020[42]). Despite these ambitions very limited concrete measures are specified in either policy document. The only references made indicate to investigate alternative funding for cultural destinations and that further networks, meeting places and dialogue between actors shall be created and strengthened. Identification of actors responsible for driving these efforts is missing and it seems like actions such as Gotlands Kulturrum are trying to fill this void.
To unleash its unused creative and cultural potential for regional development Region Gotland can do more to systematically support and strengthen the CCS and therewith the benefits it can bring to regional development. In line with the national strategy released in May 2022, the region needs to further develop concrete measures to support the CCS and consolidate already existing efforts, providing a unified roof. A first step in this regard could be to develop a separate CCS strategy or action plan that clearly identifies a series of concrete measures, based on evidence gathered in previous work. Measures should then clearly assign roles and identify relevant stakeholders involved. Such a process can help to streamline actions and further activate and engaged different actors including the new centre for cultural entrepreneurship, the university, the local business association, museums and initiatives such as the film fund and others. As part of this process, also other development trajectories (tourism, agriculture) of the island need to be considered.
Especially, interconnections with the tourism/hospitality sector and the CCS can be essential to drive regional development on Gotland. Not all potential partners from either the creative/cultural or hospitality industry have a clear understanding of the opportunities and possible impacts of collaboration with creative and cultural industries. Elements to support these partnerships can include the strategic exchange of information, regular working sessions and staff exchanges. Furthermore, improving accessibility to sites or events can be essential. For instance, there might be a need to co‑ordinate (public) transportation with the opening times of shops, centres, expositions or concerts, as well as a need to adapt visiting hours to the local context (arrival of cruise ships). This can increase access and attractiveness for audiences. One way to foster this is integrated guest cards that offer access to several sites, reduced transport fees or discounts on products and services from private producers of local agricultural products. There may be a way to offer a reduction on car rentals to ensure people can reach attractions outside of Visby. The positive impact of cultural tourism further depends on the length of stay of visitors. It is therefore important to offer opportunities for leisure and hospitality alongside cultural attraction (OECD/ICOM, 2019[43]).
The CCS also have a specific role to play in innovation ecosystems. They are often highly innovative, creating new products, services, processes and business models. Moreover, they also directly contribute to innovation in other sectors of the economy through collaboration, interdisciplinary research projects and so-called “soft innovation” contributions (i.e. innovations which are primarily aesthetic in nature) across supply chains. For example, video game developers working on projects to develop “serious games” for training airline pilots and surgeons, and visual artists working with health professionals to develop therapeutic strategies such as the provision of cognitive stimuli to Alzheimer’s patients. Especially in a context like Gotland, where training options might be limited, the development of serious games could benefit skills development and be used to help develop needed skills on the island. Alongside these direct contributions to innovation, creativity and culture have important unforeseen external effects (spill-over effects) on economic activities, companies, organisations and communities, as ideas, skills and knowledge developed in the CCS are taken up by other sectors (OECD, forthcoming[39]). Research on rural regions has demonstrated, for instance, that promoting the arts does facilitate innovation in rural regions (Box 3.9).
Box 3.9. Promoting the arts to facilitate innovation in rural regions
Research in the United States (US) has identified the importance of the arts to innovation in rural America. Released in 2015, the Rural Establishment Innovation Survey (REIS) provides data on innovative technologies and practices. Researchers have used REIS to identify how business innovation is different in rural regions as well as how innovation and rural economies interact. The results suggest that the arts do more than simply improve quality of life. In addition to helping firms attract and retain talent, the presence of arts organisations in rural regions demonstrates a strong statistical association with innovation-oriented businesses and economic dynamism.
Arts provide two main benefits for rural communities: improved well-being and increased productivity. According to REIS data, businesses are significantly more likely to be “substantive innovators” if they operate in a rural region with 2 or 3 performing arts organisations at 70%, compared to those with none at 60%. The probability rises to 85% in counties with 4 or more such organisations. Yet, what is unclear is whether the arts are an amenity that attracts creative talent or an enabling factor to increased rates of innovation in rural regions. Whether by attracting or enabling creative talent, promoting the arts is likely to have a positive impact on the capabilities of rural firms.
The presence of performing arts organisations is associated with higher rates of design-integrated businesses in rural economies. Design integration is an important measure of growth because innovation rises with the use of design, allowing businesses to increase market share, enter new markets and export more goods and services. REIS data indicate a business is 49% more likely to be a design-integrated business if located in a region with at least 2 performing arts organisations.
However, not all rural types benefit equally from the presence of an artistic influence. Similar to urban areas, innovation concentrates on “rural creative havens”, which tend to have well-established linkages to cities, a university or natural amenities. Rural regions seeking to promote the arts should therefore consider the complementary policies necessary to make arts organisations successful. For example, rural-urban partnerships, as well as policies to improve transportation and access, can encourage greater arts participation and thereby bolster the impact on businesses (rural arts organisations report that 31% of their audiences travel “beyond a reasonable distance” to attend events).
Source: Wojan, T., D. Lambert and D. McGranahan (2007[44]), “The emergence of rural artistic havens: A first look”, http://dx.doi.org/10.1017/S1068280500009448.
The CCS can also support cross-sectoral and interdisciplinary innovation to fuel economic growth. Cross-industry and interdisciplinary collaboration typically requires greater resources (in regards to both time and money) than projects involving firms from the same industry sector, creating significant barriers for the often-smaller CCS businesses to get involved in such projects. Furthermore, the fact that there is still not enough awareness in other sectors of the potential of the CCS and exactly how they could be used creates additional hurdles (NDPC, 2021[45]). Support for cross-sectoral and interdisciplinary projects involving CCS businesses could significantly bolster existing innovation policy frameworks on the island feeding into work on tourism, education, mining, energy and agriculture.
Possibilities of achieving this type of collaboration are manifold but generally include strategic support for knowledge-sharing and networking activities that are brokered to enable cross-sectoral teams to work to solve specific challenges. A key issue in enabling a bottom-up approach is creating platforms and organising events appropriately in terms of matchmaking and linking with traditional sectors or sustainability initiatives. Hackathons, “meet-ups”, “speed-dating”, etc. are important in this respect both for the public and private sectors. Ideally, CCS actors should be part of the discussion and development of such policies and programmes from an early stage. More information and more than 100 leading case examples for cross-sectoral innovation with creative and cultural industries can be found via the Northern Dimension Partnership on Culture (NDPC) project on “Cross-sectoral co-operation and innovation within Creative and Cultural Industries - Practices, opportunities and policies within the area of the Northern Dimension Partnership on Culture” (NDPC, 2021[46]). The two cluster initiatives on the island as well as the university should be partners in initiating such dialogue platforms for cross-sectoral collaboration. One example of a cross-sectoral innovation hub using CCS is described in Box 3.10.
Box 3.10. Innovation hub at the intersection of the creative and cultural sectors
The FuseBox in Brighton, United Kingdom (UK), connects the CCS with technology and other sectors and is a space designed for digital innovators and creative technologists. The FuseBox provides access to spaces, facilities, opportunities and expertise. It specifically encourages knowledge exchange and practices from the arts, humanities and design with new technologies. The residency programme aims to facilitate interactions and focuses on:
Immersive: Virtual and augmented reality.
Connected: 5G and Internet of Things.
Intelligent: Artificial and computational intelligence.
Data: Big data and data visualisation tools.
The hub also hosts a range of events, programmes and activities. Central to the offer is learning through doing, demonstrating and testing. For instance, it houses the Brighton Immersive Lab, offering access to hardware including virtual reality (VR)-ready PCs, tethered headsets, VR-ready smartphones, a green room, a motion capture suit and depth sensors, and a 5G testbed. The 5G testbed, enables a diverse range of companies to innovate their own application of 5G. As part of this programme small businesses learn more about 5G, enhance their existing products to take advantage of it and develop bespoke products for the technology.
Source: The FuseBox (n.d.[47]), Homepage, https://thefuseboxbrighton.com, accessed march 2022
Boosting games development and gamification on the island is one CCS sector with specific potential on Gotland. It could be used to further diversify the economic landscape and provide points for intersection with other industries. Overall, the video game sector has matured from a niche hobby for enthusiasts to a global, export-oriented industry with creative, cultural and economic significance. Especially during the COVID-19 pandemic, the industry saw an uptake, while many other CCS were struggling. The Swedish game industry has experienced steady growth. The industry has increased turnover in the past decade from EUR 130 million to an incredible EUR 3.3 billion. This is also mirrored by the number of employees in the games industry in Sweden, which increased by 9% in the past year to 6 596 people (Statistics Sweden, 2021[48]). It is estimated that every fourth person in the world has played a game created in Sweden. Gotland has the oldest university track for games development run by Uppsala University Campus Gotland. Alumni from the training are among the founders of a range of game companies including Nexile, Neat Corp, Toadman Interactive and Pixel Ferrets. Most of these companies, however, are not based on the island (Statistics Sweden, 2021[48]).
Game design provides a high value-added good that is seasonally independent. Furthermore, being based largely on a digital market, the gaming industry is also well suited for island geography where physical space is limited and transportation costs high. The local educational programme including an international student body and the excellent broadband connection on Gotland are key enabling factors for the industry already present on the island. To help students to transition into professional game developers after their studies, the island currently lacks targeted business development support and strategic collaboration with the region and its regional development activities. To develop this area further, the island would need a platform for the development of new game studios that educates students about the market, provides meeting places and can help with investment attraction or selling of games. Without the right support infrastructure, Gotland will not be able to compete with regional clusters set up in Norrbotten, Västerbotten and Västernorrland. It is hence important that local stakeholders like the university and the region collaborate on advancing this sector strategically and make use of connection to national-level support. Together, the university and Region Gotland could investigate if there is the potential to setup a larger games cluster on the island.
Concretely, to enable the development of the CCS, and specifically games design, tailored support is needed, as generic business advice often only provides limited usefulness (OECD, forthcoming[39]). An incubator/accelerator track at Science Park Gotland or as part of a more general CCS business hub, focusing on specific challenges for CCS and especially game companies, could support students and business owners. It could help train business competency and investment attraction. CCS-related incubators already exist in other regions and can be an inspiration for this. The closeness to the capital region, where many CCS businesses, especially gamers, are located, might also be leveraged to support peer learning.
Strengthen the bioeconomy and circular economy along with the renewable energy transition
Resource and energy-intensive industries (heavy industries, mining and food systems) characterise many rural economies. They are also the drivers of climate change. To cut emissions, protect the environment and reduce the cost of climate adaptation, it is essential to transition from rural industries to bio-based and circular models. The circular economy refers to a development strategy that allows economic growth by optimising the use of natural resources, minimising environmental pressures, transforming supply chains and consumption patterns and redesigning production systems (OECD, 2020[49]). In the bioeconomy, all inputs are developed and derived from renewable biological resources.4 Transitioning to these models not only reduces the carbon footprint and waste generation but also holds significant potential for boosting sustainable rural development.
Making use of this potential necessitates rethinking business models to become bio-resource oriented and more circular. In the innovation and entrepreneurship sense, a transition to a bioeconomy and circular economy requires transforming business models, supply chains and consumption patterns and redesigning production systems to see waste as resources, while sourcing materials and energy from renewable biological resources, so that withdrawal of finite resources is minimised. Yet, SMEs are often limited in terms of expertise and resources on how to make use of bioeconomy and circular economy opportunities. Furthermore, the transition requires multi-disciplinarity, which is difficult to achieve in smaller SMEs. To advance this transition, policy makers need to set the right support and incentive structures. This includes setting the right legal or financial incentives in domains such as waste management, tendering processes or awareness-raising (OECD, 2020[49]). Implementing sound circular and bioeconomy policies also requires harmonising regulatory requirements and ensuring sufficient policy co‑ordination across different circular economy and bioeconomy sub-sectors such as agriculture, food, forestry, marine, waste and energy (Diakosavvas and Frezal, 2019[50]). A lot of this co-ordination happens at the local level and requires establishing effective governance arrangements.
At the national level, Sweden has a strategy for research and innovation for a bio-based economy as well as a strategy for the circular economy. Published in 2012, the strategy for bioeconomy aims to create a sustainable society, based on the use of raw materials and products from biomass. The strategy deals with many aspects of a shift to a bio-based economy, including new value chains, the central role of ecosystem services, sustainable consumption and recycling. The strategy identifies research gaps and the prerequisites for the development of the bioeconomy in Sweden. This includes the replacement of fossil fuels, more efficient use of by-products and waste products, changing consumption patterns and attitudes, and reaching environmental and socio-economic consequences of increased biomass production (Swedish Research and Innovation, 2012[51]).
In the circular economy strategy, published 2020, the government seeks to provide support and direction for actors in the business sector, the public sector, universities and other HEIs, and civil society, as well as for private individuals who want to realise business opportunities and make conscious choices on the basis of the circular transition. It identifies four focus areas, which shall be supported by action plans to be developed. The focus areas include:
Circular economy through sustainable production and product design.
Circular economy through sustainable ways of consuming and using materials, products and services.
Circular economy through non-toxic and circular material cycles.
Circular economy as a driving force for the business sector and other actors through measures to promote innovation and circular business models.
The strategy specifically mentions that the regions and the municipality of Gotland have the task of drafting, adopting and implementing a regional development strategy that can also include the transition to a circular economy (Government Offices of Sweden, 2020[52]).
Gotland is well positioned for the transition to further advance its bioeconomy and circular economy, alongside its existing renewable energy transition efforts. It is home to a range of sectors that belong to the bioeconomy, including: i) crop and animal production, hunting and related service activities; ii) forestry and logging; iii) fishing and aquaculture; iv) manufacture of food products, beverages, tobacco products; v) manufacture of wood and products of wood and cork; and vi) manufacture of wool textiles (Satistics Sweden, 2018[53]). Furthermore, the geographical and social closeness that the island offers is particularly suitable for circular economy development that relies on material flows and synergies between users. Gotland also faces significant water scarcity issues and conserving water through more circular models can provide an opportunity.
Gotland is already the energy pilot of Sweden. This means that the island is tasked with accelerating the transition into a renewable energy system faster than mainland Sweden and that the island functions as one large testbed. Currently, multiple projects are home to the island. Smartroad Gotland, for instance, is testing a unique solution for seamless charging of electric vehicles travelling on the road. The islands energy centre Energicentrum Gotland is at the centre of the work on energy transition and co‑ordinates, enables, drives and communicates on all activities and offers information and support for energy efficiency improvements in companies and private households. Furthermore, the island is already sourcing renewable energy from solar and wind energy, as well as biofuels, which are used by both industry and transport. For instance, the locally produced biogas allowed the dairy company Arla to replace a large part of their fossil fuel requirements at the local plant with biogas. Still, significant emission reductions will also depend on implementing emission reduction in the local cement plant, which largely exceeds any other industry on the island (see also Chapter 1).
The ambition to be a testbed region for innovations around all aspects of the bioeconomy and circular economy, including the already existing renewable energy projects, could function well for Gotland as one innovation mission to pursue. If Gotland successfully demonstrates it can manage the green transition, not only by reducing emissions but also by saving other resources, especially as it has a large tourism sector, it could become a role model for other regions and islands and contribute to reinforcing local identity and sense of ownership among Gotlanders as a sustainable island. These objectives include a wide variety of actors in the ecosystem (university, private sector, national and regional government, local community development initiatives) and a range of measures that all need to come together as an overall umbrella. To realise this ambition, technological perspectives and research need to be combined with regulatory aspects and framework conditions, and space for experimentation. There are various examples of regions and organisations that successfully transformed themselves into demonstration labs for innovative solutions, by using instruments such as innovation deals, sandboxes and regulation low zoning (Federal Ministry for Economic Affairs and Energy, 2019[54]). Taking different stakeholder perspectives into account seems important, given the entrepreneurial spirit that exists among local communities and start-ups. It is also important to have a clear focus on the testbed ambition in terms of aligning ongoing and future activities and choosing a specific domain and (possible) partners, also given the size and relatively limited capacities of the regional government.
An important step in the right direction in this manner is the planned Industrial Symbiosis Park. It could become the centrepiece of the region’s ambition, once realised. The park is supposed to become a circular economy-based hub where companies will interact both technically and socially in a circular fashion. Currently, possible synergies and exchanges that can develop between companies, industries and urban areas are investigated. The idea is to connect hydrogen storage solutions, common water facilities and waste solutions (Swedish Environmental Research Institute, 2020[55]). As the island moves further towards setting up such a park, establishing contact with successful initiatives in other countries would be highly recommended. One particularly interesting example is GreenLab, located in the Danish town of Skive (Box 3.11).
Box 3.11. GreenLab Skive – The world’s first green industrial park, Denmark
GreenLab is the world’s first rural green industrial park and national research facility. The cluster’s energy is entirely sourced from renewable energy, which powers the local industrial processes. In the industrial park, everything is connected by an intelligent grid of energy and data that lets companies share their surplus energy and resources. Resident companies include green hydrogen production, a waste handling and a recycling plastic and paper facility, a factory producing protein for animal feed from invasive starfishes and different grasses, and a biogas plant closing the loop in the local cattle ranching industry.
The establishment of the cluster created new industries and jobs in a previously merely agricultural area. Their aim is to accelerate research and technology to scale, transforming the way green energy is produced, converted, stored and applied. They also test theories in practice and have made it their goal to find viable green solutions to the world’s biggest challenges.
To establish this cluster, the first step was to engage with local stakeholders, map the local resources and look at the demand opportunities for new resources and value streams to attract private sector investment.
Source: GreenLab (n.d.[56]), Let’s Create a Power Shift, https://www.greenlab.dk/.
Measures to foster Gotland’s transition to a bioeconomy and circular economy could include further promoting cross-industry collaboration on R&D, and SMEs with business development. Universities and research institutes have a central role to play in supporting appropriate research activities. For instance, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), in collaboration with James Cook University and Meat and Livestock Australia, has developed a cost-effective seaweed feed additive called FutureFeed, which uses a variety of Australian seaweed that significantly reduces methane emissions from livestock and has the potential to increase livestock productivity. FutureFeed has been found to reduce the production of enteric methane by more than 99% (Diakosavvas and Frezal, 2019[50]). Examples like this demonstrate, that increased collaboration between the Green and Blue Centres to advance on the path of climate-friendly bioeconomy solutions will be important to enable cross-sectoral symbiosis on the island. Therefore, the collaboration between the Green and Blue Centres with regards to supporting innovation and entrepreneurship around the food industry could be improved.
On the business and household side, the island’s Energy Centrum already offers information and support for energy efficiency improvements in companies and private households. If there is an ambition from the island to extend and also move towards supporting the bioeconomy and circular economy, it should think about complementing the establishing coaching and support on circular economy and bioeconomy. This could include: improving energy and waste efficiency in businesses and across value chains; helping them to minimise waste; saving water and other materials; recycling and reusing materials or waste; while offering green products and services. A particular focus could be placed on the tourism sector, which is an area prone to single-use goods and waste creation. With regards to financing such a possible centre, there seem to be restrictions for the use of tax payer’s money for such services. For instance, municipal taxes are not supposed to be used to finance waste reduction advisory services. To solve this problem, the region would need to find support for the national government to finance such a service or be allowed to loosen the tax regulations. Considering the fact that water is a pressing issue on Gotland and the island has positive experiences with its energy centre, advocating for this to happen might pay off locally.
Gotland faces a demographic challenge to ensure sufficient high-skilled human capital but has a fundamental asset: A university campus
Regional innovation and entrepreneurship require human capital
The positive link between human capital – the knowledge and skills embodied in workers – and income, productivity and growth is empirically well established. For example, education fosters technological progress and increases the ability to absorb innovations but also improves health, letting workers be more productive and live longer lives (OECD, 2015[1]). Consequently, the main asset for any firm, especially SMEs, is its human capital. This is even more important in the knowledge-based economy, where intangible factors and services are of growing importance. The rapid development and renewal of knowledge is a key feature of the knowledge economy. Fast-paced technological change as well as phenomena such as climate change further exacerbate and generate skills shortages or changes to the skills required to keep companies up to date with what is required by customers, business partners and even regulators.
SMEs in rural places, particularly, often struggle to attract and retain skilled and highly qualified personnel or retain and upskill them. In a survey, Gotland’s business owners, many of whom are small, describe difficulties in finding skilled labour and the cost of hiring as the largest barriers to growth (Företagarna, 2018[19]). This often is because, in comparison to large firms, SMEs tend to lack the capacity and networks needed to identify and access talent but also, and sometimes more importantly, they tend to offer less attractive remuneration and working conditions compared to larger firms and therefore have difficulty competing for highly skilled workers (OECD, 2019[16]). On islands, this challenge is further aggravated as the local labour market is geographically small, commuting from the mainland is costly or difficult and firms might tend to poach skilled personnel from each other instead of actually bringing in new labour. Consequently, upskilling local employees and building a local workforce that fits the needs of the local economy is of increased importance for islands such as Gotland.
For the regional government, education and training systems, and skills policies more broadly, are important levers to support entrepreneurship and firm development. They include policies aimed at school graduates but should also cover newcomers, such as migrants, as well as adults who might require developing a different set of skills than older people (OECD, 2015[1]).
Gotland faces three particular challenges with regards to education and skills provision (see also Chapter 1):
Like on many islands, Gotland’s population is ageing and elderly dependency is high and growing. Even with a steady stream of new arrivals, the percentage of the older population (over 65 years) is estimated to rise to around 30% by 2060 and the working-age population (15-64 years) will make up around 55% of the population. As the population ages and the share of elderly people rises, it will be increasingly important for Gotland to upskill workers and ask the population of over 65-year-olds to contribute to economic activities.
Gotland has a low average number of people with post-and upper secondary education, despite having the institutional availability of high schools, vocational training offers and a university present on the island. As Chapter 1 shows, the gap between Gotland and the Swedish average for upper secondary education is -5 percentage points for women and -9 percentage points for men. On the share of people with post-secondary education, the gap is even higher between Sweden and the island and, in contrast to the Swedish average, attainment of post-secondary education has not increased in the past generations. This creates shortages in highly skilled people. Anecdotal evidence suggests that reasons for this include scepticism towards higher education and larger incentives to start working quickly instead of investing in transversal skills.
Sustaining the viability of kindergartens, primary schools and secondary schools will not only depend on the number of children but also on the availability of teachers. It is forecasted that between 2021 and 2030, over 800 positions will need to be filled to meet future needs on Gotland. Compared with other regions, Gotland has the greatest regional recruitment needs based on 2020 teacher staffing. This is also because of significant retirement: on Gotland, more than half of the teaching staff are 50 years or older. This is 10% higher than the Swedish average (Skolverket, 2021[57]). The largest needs exist at the primary school level and in kindergartens. This requires the region to think about ways to replace teachers and attract younger colleagues to take up work – especially in rural communities.
Future-proofing the region through better anticipation of skills needs
Demographic changes and other megatrends require Gotland to have a good understanding of its potential future labour market and skills needs. While the local levels of data are generally good for Gotland, the strategic use of data and insights on skills and the labour market seems to be underutilised, fragmented or short-term focused. Fast technological change and developments such as climate change will require a changed set of skills needs in the future. It is important to prepare for the future in a more comprehensive and forward-looking way and prepare for career transition and professional development as needed.
Future-proofing the labour market can be improved through anticipatory planning and a strategic understanding of which skills are likely to be needed in the next 10 to 30 years. Considerations for this type of planning should include strengthening the evidence base on the current and future demand for skills, including data on retirement levels and the average age in certain professions/industries, jobs at risk of automation, and focused research on digital and data skills and required “green skills” ranging from highly specific requirements in sectors directly supporting the transition to net-zero such as energy, transport, construction, agriculture and manufacturing, through to more generic requirements across all sectors to thrive in a net-zero economy. It could also include a publicly administered employer survey to collect information on skills challenges that employers report both within their existing workforces and when recruiting, the levels and nature of investment in training and development, and the relationship between skills challenges, training activity and business strategy. Existing overarching policy goals set in the regional development strategy and the region’s smart specialisation strategy should also be reflected in such forward-looking planning.
Moreover, such a strategy needs to consider the particular complexities of the island labour market, including small initiatives and non-conventional forms of employment. As discussed earlier, part-time work, temporary contracts and self-employment are common on islands. Within this context, different types of workers and skillsets are emerging and needed, many of whom do not fit into commonly accepted patterns of full-time professions with lifelong careers. For example, island entrepreneurs might hold multiple jobs at different times of the year. This diversity should be reflected in the assessment and might therefore also diverge from national planning that might not feature this speciality.
A suitable tool for engaging in such a strategic skill planning process can be a foresight exercise. Scenario processes, for instance, allow thinking about a range of possible futures and can be a useful opportunity for addressing issues that might otherwise be neglected and for determining pathways of how to respond. Such a process should bring together experts, composed of private, public and civil society stakeholders, to assess potential future skills needs, taking technological advancements and environmental changes as well as innovations currently taking place into account. The process would also allow skills supply needs to be mapped and raised as a crucial strategic issue with employers, strengthening mutual awareness and collaboration, for instance in sharing training capacities. The outcomes should guide both public and private sectors to work hand in hand on their attractiveness and skills provision while involving educational institutions to provide the necessary education.
Apart from getting a better grip of future skills needs, other benefits of such a process could include encouraging local industries to work together on recruitment to the island and avoiding poaching of high skilled personnel on Gotland – a challenge often faced by remote geographies. Moreover, it is important to encourage employers to consider more flexible work models, including offering off-island teleworking (reversing the idea of coming to telework on the island) but also allowing for people to share positions. This way they might have more success in attracting talent. For additional considerations on how to improve regional attractiveness please refer to Chapter 4.
Similar to Gotland, Scotland and the Scottish Isles have set ambitious targets for the net-zero transition. The nation wants to reach the target of zero greenhouse gas emissions by 2045, with a 75% reduction by 2030. Scotland already has many of the skills required to facilitate the transition to a zero-carbon economy. Many of these skills exist across many established sectors, such as energy, engineering, construction and chemical science. Still, with the growing complexity within many roles and the rapidly changing technological environment, the subnational government saw a need for a more collaborative and integrated approach to skills alignment and provision, as the scale and pace of change needed across all sectors will demand a significant realignment of investment in education, training and work-based learning towards green jobs. As a consequence, the Scottish government has set out a Climate Emergency Skills Action Plan (CESAP) described below. While focusing on one specific sector, the approach taken by Scotland could be an interesting inspiration for policy makers on Gotland on how to engage in planning for future skills (Box 3.12).
Box 3.12. Green skills in Scotland
Scotland has developed a Climate Emergency Skills Action Plan (CESAP) that provides new evidence base on the skills needs of a net-zero economy with consideration of demographics, population and the availability of people, specific skillsets and geographies. It identifies potential opportunities for job growth across five broad areas of economic activity and notes priority areas for activity to drive economic change. This way it sets out a clear direction for change skills system and identifies the role that industry, communities and individuals across Scotland will play. The CESAP was published in December 2020 and focuses on the key actions needed over the next five years to 2025.
In the plan three categories of green jobs have been identified, providing a framework against which to gauge likely skills demand and develop and focus interventions when the CESAP moves to its implementation phase. These are:
New and emerging jobs that relate directly to the transition to a net-zero economy, e.g. hydrogen cell technicians, carbon monitoring technicians and urban miners.
Jobs affected by the transition to a net-zero economy that will need enhanced skills or competencies, e.g. architects and environmental consultants.
Existing jobs that will be needed in greater numbers as the result of the transition to a net-zero economy, e.g. insulation installers, energy assessors and designers and multiskilled onsite operatives.
Two important measures defined in the plan are the establishment of a Green Jobs Skills Hub that will cascade intelligence into the skills system on the numbers and types of green jobs that will be needed over the next 25 years and a Green Jobs Workforce Academy. The academy will support existing employees and those who are facing redundancy, to assess their existing skills and undertake the necessary upskilling and reskilling they need to secure green job opportunities as they emerge.
Source: Scottish Government (2020[58]), Climate Emergency Skills Action Plan 2020-2025, https://www.skillsdevelopmentscotland.co.uk/media/47336/climate-emergency-skills-action-plan-2020-2025.pdf.
Raise the level of education and allow for reskilling at an older age
The general education system is well developed on Gotland and offers many opportunities, even in tertiary education (see also Chapter 1). Also, Gotland is in a good position to work on skills development as it has responsibility for both regional development and for upper secondary education. Still, levels of upper secondary and tertiary education and therewith the supply of highly skilled labour are low and below the national average (see Chapter 1 and above). Not finding the right skills can hamper business growth and regional development. It can also put public services under strain as older generations will need to be replaced. In order to upgrade skills levels, two things are important for Gotland:
Getting more young people to complete upper secondary and tertiary education.
Upgrading possibilities for adult education, allowing for re- and upskilling, in a way that is compatible with an island lifestyle where people might have multiple jobs and responsibilities and need to do this part-time.
The usual indicators for pursuing post-secondary education are parental education, household income and students’ academic success. The socio-economic status of parents, for instance, is also known to influence the choice of upper secondary programme, which influences participation in higher education. As in other OECD countries, students without any tertiary-educated parent in Sweden are more likely to follow a vocational upper secondary pathway than a general one (OECD, 2021[59]). The fact that most parents on the island also do not have tertiary education degrees is thus likely to influence young adults’ educational preferences. It also means that youth on Gotland cannot draw on their parent’s experience and have to put more effort into understanding the options available. Furthermore, Gotland seems to have a shortage of study and career guides, with only 17 advisors working for around 7 000 students. Individual-level data on the socio-economic characteristics of students in upper secondary and tertiary education could give a more complete picture of the differences in the socio-economic profile of people accessing and graduating from higher education compared to society at large. These statistics are, however, currently unavailable.
Other reasons for not taking on upper secondary or tertiary education might be linked to the presence of the extractives sector. Extractive industries often well-paid jobs for low-skilled workers, for instance driving trucks or operating heavy equipment. On Gotland, it seems that young men especially do not see the long-term benefit of investing in education. Interviews conducted on the island also suggested that local young people might be drawn to making money quickly without considering that this will make it harder for them to transfer jobs at a later stage or advance with their careers. Others might prefer staying flexible and working a range of small artisanal jobs rather than seeking a more formal education.
Breaking cultural barriers to education is difficult but a range of activities can help steer students toward seeking the benefits of pursuing higher education. Generally, career counselling provides young people with specific advice to make educational, training and occupational choices on an individual basis. Career counselling includes activities that help young people to gather, understand and interpret information and apply it to their own situation, as well as impartial guidance and specialist support to help young people to understand themselves and their needs, confront barriers, resolve conflicts, develop new perspectives and make progress (Covacevic et al., 2021[60]). Specific programmes can include getting a student in contact with alumni who have made the choice to continue their studies and can function as role models. Furthermore, providing support on application and enrolment assistance as well as guidance on courses and pathways can support pupils in making choices that might be different from what they know from their families or peers. One example of how to do this is provided in Box 3.13. The Technical College on Gotland has developed a successful programme for study advice and counselling, which could be replicated for other higher education facilities or even professions. Furthermore, previous OECD reviews of career guidance have concluded the following good practices.
Provide regular opportunities for young people, from primary education onwards, to reflect on and discuss their prospective futures.
Allow students to consider the breadth of the labour market and particular occupations which are of strategic economic importance, newly emerging and/or likely to be misunderstood (such as the skilled trades).
Undertake schoolwide approaches, bringing onboard career guidance specialists but also teachers and school leaders, as well as parents and people in work.
Provide easy access to trustworthy labour market information and advice/guidance from well-trained, independent and impartial professionals in advance of key decision points.
Recognise that the ways in which young people think about jobs and careers are shaped by parental influence, their social background and sense of identity, addressing information asymmetries about specific professions and challenging gender and ethnic stereotyping.
Target young people from the most disadvantaged backgrounds for the greatest levels of intervention.
Ensure that employers, employees and workplace experiences are systematically involved in provision (Mann, V. and C., 2020[61]).
Gotland also needs to do more to allow for lifelong learning opportunities and encourage employers to work strategically to increase the skills of existing staff. This can make changing careers and employment easier. Often, employers operate their local business without understanding the full benefits of participating in apprenticeships and other work-based training opportunities, which enhance the productive capacity of a company while also improving the retention of employees. In many cases, it can be helpful to have employers mentor other firms on the benefits of training. Advertising through social media, job boards or specialist websites are also activities that can be used to get information to employers (OECD, 2015[62]).
OECD research has found that there is a lack of specific employment and training programmes in Sweden, which target SMEs (OECD, 2015[62]). SMEs should be encouraged to provide more upskilling opportunities to their staff and target them specifically at lower-skilled workers, as it is higher-skilled workers who tend to participate in these training opportunities. Employers and workers have a joint role to play in this by supporting a culture of workplace learning. It is important to build on good bottom-up collaboration and networks that already exist. To facilitate the flow of information, Scotland, UK, has developed a rural employers toolkit. It offers practical guidance on training, apprenticeships and placement support for rural businesses across all sectors of the economy. The toolkit can be viewed here. Furthermore, in Northern Ireland, UK, the government established a Skills Solution Service, which consists of a small team of trained “skills advisors” who work with SMEs to provide them with advice on existing skills provision and assist in designing and brokering customised solutions for skills problems faced by employers.
While Gotland has the benefit of already having a university campus on island, a centre like the Pilbara Universities Centre could allow for a broader offer, also connecting to other programmes that are not on offer by the local campus and providing a space for adult education or satellite education and reskilling in collaboration with local industry (Box 3.13).
Box 3.13. Pilbara Universities Centre, Australia
The Pilbara, a fairly remote region in Western Australia, has dedicated itself to promoting and supporting tertiary education in the region for all residents, irrespective of their age or background, providing the opportunity for people to stay in the region longer. A key element of the institution Pilbara Universities Centre is the support service for current and aspiring students undertaking tertiary education within the Pilbara region, especially as a part-time or adult education programme. The centre provides a unique learning environment through which students gain access to educational support, application and enrolment assistance, guidance on courses and pathways, connections with local industry, comfortable and modern facilities to study and connect with other students, as well as administrative and student support.
Source: Pilbara Universities Centre (n.d.[63]), Homepage, https://puc.edu.au/, accesed December 2021
Increasing attractivity for teachers
Many rural areas struggle to attract teachers. This challenge not only affects the regional but also the national level because shortages of newly qualified teachers disproportionally affecting rural areas could result in future rural-urban gaps in quality education. National and regional governments consequently need to work closely together to ensure that incentives for new teachers to come to rural schools are put in place and policies from both the national and regional levels complement each other. When thinking about policy options, these should not only consider monetary levels of compensation in terms of funding but also challenges related to teaching in small and multi-grade classrooms, long travel times and lack of exchange with peers, possibly resulting in feelings of isolation. In this sense, the incentives to become a teacher in a small rural school need to go beyond lump-sum financial aid (OECD, 2022[64]).
Going forward, the regional and national government should align actions and set up a mix of policies that provides additional benefits for new rural teachers. This could include offering full or partial student debt relief to graduates if they move to a rural area. A similar mechanism is already in place in Norway (Box 3.14). The Swedish Rural Affairs Committee has already proposed that the government should investigate whether it should be possible to reduce student debt for those who live and work in 23 municipalities that were identified as having challenges (SOU, 2017[65]). In a subsequent bill (Prop.2017/ 2018: 179), the government stated that further measures need to be taken to facilitate the supply of skills in Sweden’s rural areas. Discussions involving the use of debt relief are currently underway considering delineation of geographical areas as well as employment of resident status. With regards to Gotland and the fact that the municipality is rather large and therefore also diverse, discussions on delineation should consider the differences that exist between living in the larger town of Visby and further away in more rural part of the island. A loan write-down option that is targeted at the broader Gotland municipality might do little in terms of inter-regional differences and would probably need to be complemented by other schemes. In addition, general regional attractiveness, for teachers and other positions, as mentioned in Chapter 4, should also be considered.
Other financial mechanisms could include accommodation support including teachers’ residences. In addition to financial aspects, however, experience-sharing and peer contact are crucial for young teachers and their career choices. Therefore, the region should think about how to set up a community of rural teachers that allows for the needed exchange, between peers but also with more experienced teachers. Other considerations could include more flexible working hours, fewer contact hours per week and/or rotation systems as well as career incentives (e.g. faster progression of the career system for young teachers).
Box 3.14. Reduction or write-down of student loans for moving to rural municipalities in Norway
To encourage graduates to move to rural municipalities, the Norwegian government has introduced a system, whereby graduates can profit from a reduction of their student loans when they move to an approved rural municipality. The Norwegian system of write-downs of student debt is part of a larger regional policy support package (Tiltakssonen) aimed at the northernmost part of Norway, i.e. Finnmark, and the seven northernmost municipalities in Troms County (Nord-Troms). The aim of the schemes is that Finnmark and Nord-Troms will become more attractive for settlement, business and work and thereby contribute to a positive development in the area. In addition to the student loan write-downs, the package also includes reduced income tax, reduced electricity fees and extra child allowance.
The scheme enables a reduction of up to 10% and a limit of NOK 25 000 per year and requires graduates to work and live in the selected municipalities for 12 consecutive months. For primary school teachers, an additional NOK 20 000 are deducted, as a special incentive. As long as people benefit from the scheme, they are also exempt from paying instalments on the loan, just the interest being due.
An evaluation from the Northern Research Institute (Norut) in 2012 points to the positive effects of the measures. They conclude that about 10% of the university students who complete their education use the opportunity to write down student loans. It also showed that, for those who benefitted from tax relief and write-down of student loans, as many as 91% remained in the municipality after 5 years.
Source: Norut (2012[66]), Tiltakssonen for Finnmark og Nord-Troms - utviklingstrekk og gjennomgang av virkemidlene; Lånekassen (n.d.[67]), Reduction of Debt For You in Finnmark and Nord-Troms, https://www.lanekassen.no/nb-NO/Tilbakebetaling/sletting-av-renter-og-gjeld/Sletting-av-gjeld/Finnmark-og-Nord-Troms/.
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Notes
← 1. Biology Education Centre (IBG), Centre for Social Work (Department of Sociology), Department of Archaeology and Ancient History, Department of Art History, Department of Business Studies, Department of Civil and Industrial Engineering, Department of Cultural Anthropology and Ethnology, Department of Earth Sciences, Department of Education (Pedagogy, Didactics and Sociology), Department of English, Department of Game Design, Department of Informatics and Media, Department (Faculty) of Law, Department of Public Health and Caring Sciences (IFV), Department of Scandinavian Languages, Department of Social and Economic Geography, Department of Statistics.
← 3. A municipality’s ranking depends two‑thirds on companies’ survey responses and one‑third on statistics selected by the Confederation of Swedish Enterprise.
← 4. The bioeconomy and circular economy are different but complementary approaches. Their agendas are closely linked, as both highlight resource efficiency, the re-use of resources and more sustainable consumption and production patterns. This is why they are considered together in this chapter. It has to be noted, however, that the bioeconomy is not fully part of the circular economy, as not all biological resource flows, including energy, biomass and foods, are circular. The circular economy strengthens the eco‑efficiency of processes and the use of recycled carbon to reduce the use of additional fossil carbon. The bioeconomy substitutes fossil carbon by bio-based carbon from biomass coming from agriculture, forestry and marine environments. It is possible to have a circular bioeconomy.