Are you thinking of setting up a business in the Nordics? Here are ten reasons why the Nordic region should be your go-to business destination!
The Nordic countries – Denmark, Norway, Sweden, Finland, and Iceland – are fantastic places for savvy investors, and they’ve recently seen a surge in startup activity. This growth is often attributed to their robust welfare systems, outstanding education, and innovative business practices. These nations excel at balancing economic growth and efficiency with strong social bonds, fair income distribution, and a robust job market.
However, one can’t be sure whether this trend will continue into 2023 and beyond due to the current global economic climate. In this article, we’ll understand why you should consider setting up your company in the Nordic Countries.
Powerful Economy
The Nordic countries, comprising Denmark, Finland, Iceland, Norway, and Sweden, boast open and innovative economies that have consistently experienced GDP growth. This impressive economic performance has made these nations highly attractive for businesses. In recent years, their combined GDP has been upward, surpassing $1.6 trillion in 2022.
One of the key factors contributing to this growth is the ease of doing business in the Nordic region. The World Bank’s Ease of Doing Business Index consistently ranks these nations among the top in the world, thanks to their transparent and efficient business regulations. Entrepreneurs benefit from streamlined processes for starting and running companies, minimal bureaucratic hurdles, and robust legal frameworks that protect property rights.
Member of EEA
The Nordic countries, including Denmark, Finland, Iceland, Norway, and Sweden, enjoy seamless access to the European Single Market and numerous trade agreements, greatly facilitating business operations. These nations, collectively known as the Nordic Council, benefit from their membership in the European Economic Area (EEA), ensuring they participate in the Single Market without being EU members. This arrangement opens up a market of over 25 million consumers.
The Nordic countries have also inked various trade agreements with the EU, further enhancing trade relations. In 2020, their combined exports to the EU were approximately €107 billion, with machinery, vehicles, and pharmaceuticals being key exports. Imports from the EU stood at approximately €112 billion, revealing the balanced nature of their trade relations.
This access to the European Single Market and collaborative trade agreements simplifies cross-border commerce for Nordic businesses, fosters economic growth, and solidifies the region’s position as a prosperous and interconnected part of Europe.
Low correlation
Nordic countries, comprising Denmark, Finland, Iceland, Norway, and Sweden, offer a unique advantage for investors seeking diversification in their portfolios. One key factor contributing to their attractiveness is their low correlation with the US equity markets. This means that when the US stock market experiences fluctuations, Nordic markets tend to react differently, resulting in a lower synchronized movement.
Statistically, this low correlation is evident in the data. Over the past decade, the correlation coefficient between the US S&P 500 and significant Nordic stock indices like the OMX Copenhagen 25, OMX Helsinki 25, and OMX Stockholm 30 has consistently remained below 0.5. This indicates a relatively weak relationship between the US and Nordic markets.
Such a low correlation implies a reduced risk for investors. When your investments are spread across assets that move independently, the potential for mitigating losses and achieving more stable returns is higher. This makes Nordic countries an attractive destination for global investors looking to diversify their portfolios and reduce exposure to the volatility of the US equity markets.
Easy business registration
The Nordic countries, notably Norway, have garnered international acclaim for their straightforward and efficient business registration processes. Norway, in particular, stands out as a prime example of ease of doing business. According to the World Bank’s Ease of Doing Business Index, Norway consistently ranks among the top countries globally. In 2022, it held 9th out of 190 countries, a testament to its business-friendly environment.
One key factor contributing to Norway’s business-friendly reputation is its streamlined registration process. Entrepreneurs can establish a business within a few days, often requiring just a single online application. Furthermore, the country has invested significantly in digital infrastructure, allowing smooth online transactions and interactions with government authorities and minimizing bureaucratic hurdles.
In addition to easy registration, Norway offers numerous incentives and tax reliefs to stimulate economic activity. The corporate tax rate, for instance, is competitive, standing at 22% in 2023. Various tax deductions and incentives exist for research and development activities, innovation, and environmental initiatives. These measures aim to attract both domestic and foreign investors, fostering a conducive environment for business growth.
World-class infrastructure
The Nordic countries, including Norway, Finland, and Sweden, boast remarkable infrastructure that makes business a breeze. With its extensive network of well-maintained roads and bridges, Norway has consistently ranked high in global infrastructure rankings.
Meanwhile, Finland’s efficient transportation system and digital infrastructure have played a pivotal role in its business-friendly environment. The country’s 5G coverage exceeds 90%, supporting cutting-edge technology adoption. Sweden, too, offers a robust infrastructure, with one of the world’s highest rates of broadband penetration, forecasted to reach 98% of Sweden by 2023.
The Nordic region’s commitment to sustainability is reflected in its energy infrastructure. For instance, Norway, Iceland, and Sweden generate over 95% of their electricity from renewable sources, reducing operational costs for businesses.
Technology sector
The Nordic countries, comprising Sweden, Norway, Denmark, Finland, and Iceland, are renowned for their strong presence in the global technology sector, driving remarkable business efficiency. With a combined population of approximately 27 million, these nations foster a robust technological ecosystem that encourages entrepreneurship and innovation.
A notable measure of their technological excellence is their impressive internet penetration, with nearly 91% of their population having online access. This widespread connectivity enables businesses to reach a broad online audience. Furthermore, these countries consistently allocate over 3% of their GDP to research and development (R&D), reflecting their commitment to innovation, resulting in a consistent flow of groundbreaking technologies.
Remarkable Banking services
The Nordic countries, including Denmark, Finland, Iceland, Norway, and Sweden, have gained a reputation for their outstanding banking services, which significantly contribute to making business operations easier. These countries consistently rank high in global indices for financial stability and ease of doing business.
One key indicator of their exceptional banking services is their robust digital infrastructure. Over 96% of Nordic countries‘ population has internet access, facilitating online banking transactions. This digital readiness has led to efficient and convenient banking experiences for businesses.
Furthermore, the Nordic countries boast impressive statistics in terms of banking efficiency. For instance, the World Bank’s Ease of Doing Business Index consistently ranks Denmark, Norway, and Sweden in the top 10 globally, with efficient procedures for starting a business, accessing credit, and protecting minority investors.
In addition, the region’s low corruption rates enhance the trustworthiness of its banking systems. For instance, Transparency International’s Corruption Perceptions Index frequently places Nordic countries among the least corrupt nations globally, making them attractive destinations for foreign investment.
Educated and highly skilled workforce
The Nordic countries, including Denmark, Finland, Iceland, Norway, and Sweden, boast a highly skilled and educated workforce, making them ideal locations for thriving businesses. According to statistics, a significant portion of their population holds advanced degrees. For instance, Over 42% of Icelanders aged 25 to 64 hold a tertiary education degree; similar trends are seen in other Nordic countries.
These nations prioritize education, investing heavily in their schooling systems. In Finland, students consistently score at the top in international education rankings. Denmark, Norway, and Sweden are known for their world-class universities, attracting talent from around the globe. The emphasis on lifelong learning ensures that the workforce remains up-to-date with the latest skills and technologies.
Furthermore, their commitment to a high standard of living and social welfare means that employees are well taken care of, resulting in a motivated and productive workforce. Low corruption levels and transparent business practices make it easy for companies to establish and operate in the Nordic region.
English proficiency
The Nordic countries have a remarkable proficiency in English, making business interactions seamless. According to the EF English Proficiency Index, these nations consistently rank among the top in the world for English fluency. For instance, in 2022, Sweden was ranked 7th, Norway 4th, Denmark 5th, and Finland 8th out of 100 countries.
This high level of English proficiency has significant advantages for international business. It allows companies in the Nordic region to easily engage in global trade and partnerships. English is a common language for negotiations, contracts, and communication with international clients and partners, reducing language barriers and facilitating smoother transactions. This linguistic proficiency contributes to the Nordic countries’ strong reputation for being business-friendly and globally connected, attracting multinational corporations and fostering economic growth.
Low crime rates
Nordic countries, including Denmark, Finland, Iceland, Norway, and Sweden, boast exceptional living conditions with low crime rates. These nations consistently rank among the safest in the world. For instance, in 2022, Denmark’s homicide rate was just 0.8 per 100,000 people, while Norway reported a similar rate of 0.54 per 100,000. This starkly contrasts with global averages, emphasizing their secure environments.
In conclusion, the Nordic countries’ exceptional living conditions, low crime rates, and business-friendly environments, supported by impressive figures and rankings, make them desirable destinations for residents and entrepreneurs seeking security and prosperity.
