Foreign direct investment (FDI) in Norway

FDI in Figures

Due to the economic crisis triggered by the Covid-19 pandemic, FDI in Norway dropped sharply in recent years: according to UNCTAD’s World Investment Report 2022, FDI inflows were negative both in 2020 and 2021, at minus USD 1.3 billion and USD 1.6 billion, respectively. The country's FDI stock stood at USD 150.2 billion in 2021. Despite the uncertain economic situation, Norway continues to be a major investor abroad, with a total stock of outward FDIs of USD 198.2 billion. The latest data from Statistics Norway show that the main sectors in terms of inward FDIs are mining and quarrying (18%), financial and insurance services (17.8%), manufacturing (12.1%), wholesale and retail trade (9.1%), and real estate (8.3%). In terms of ultimate investing country, the U.S. leads the way with 19.5% of the total stock, followed by Sweden (11.5%), the UK (7%), Denmark and Finland (6.4% each, Statistics Norway). The Norwegian economy is largely based on the petroleum and gas sector. Consequently, the decline in the price of hydrocarbons led to a drop in investment in Norwegian oil companies in recent years. However, the trend reversed due to the ongoing conflict between Russia and Ukraine and the consequences it caused in the energy market (new investments in the gas sector worth USD 672 million were announced in 2022 – FDI Intelligence). Lately, the Norwegian government pension fund has enhanced its efforts to move towards sustainable investments, for example by announcing the divestment of carbon-related assets from its portfolios. According to the latest figures by OECD, in the first six months of 2022 FDIs to Norway totalled USD 3.9 billion, compared to a flow of USD 5.8 billion recorded in the same period one year earlier.

The Norwegian government introduced a new investment screening regime, allowing Norwegian authorities to investigate and block FDI on grounds of national security, national financial stability and autonomy. The decision applies to EU and non-EU investments alike. There are about 8,100 foreign-owned companies in Norway (U.S. State Department). While the country has a small domestic market, it possesses several assets, such as its geographic location in a fertile region, its favoured ties with the United States, its skilled and multilingual population, a modern economy and rich energy resources. Norway has a particularly favourable business climate, and the country ranks 14th out of 82 nations in the Economist Business Environment ranking. It is also ranked at 12th place out of 102 in the 2022 Corruption Perception Index.

What to consider if you invest in Norway

Strong Points

Advantages for FDI in Norway:

• Norway has a very strong economy and encouraging prospects of development. 
• The high value-added sector of information and communication technologies is, for example, very well developed. 
• The public sector is well organised (around a sovereign fund in surplus that can intervene at any time in the economy) and the country has high quality infrastructure. 
• The workforce is highly skilled, multilingual and has one of the highest purchasing powers in the world. 
• As can be seen from its eighth spot in the World Bank ranking of countries where it is easier to do business (Doing Business Norway), the business environment in Norway is very positive and stable. 
• The banking and financial sectors as well as the fiscal and legal framework are also very robust. 
• The country's political environment is democratic, healthy and transparent.

Weak Points

Disadvantages for FDI in Norway:

• Norway's economy is generally not very diversified and is therefore very dependent on the price of oil, and the country has already exceeded the peak of its production (even if new deposits have been discovered). 
• Like any open international economy, it is also very vulnerable to the economic situation of its main economic partners and the impact of the exit of the United Kingdom (Norway's largest export market) on its economy is still difficult to predict. 
• Due to the geographical isolation of certain regions of the country, expenditure in the areas of transport, logistics and telecommunication infrastructure is very high. 
• The country has put in place relatively strict labour laws that accentuate the extremely high wage costs in the country.

Government Measures to Motivate or Restrict FDI

The government maintains an open position towards FDI in Norway. Norway does not offer significant tax benefits to investors (whether foreign or Norwegian), but some benefits, such as lower social security contributions, lower tax rates and additional deductions for individuals apply for investments made in the less populated areas of northern Norway. Existing regulations, standards and practices may slightly favour Norwegian, Scandinavian and European Economic Zone investors.
For more information you can visit the Innovation Norway page, the government agency whose purpose is to help companies offer financing through the Industrial Development Contracts and Research in Norway. 

Special restrictions exist in Norway and apply in the following sectors: 

• Acquisition of waterfalls, rights for power supply and mines
• Acquisition of land, real estate and leases in the long term
• Acquisition of cultivable land and forests
• Purchase of more than 10% of the share capital of a Norwegian financial institution
• Direct investments in exploration and petroleum operations that are licensed by the government

On January 1, 2019, a new law on national security came into force that provides the legal basis for a better evaluation of foreign investment by the government. ‘Target’ businesses are obliged to notify the relevant ministry under which they are regulated.

Bilateral investment conventions signed by Norway

Norway has signed bilateral investment treaties with several countries. A list can be found on the UNCTAD Investment Policy Hub pages dedicated to Norway.