Foreign Direct Investment

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 3.6 billion in 2019 to almost USD 1.2 billion in 2020. In the same year, FDI stocks reached USD 135 billion. Demark is traditionally a net investor, with FDI outflows reaching USD 4.4 billion in 2020. Investments are mostly oriented towards finance and insurance, business services, wholesale and retail trade, manufacturing, real estate and information and communication. FDI stocks are mostly owned by Sweden, the Netherlands, Norway, Luxembourg and the UK. 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). According to the latest figures from OECD, in the first half of 2021 FDI inflows to Denmark totalled USD 3.9 billion, up from USD 2.9 billion in the same period one year earlier.

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. In July 2021, the "Investment Screening Act" entered into force, introducing two alternative screening procedures: a sector-specific mandatory notification (for sectors related to national security and public order) and a voluntary notification for all other sectors.
The Danish business environment is so well developed that the World Bank has ranked Denmark 4th out of 190 countries in its latest Doing Business ranking, one position lower compared to the previous edition, but still the best-ranking country in Europe.