Updated at 2021-10-02 10:31:15 UTC
Copenhagen – Denmark is a top innovation and test market and a front runner for new tech solutions. Excellent infrastructure, flexible business conditions and an internationally-minded workforce; just three of the reasons why Denmark is the ideal place for company's service centre.
Denmark is a place at the forefront of technology in a flexible, cost-efficient and low-risk environment and it is a global hub of world-class innovation with talented people, a good education system and a track record of entrepreneurial success.
The level of FDI in Denmark is still far below the country's potential. In addition, due to the effects of the Covid-19 pandemic, FDI inflows have slowed down sharply. According to UNCTAD's 2021 World Investment Report, FDI inflows fell from USD 1.2 billion in 2019 to USD 3.6 billion in 2020. In the same year, FDI stocks reached USD 135 billion. Investments are mostly oriented towards finance and insurance, business services, wholesale and retail trade, manufacturing, real estate and information and communication. FDI stocks are mainly owned by the Netherlands, Sweden, the UK and Luxembourg. FDIs to Denmark often pass through the Netherlands and Luxembourg as transit countries; however, if taking into consideration the country that ultimately controls the investments, the USA are the largest investor (around 30% of total FDIs, according to the Bank of Denmark).
The country's strengths include a highly skilled and multilingual workforce, a flexible labour market, ultramodern infrastructure (telecommunications, transportation, etc.) and attractive tax incentives for companies. On the other end, the internal market is small and vulnerable to external shocks, and the external debt level is high. The Danish government proposed the introduction of an FDI screening scheme for investments in sectors that may pose a threat to national security and public order, which should be discussed in 2021. The business environment is so well developed that the World Bank has ranked Denmark 4th out of 190 countries in its 2020 Doing Business ranking, one position lower compared to the previous year, but still the best country in Europe.
|Foreign Direct Investment||2018||2019||2020|
|FDI Inward Flow (million USD)||1,198||3,587||1,151|
|FDI Stock (million USD)||116,251||121,482||135,125|
|Number of Greenfield Investments*||93||147||58|
|Value of Greenfield Investments (million USD)||1,287||1,216||2,130|
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
|Country Comparison For the Protection of Investors||Denmark||OECD||United States||Germany|
|Index of Transaction Transparency*||7.0||6.0||7.4||5.0|
|Index of Manager’s Responsibility**||5.0||5.0||8.6||5.0|
|Index of Shareholders’ Power***||8.0||7.0||9.0||5.0|
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
Advantages for FDI in Denmark:
Disdvantages for FDI in Denmark: