Innovation and invention of new technologies are drivers of economic growth.
Introducing a new technology implies that there is a demand for that new technology, while the supply comes at a reasonable cost. The investment needs to be beneficial, that is, either the innovation may not be too costly or the effects must be sufficiently large. Hence, technological progress is endogenously driven by market conditions such as supply and demand as well as by technological conditions such as simplicity and the cost efficiency of introducing the new technology (Jones 2005).
However, public procurement occurs when a public agency places an order for a product or system which does not exist at the time, but which could (probably) be developed within a reasonable period to meet the long-term objective of economic development. This study aims to provide an overall background to public procurement in Sweden: the rules that circumscribe a procurement, how a procurement takes pace and what is procured and by which authorities. The X2000, also called X2, is a tilting train operated by SJ in Sweden.
To situate the case briefly, the procurement of the X2000 occurred during the mid-1980s, culminating the development of proposals, plans and technical preparations for a Swedish high-speed train over a period of some 20 years. Throughout this period, there was close collaboration between the Swedish state railway company, SJ, and the Swedish railway equipment manufacturer, ASES (now ADtranz), in joint research concerning a future HST. The first X2000 tilting train was delivered from ADtranz in 1990.
Since then they have benefited from aggressive marketing, and are credited with saving the Swedish passenger rail network from extinction. While the initial route chosen for X2000 was the main Stockholm-Gothenburg corridor, infrastructure works have subsequently been carried out over the whole of the country’s network to allow all routes to benefit from the success of X2000. However, it is on this main corridor where the most dramatic time savings have been achieved. In 1990, before the introduction of X2000, journey times averaged three hours 45 minutes. Eight years later, these have been cut by one hour. The savings in time have also had dramatic effects on SJ’s market share of Stockholm-Gothenburg traffic. Ridership increased steadily each year, to reach nearly nine million journeys in 1996, giving it almost 80% of the rail-borne market, and representing a ten-fold increase over the first seven years. The X2000 now has over half of the market for all rail journeys between Sweden’s two main cities, and achieved these improvements without the need for lengthy infrastructure works, allowing the benefits to be offered to passengers much more quickly.
The net result in terms of rail passenger transport development is a positive one; passenger-kilometres have increased and the railway has been able to maintain its market share. As this decreased in the 1980s, the 1990s thus represent a trend reversal! In 1999, travel was at record levels and continued to increase in 2000 to 8,300 million passenger kilometres. The X2000 High-speed and fast regional trains account for the major part of the increase. However, one factor which had a negative effect on rail travel was the introduction of value added tax, VAT, on travel in Sweden in 1991. This reduced long-distance travel by 2520% in just two years. As private consumption also decreased at the same time, and unemployment rose, the market was extremely sensitive to price increases. The new VAT affected travel by air and road as well as that by rail. The procurement of the X2000 was not altogether successful as an instrument of industrial policy, due to the train`s failure to win export markets.
The X2000 was not a particularly successful example of innovation policy, because it resulted in little or no radical change to the speed or direction of technical change. The X2000 was not the first high speed train to be developed, nor has it come to be widely used outside Sweden. Overall, SJ`s procurement of the X2000 from ASEA (now ADtranz) must be regarded as a case of “adaptive public technology procurement” rather than “developmental public technology procurement”. One of the main problem faced by the X2000 in capturing a significant share of export markets for high speed trains was simply that of timing. The X2000 was a very late arrival to the international market for high speed trains, and fared poorly. From international perspective, the X2000 procurement slowed down the pace of technological development in Sweden, instead of speeding it up. One of the main causes of this effect was the initial low competence level of SJ, the state railway company, and the length of time it took for SJ to raise its competence to a level where it could function effectively as the “buyer” in procuring a high-speed train for Sweden.
Overall, the X2000 project was a moderate success: It succeeded in technical terms and industrial delivery, and fulfilled its role in increasing the competence of the supplier, ASEA (now ADtranz). However, its conclusion had suffered a lengthy delay, even in terms of the schedule that SJ had originally set for itself. (SJ, 1980:25).