Growth package 2014: The government presents a comprehensive Danish export strategy
Denmark is one of the world’s leading export nations. Extensive foreign trade is a path to higher productivity and greater prosperity for Denmark. The government considers one of its core tasks to be strengthening exports and internationalisation by assisting Danish companies in global markets where the Danish government can deliver added value, thereby creating growth and jobs. Today, approximately one in four workplaces are linked to export industries. For many years now, exports have been among the key factors for economic growth and prosperity, employment and stability in the Danish economy.
However, the foreign economic conditions for Denmark are changing. In particular, global growth patterns shifting towards markets outside of Europe presents new challenges and opportunities. A high priority for the government is to contribute to ensuring a stronger foothold for Danish companies in the new growth markets, which in the coming decades are expected to account for 60-70 percent of global growth. It is also crucial for the government to secure the best conditions for Danish companies in the most important traditional export markets, which continue to possess significant purchasing power and, for many Danish companies, serve as a springboard for further exports. Meanwhile, there is increasing demand from developing countries for trade, investment and technology transfer, in addition to the traditional development cooperation. Both developing countries and Denmark stand to gain considerable benefits from increased engagement by Danish companies in developing countries, where Danish knowledge and technology can address local development needs.
In response to the present realities, the government presents its first comprehensive Danish strategy for export promotion and economic diplomacy, which aims to support Danish companies’ export efforts and internationalisation. The strategy will ensure more effective organisation and coordination of the existing export promotion efforts, utilising resources optimally to create value and impact for Danish companies.
The strategy also bolsters economic diplomacy activities throughout the Ministry of Foreign Affairs of Denmark and the government as a whole, providing greater benefits to companies from official Danish support in global markets. The strategy will also ensure that development cooperation activities contribute to laying the foundation for commercial activities where Danish knowledge and technology can deliver solutions for local development needs.
With this strategy, the government will ensure that companies fully benefit from the new growth orientation in the Danish representation structure, to be implemented by the Ministry of Foreign Affairs in 2014. The government will be opening embassies in Nigeria, Columbia, the Philippines, and Myanmar, and a trade commission in Lagos. The new representation structure will provide stronger Danish access to markets with a total population of approximately 300 million people.
As part of the new strategy, an additional DKK 155m will be allocated to export promotion and economic diplomacy efforts in 2015. The strategy includes nine overall measures with a total of 40 initiatives.
The government will:
· Make it easier for companies to navigate through the Danish state’s export promotion programmes by creating a single online port (Eksportguiden.dk).
· Increase the Trade Council’s focus on political and commercial advising and on long-term export and internationalisation programmes for small and medium-sized companies in particular.
· Augment export efforts in growth markets with 15-20 trade promotion staff and enhance efforts in Germany, the United States and Japan.
· Establish a “high value programme” to promote Danish solutions in relation to international projects that can lead to very large orders for Danish companies.
· Bolster economic diplomacy by establishing 17-19 Danish “growth counsellors”, who will be stationed in selected markets to establish cooperation with local authorities, knowledge sharing and capacity building, and to serve as a bridgehead for Danish exports and investment.
· Apportion funds for strategic sector cooperation with other countries’ authorities, which can provide commercial opportunities for Danish companies.
· Give Danish companies better access to support for preliminary explorations of business opportunities in developing countries.
· Extend the Export Loan scheme (ELO) under Denmark’s Export Credit Agency (EKF) an additional 5 years to 2020, giving Danish exporters an opportunity to offer a competitive and comprehensive financing solution for their customers.
· Strengthen smaller companies’ opportunities for participation in international innovation collaborations through the innovation networks’ internationalisation activities.
· Strengthen the programme for joint business promotion through a new partnership with the business community and establish funding for business promotion for Danish companies in developing countries.
· Establish an agricultural investment fund that will contribute to profitable and sustainable projects in agriculture and food processing in developing countries.
· Establish an investment facility in Ukraine that will contribute to promoting growth, employment, and the involvement of small and medium-sized Danish companies in Ukraine.
· Create a new Foreign Economic Forum, with the participation of the business and research communities, to advise the government on how Denmark can best utilise its opportunities in the global markets.
· Strengthen export cooperation throughout the government, including the establishment of an inter-ministerial export coordination group.
Danish exports of goods and services totalled approximately DKK 1,000 billion, equivalent to approximately 55 percent of Denmark’s GDP. Around 725,000 Danish jobs depend on the ability of Danish companies to sell products, services, etc. abroad. Ten percent of the approximately 300,000 Danish companies export. Of these 30,000 exporting companies, approximately 10 percent account for 90 percent of total exports. The 100 largest exporters alone account for approximately 50 percent of total exports. About 75 percent of Danish exports of goods go to European countries and an additional 6-7 percent go to the United States. Only 15-20 percent of exports go to economies outside of the OECD area – the very economies where the bulk of global growth is expected to occur in the coming decades.
The government’s strategy for export promotion and economic diplomacy is a response to the Productivity Commission’s Interim Report on Competition, Internationalisation and Regulation, published in May 2013. The Productivity Commission identified a possible potential for bolstering Denmark’s productivity growth through increased international trade, while also pointing to the lack of a comprehensive overview of the Danish state’s export promotion programmes and their impact. On this basis, the Productivity Commission recommended the introduction of proposals for more efficient organisation and coordination of Danish export promotion efforts.
The Danish state’s export promotion activities constitute about 600 full time equivalents (FTE). Approximately 85 percent of these are based in government institutions and centralised; the Trade Council, under the Ministry of Foreign Affairs of Denmark, accounts for the largest share, with approximately 300 FTE. As Denmark’s national export promotion organisation, the Trade Council’s objective is to create internationalisation and increased exports for the benefit of Danish companies and the Danish economy as a whole. The Trade Council advises approximately 6,000 Danish companies annually on exports and internationalisation. A new “net impact measurement” for the Trade Council for the period 2001-2011 shows continuous growth of 4-8 percent in sales, value added and employment for small companies that have purchased advising services from the Trade Council, in relation to comparable companies. The Trade Council has a self-financing ratio of approximately 25 percent, based on hourly rates (DKK 935) for specific tasks.
In development cooperation, Danida Business offers support for Danish companies’ collaborations with partners in developing countries and support in connection with financing major infrastructure and construction projects in selected developing countries. In addition, IFU, the Investment Fund for Developing Countries, offers advising services and risk capital to Danish companies investing in developing countries, with the objective of contributing to economic and social development in the host countries.
The Trade Council works closely with Denmark’s Export Credit Agency, under the auspices of the Ministry of Business and Growth, operating a joint unit that provides advising on export financing in selected markets.
The Danish state’s export promotion programmes supplementing the Trade Council’s efforts are primarily offered by the Regional Business Development Centres and aimed mostly at small and medium-sized companies. Some regions and municipalities have also established offices abroad that offer internationalisation services.
As an integrated part of the Danish Foreign Service, the Trade Council has operations at 64 representations in 50 countries. The Trade Council’s global organisation comprises 258 commercial advisors – 57 stationed staff and 201 locally employed staff – located at the Danish embassies, trade councils, and the six Danish innovation centres operated in a collaboration between the Ministry of Higher Education and Science and the Ministry of Foreign Affairs of Denmark.