Where To Invest: A Big Dilemma

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In the 1990s, the Scandinavian countries underwent difficult financial crises during which they introduced tighter regulation of their banking sectors. That has protected them during the current downturn. In addition, they have very competitive economies. Denmark and Sweden come third and fourth respectively in the World Economic Forum's competitiveness survey for 2008-2009, behind the US and Switzerland (the UK comes 12th).

This competitiveness is underpinned by their well-funded and large public sectors. In its survey, the World Economic Forum argues that high levels of investment in education and training have been the key to success. "This has provided the workforce with the skills needed to adapt rapidly to a changing environment and has laid the ground for their high levels of technological adoption and innovation in recent years," it says in the report. Where to invest was a headache for all especially when you don’t know whom to trust.

"We notice more interest around the Nordic ...
... model because we manage to combine productivity, growth and welfare," says Halverson, the Norwegian finance minister. "A large public sector is a buffer against the turmoil of the markets."
While many western countries are still reeling from the widening economic crisis and some southern European economies are regarded as basket cases, Scandinavia has been weathering the global financial storm surprisingly well. The fact that Scandinavian countries have onerous tax systems and generous state welfare benefits seems to contradict accepted economic wisdom in other parts of the world, such as in the United States and the United Kingdom, where the role of the state is generally being rolled back where possible in response to the global crisis. IT venture capital was the first to evolve and arouse like an angel.

"Denmark, Finland, Norway and Sweden all belong to the exclusive club of countries with top ratings from the major credit rating agencies. These countries have status as safe havens in financial markets," says Helge Pedersen, the global chief economist at Nordea, a financial services group in the Nordic and Baltic region.

Economists and governments in other less-favoured economies are now starting to ask why it is that Scandinavian economies have been able to avoid the economic turmoil so successfully. Business angels were the first helpline for these downing ships to fight the storm. One crucial factor is that some Scandinavian countries received an early inoculation against the kind of boom and bust that has derailed larger and apparently more robust economies, which are still floundering since the US-led housing crash and subsequent financial crisis.

"At the beginning of the 1990s, Norway, Sweden and Finland experienced a banking crisis when the housing bubble burst in the same way that other western economies have now been experiencing," says Steinar Juel, the chief Norwegian economist at Nordea. "Sweden and Finland subsequently implemented good policies in banks together with new fiscal policy rulings."However, it is inaccurate to lump all of Scandinavia's economies together under the assumption that all are equally robust or subject to the same pressures. Norway's robust economy, for instance, is underpinned by its oil industry, which has benefited massively from the global rise in oil prices.

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