One of the main reasons Minnesota companies should consider trade in the Nordic region: The Swedish, Norwegian, Danish, Finnish, and Icelandic economies have expanded in recent years, fueled by technology investments, consumer demand, and a skilled work force. In fact, all five countries ranked in the top 11 worldwide for gross domestic product in 2006, according to the International Monetary Fund. Finland’s gross domestic product sits at the low end of the range for the Nordic countries ($211 billion), with Norway at the high end ($335 billion).

U.S. Ambassador to Denmark James Cain visited Minnesota and attended a breakfast in April as part of a tour with the U.S. ambassadors to Norway (Benson Whitney), Finland (Marilyn Ware), and Sweden (Michael Wood). The U.S. Department of Commerce’s Commercial Service division and the Minnesota International Center, a Minneapolis nonprofit that helps Minnesota companies learn about international opportunities, hosted the event.

Cain said the Scandinavian countries welcome U.S. business. He recounted a visit with business students at a college in Aarhus, Denmark, who told Cain they admired Americans’ tolerance for risk, and a culture that encourages Americans to establish businesses and build wealth.

Although the business climate of the Nordic countries differs from that of the United States—for instance, all Nordic countries have corporate and personal income taxes well above that of American companies and individuals (Denmark’s personal income tax rate can go as high as 65 percent)—some taxes are slated to go down. In Denmark, corporate tax reform was introduced to parliament in 2006, and personal income tax cuts are expected in 2008.

To be sure, the Nordic countries enjoy some of the highest living standards in the world due to generous welfare programs, low unemployment, and stable inflation rates. What’s more, corruption is almost unheard of there. But taxes in the Nordic region “can discourage the accumulation of wealth,” Cain says. “They provide free health care—which is not necessarily better [than the United States’]—and college education and a few other programs, but [tax rates] can hinder business opportunities.”

Still, Denmark and Sweden sit atop the World Economic Forum's Networked Readiness Index for 2006 to 2007, which measures a nation’s preparedness to use information and communication technology for business, regulation, and infrastructure purposes, and the readiness of individuals, businesses, and governments to use the technology. The other three Nordic countries are also in the top 10.

The United States, formally number one in the 2005 to 2006 ranking, has fallen to the seventh position. The World Bank’s “ease of doing business” index ranks all five countries in the top 15. The Danish government’s High Technology Fund, worth $800 million, is slated for technology research.



Growing Markets: High-Tech and Green

During the breakfast panel discussion, the four ambassadors spoke of business opportunities in several Nordic markets, including:

››› Oil and natural gas. Norway recently invested $17 billion in its oil and natural gas industry to produce exports. Companies that provide shipping services and new equipment for oil and gas transport will likely see a boom in business.

››› Green technologies. In the Nordic countries, the demand for energy-conserving technologies for home appliances and other applications is high. Companies are developing alternative fuel technologies such as wind power to feed the consumer demand.

››› Health care. Medical equipment and devices, along with electronic medical records systems, are particularly in need.

››› Telecommunications. Denmark has the highest rate of Internet and mobile phone usage—and a highly skilled IT work force. It’s also considered a good testing ground for new products.

››› Design. Despite the area’s distinctive design industry, Nordic consumers are looking outside the region for home furnishings and décor.

››› Security and defense. Suppliers of disaster-response and telecommunications security software and equipment are needed.

Along with moves to reduce taxes and energy dependence, some Nordic countries are considering reducing job protections so that companies have greater flexibility to hire and fire employees.

The loosening of these rules and tax codes will open more doors to Minnesota businesses. As the students in Aarhus noted, the U.S. entrepreneurial culture and attitude would be welcomed to help drive these expanding opportunities.