6. Conclusions

The geo-economic shift and resilience in Nordic value chains

The global economy is undergoing a profound structural transition, moving rapidly from an era of deep globalization toward a new phase defined by geopolitical and geo-economic dynamics. This shift is marked by escalating geopolitical tensions and a heightened suspicion regarding the deep dependencies forged through international trade and value chains. Events such as the war in Ukraine, which exposed vulnerabilities in supply chains, and subsequent geopolitical conflicts have dramatically increased the focus on national resilience and economic security.

In this environment, economic tools are increasingly being leveraged to pursue foreign policy objectives – a practice known as geo-economics. This subtle exercise of power includes instruments such as tariffs, trade restrictions, subsidies, and strategic dependency creation, making it difficult to differentiate from regular economic activity. This rise in trade barriers and national industrial state subventions by large countries poses a challenge to the core economic model of the Nordic countries. For these small, open economies, international trade is exceptionally vital, allowing them to overcome the limitations of their domestic market size and achieve specialization and essential economies of scale. A comprehensive understanding of their value chains is therefore crucial for strategic decision-making and ensuring a robust economic future.

Nordic reliance on intermediate goods

A fundamental characteristic of the small Nordic economies is their reliance on imports of intermediate goods – raw materials, components, and other inputs – which is both necessary and economically efficient. Small nations cannot feasibly produce all components required for their sophisticated industries. Across the region, intermediate goods account for a substantial portion of total goods imports. Our results show that Finland exhibits the highest reliance on these imports, whereas Denmark and Iceland show the lowest dependency.

The analysis of sourcing regions reveals a deeply integrated, Europe-centric supply structure. The primary source of intermediate goods for all Nordic countries is other European partners, followed closely by robust intra-Nordic trade, which serves as the second most important source. This strong regional integration suggests a high degree of reliance on European supply chain stability. Beyond Europe, the involvement of major global economies, such as the US and China, is smaller, though variable. Denmark and Norway source relatively more from the US, while China’s supply share remains moderate across the region.

Product-level imports are often highly concentrated, reflecting the specialized needs of national industries. For instance, energy-related products, such as crude petroleum oils, are among the top imports for Denmark, Finland, and Sweden. Conversely, Norway, a significant energy producer, imports considerably less in these categories compared to its neighbors. The high reliance on established European supply corridors requires continuous scrutiny to ensure their resilience. Strategic attention is also warranted for diversifying the sourcing of specific, concentrated critical products. From the policy perspective, the challenge remains that sourcing regions and countries are ultimately determined by individual company decisions.

Identifying and addressing import vulnerabilities

Vulnerability in upstream value chains is tracked using a precise methodology, classifying imports as vulnerable if they simultaneously meet three challenging criteria: high sourcing concentration, significant reliance on non-European supply, and low potential for domestic substitution.

Our results show a stark contrast in vulnerability levels across the region. Norway and Denmark demonstrate the highest exposure. In these countries, vulnerable imports account for 14.5% and 9.4% of total intermediate imports, respectively. In contrast, Sweden (2.6%) and Iceland (1.2%) show much lower vulnerability levels, suggesting more diversified or internally resilient supply chains. A key finding is that the inputs classified as most vulnerable overwhelmingly originate outside Europe, indicating that critical supply chain risks are potentially geopolitical in nature.

The specific geopolitical origins of vulnerability differ geographically across the Nordics. For Denmark and Sweden, the US is the overwhelmingly dominant source of vulnerable goods. Conversely, Finland and Iceland’s major vulnerability exposure lies with China. Norway exhibits a more globally dispersed risk profile, relying heavily on the rest of the World and other BRIC regions for its vulnerable inputs.

Our analysis reveals that vulnerability is frequently concentrated in a small number of critical product categories. For example, Denmark’s vulnerability is largely tied to petroleum products, which constitute a significant majority of its vulnerable imports. For Finland, lithium-ion accumulators represent the largest share of its vulnerable inputs. Strategies should seek to reduce single-country dependencies on major global powers – whether the US or China — for these sensitive materials, which are crucial for industrial stability.

Strategic importance of critical raw materials

Critical raw materials (CRMs) are of paramount strategic importance, underpinning the technological transition toward green energy, digitization, and the defense sector.

The analysis of CRM sourcing reveals severe concentration patterns. Iceland sources over half of its CRMs from China, while Norway demonstrates overwhelming dependency on the rest of the World category. For Denmark, Norway, and Sweden, however, European supply chains (Nordic and other European) secure the majority of these materials. Denmark has the strongest regional sourcing focus, with a significant amount of its CRMs coming from its immediate Nordic neighbors. In contrast, Finland’s sourcing is the most geographically scattered. The specific materials imported are highly specialized; for example, Nickel accounts for over half of Norway's total CRM imports, while Copper is crucial for Finland and Sweden.

It should be noted that our analysis is based solely on the direct imports of CRMs. Consequently, it does not account for imports where CRMs are embedded within more refined parts, components, or other intermediate goods.

Companies are trading, not countries

It is important to note that large companies, defined as those with over 250 employees, are the primary importers of intermediate goods across the Nordic region. These large firms are the key actors managing supply chain risks.

Contribution rates from the smallest companies – those with fewer than ten employees – demonstrate clear variations across the Nordics. This group accounts for only slightly over 6% of total intermediate goods imports in both Finland and Sweden, a share that is significantly exceeded by the contributions observed in Norway and Iceland.

Unsurprisingly, large firms (more than 250 employees) are also the main drivers of goods exports across the Nordics. Sweden and Finland show a particularly high dependency on these large firms for their overall export performance. Conversely, smaller enterprises (fewer than 50 employees) play a proportionally much greater role in the total exports of Iceland and Norway compared to Finland and Sweden.

Export dynamics

Exports are the lifeblood of Nordic economic growth, enabling firms to achieve necessary economies of scale and specialize internationally. This reliance on open markets, however, is being challenged by the current global shift towards geo-economics and protectionism, including significant tariff increases, notably originating from the United States.

For all Nordic countries, Europe remains the main destination for the majority of goods exports. Denmark is exceptional in its reliance on markets outside of Europe, directing a substantial share of its total exports to extra-European regions.

The importance of the US as a destination for exports of goods varies however between Nordics Over 11% of Iceland's goods exports go to the United States, but the corresponding figure for Norway is just under 3.5% (in 2024). The figures for Finland (9.6%), Sweden (9%) and Denmark (7.2%) fall between these extremes.

Compared to other Nordic countries, China is more important destination for Danish and Finnish companies, accounting for 5% of their total goods exports. Furthermore, an additional 4.5% of Finnish goods exports are directed to other BRIC+ countries. These other BRIC+ nations account for close to 5% of Swedish companies’ goods exports. In contrast, both China and the other BRIC+ countries are less significant export destinations for Norwegian and Icelandic companies.