International Business and Technology Blog

The term Nordics describes a geographical and cultural region in Northern Europe and the North Atlantic, comprising 5 countries: Norway, Sweden, Denmark, Finland and Iceland.

Much envied with regards to their wealth, open societies, technologies and, of course, well-being. Non-Nordics wonder how do they do it? How does a vast region with just 25 million people, speaking 4 languages, generate a GDP of $850Bn, making them amongst the richest countries in the world and ranking 6th in theEuropean Union (EU) after Germany, the United Kingdom, France, Italy and Spain and they all seem to be so happy?

So let’s enquire of a few well respected commentators for their inside Nordic view. A great place to start with regards to wealth generation is The World Bank’s annual “ease of doing business” ranking report, where “a high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.” There is an acknowledged high correlation between national wealth and this ranking, and guess what, Denmark ranks as #3, Sweden as #8 and Norway as #9, out of 189 countries! The very local communications and logistics services provider Postnord (union of the postal services of Sweden and Denmark) supplies a host of detail regarding online and ecommerce services, where again the region leads. We will also take a look at the Happiness Research Institute which released its most recent edition of the Happiness Equality Index in July 2015. And guess what?...all five Nordic countries appear in the top ten. Questions, questions, questions….

Source: The World Bank; Happiness Research Institute 

In the 20th century, despite two world wars and the Cold War, the Nordics retained their independence and developed as peaceful democracies. Now that is good for wealth generation. Highly industrialised, the Nordics developed their concept of the state as the guarantor of welfare provision, organised labour, trade unions and political parties, played a key role in the development of the economies. Roll on into the 21^st century and those strong underpinnings remain with a further element being foreign trade, heavily inter-dependent and the relationship with large trading blocks, notably Europe, brought significant economic benefits. But the Nordics did not escape the financial crisis, the impact of the global recession and subsequent impacts on growth (see table below). Seven years after the financial crisis, the Nordic economies are still struggling to recover. Finland, Denmark and Iceland suffered most: GDP is only now gettingback to pre-crisis levels. While in Norway and Sweden the downturn was relatively brief, GDP passed above pre-crisis levels by 2010. The oil price had been good for Norway, until recently. As small import and export dependent open market economies, the Nordic countries rely heavily on developments in the global economy, especially in next door Europe. Slow economic growth in Europe has had a significant knock-on effect upon the inter-dependent Nordics.

Source: The World Bank

The World Bank’s criteria for the ease of doing business ranking are as follows: ease of starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Each element is ranked individually and then collated as a whole. Let’s have a look at “trading across borders” where we have Sweden as #4, Denmark #7, Finland #14, Norway #24 and Iceland #39, providing excellent conditions to trade, across borders. The ease of doing international business is exceptional, being based on highly developed and integrated transportation infrastructure, simple documentation formalities and low cost of importing and exporting goods. There is the much praised Nordic maritime transportation system, which provides onward access to multi-modal delivery hubs.

Internet penetration across the Nordics exceeds 96%, the highest in Europe. Buying online is a natural element of consumers’ everyday lives, where 88% have shopped online. There is an exceptional number being that, 7 out of 10 Nordic consumers have shopped online from abroad, this is again the highest in Europe. A part explanation of this is the historical wide use of English, as a second language, facilitating international searching (>90% Google) and buying online coupled with the aforementioned excellent ease of trading across borders. The United Kingdom (25%) and the United States (21%) are the two primary sources of Nordic online international purchases. What are these online Nordics buying? Well, those main online categories loom large: clothing and footwear (19%), home electronics (13%) and cosmetics, hair and skincare (8%). There are some impressive growth numbers, in Q2.2015 Nordic residents spent 23% more online than in Q2.2014. The principle reason given by 92% of Nordic consumers is price. The rise of m-commerce, purchases made on mobile devices, must be noted, the uptake in the Nordics again having been particularly rapid. In Q4.2015, the majority of purchases are still made from a PC, but in the last year, average mobile purchases have risen by 7% from 9% to 16%, with Sweden leading as fully 20% of online purchases are now made using mobile devices.

Finally with this economic richness and strength, shared wealth, open and online economies how happy are the Nordics. Well, it seems very. The Happiness Research Institute (HRI) is an “independent think tank focusing on life satisfaction, happiness and quality of life”, based in, guess where, Denmark. The stated objective is to “explore why some countries, cities, organizations and people are happier than others”. Working collaboratively with many world class institutions including the United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD) and leading experts across many subjects: economics, psychology, survey analysis, national statistics, health and public policy they produce many excellent reports. A recent example is the 3^rd World Happiness Report in April 2015, noting that happiness is now considered a proper measure of social progress and a public policy goal with the Nordics leading the initiative. Drilling down into Europe, the same organisation looking at “happiness distribution within a country” and published the “Happiness Equality Index Europe 2015 Report” in July 2015. Perhaps not surprisingly we find Finland #1, Norway #3, Denmark #4, Iceland #5 and Sweden #8. The HRI tells us that the Nordic countries are often associated with happy news, including: social equality, generous maternity and paternity leave, low crime and free health care. Much of that is supported by the afore discussed wealth, openness, uptake and use of today’s online technologies.

And how happy are you and your fellow citizens?

Would you like to learn more about the Nordics? Join us at our next webinar on November 11th, featuring our Nordic expert guest speaker Heming Bjørnå, Senior Commercial Specialist from the US Commercial Service who lives and works in Oslo, Norway.