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Denmark is ranked the best country in the world to do business!

Denmark is ranked the best country in the world to do business!

According to an analysis by Forbes from December 2014, Denmark is ranked as the Best Country for Business out of 146 economies around the world. Forbes determined the Best Countries for Business by rating 146 economies on 11 different factors: corruption, property rights, technology, innovation, taxes, freedom (personal, trade and monetary), red tape, investor protection and stock market performance – each factor was equally weighted. The business climate of Denmark is described as being extremely positive. Denmark finished within top 25 in all of the 11 categories and ranked first in both personal freedom and low corruption.

Moreover, the World Bank recently published its 12th annual report “Doing Business 2015, ranking the Best Countries for Business around the world. According to this report, Denmark is ranked as the economy with the fourth most business-friendly regulations out of 189 economies around the world. Doing Business ranks the economies using the Distance to Frontier score (DTF), which is a score that benchmarks economies with respect to the regulatory environment. The DTF score is calculated on behalf of two main types of indicators: those that measure the complexity and cost of the regulatory process (starting a business, construction permits, getting electricity, registering property, paying taxes and trading across boarders) and those that measure the strength of the legal institutions (getting credit, protecting minority investors, enforcing contracts, resolving insolvency and labor market regulations). With a DTF score of 84.20 out of 100, Denmark is a front runner when it comes to creating a business-friendly environment.

Why choose Denmark?

In March 2015, Invest in Denmark published an analysis called “Hvorfor Danmark”, describing what attracts foreign investors to Denmark. The data used for the analysis covered 155 investors from 34 different countries and was performed by an independent consulting agency at the request of Invest in Denmark.

The analysis showed that access to highly professional, technical and commercial competences, as well as a highly qualified workforce was the most significant factor for attracting 80% of the foreign investors. Three out of four investments were within areas where Denmark is well-known for its competences – i.e.: Life Sciences, information and communications technology (ICT), CleanTech and the Maritime sector. Furthermore, 73% of the investors described the well-developed Danish infrastructure (airports, roads and railroads) as a positive influence and 71% emphasized trade access to the rest of Scandinavia and Europe as important. As a result, the Doing Business 2015 report ranked Denmark #7th in regard to the quality of its export/import regulations.

According to the Doing Business 2015 report, the Danish government is a front runner when it comes to creating rules and regulations that facilitate interactions in the marketplace without necessarily hindering the development of the private sector. In the analysis made by Invest in Denmark, investors point to the Danish regulatory system as an important safeguard for businesses, assuring transparency and stability in the market. Actually, the analyses shows that only 50% of investors in 2012 were positive regarding the Danish regulatory system, whereas it was 80% of investors in 2014. This is a trend that is also seen for American investors, who gradually have expressed growing satisfaction with the Danish corporate tax level and business regulations. The so-called business cluster effect, where commercial establishments within a particular field group together in the same location, appears to be of significant influence – especially to American investors. In addition, American investors expect that the relative high Danish salaries will be offset by a highly skilled and productive workforce.