5. Bridging the Atlantic and Beyond: Destinations of Nordic Exporters

Exports are foundational to the economic growth of the small Nordic countries, providing the necessary scale and opportunity for specialization that their limited domestic markets cannot offer. However, this openness is threatened by the current global shift towards geoeconomics and protectionism, including rising tariffs. Europe remains the central destination for the majority of goods exports across all Nordic nations. Danish companies stand out by directing a substantial portion of their total goods exports to regions outside of Europe.

The importance of the US as an export market varies significantly, being most crucial for Iceland and least significant for Norway. Large companies are the primary drivers of goods exports in all Nordic countries, especially in Sweden and Finland. Conversely, smaller companies play a proportionally greater role in the total exports of Iceland and Norway compared to their Nordic peers.

Exports are vital for Nordic and other small countries because with limited domestic markets, these nations cannot rely on domestic consumption to secure economic growth as much as larger countries.

Exporting allows companies to access a much larger global market, providing the economics of scale necessary for the industries to thrive. In large countries, the domestic market is often large enough to allow companies to obtain these economies of scale without significant sales abroad.

Small countries, however, cannot be world leaders in everything. Through exports, companies gain access to broader markets, which allows them to focus on niche sectors where they have a comparative advantage.

Geopolitics and protectionism

In recent years, geopolitical tensions have increased, leading to a rise in protectionism. The biggest surprise, however, may have come from the United States. The United States has raised and is raising tariffs significantly, which will also hit the Nordic countries.

The importance of the US as a destination for exports of goods varies however between Nordics (Figure 5.1). Over 11% of Iceland's goods exports go to the United States, but the corresponding figure for Norway is just under 3.5%. The figures for Finland (9.6%), Sweden (9%) and Denmark (7.2%) fall between these extremes.

Figure 5.1 The shares of destination regions/countries for Nordic goods exports, % (2024)

Nordics and Europe as exports’ destinations

In all Nordic countries, the majority of goods’ exports go to Europe, including intra Nordic exports. The share is highest in Norway (85.8%) and the lowest in Denmark (64.8%). In Finland, Iceland and Sweden, the corresponding shares are 66.4%, 78.7% and 70.0%, respectively.

Consequently, the regions outside Europe are important destinations for Danish exports since extra-Europe region accounts for more than 35 % of the Danish total exports of goods. In contrast, the extra-Europe region accounts less than 15% of Norwegian goods of exports.

Furthermore, about 19% of Danish exports go to countries beyond the EU, the US, and the BRICS+ regions while the corresponding figure in Finland, Iceland, Norway and Sweden are 14.7%, 7%, 6.8% and 12.3%, respectively.

Exports by firm sizes

Not surprisingly, in all Nordic countries, large firms (at least 250 employees) account for a large share of exports (Figure 5.2). The share of large companies is the highest in Sweden (70.6%) and lowest in Norway (46.5%).

There are also substantial differences across Nordics in the opposite direction meaning the role of smallest companies. In Finland, companies with less than 50 employees accounts for only 9.8% of the total exports of goods. This is substantially less than in every other Nordic country. In Iceland, companies with less than 50 employees export 32.6% of the total exports and in Norway 26.8%.

Figure 5.2 The role of different company sizes in exports of goods, % (2023)

Note: Figures are based on the exports of goods solely excluding service exports. Shares of goods’ exports, broken down by the number of employees (full-time equivalent).

In the context of the US export destination, large companies play a bigger role particularly in Finland (71%) and Sweden (83.5%). In Iceland and Norway, the situation is reversed: large companies have lower shares in the US exports than in the total exports.