METRO MONITOR NORTHERN EUROPE 2018 - INVESTMENT PERFORMANCE AND ATTRACTIVENESS IN MAJOR NORTHERN EUROPEAN CITY REGIONS - Copenhagen Capacity
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METRO MONITOR
NORTHERN EUROPE 2018
INVESTMENT PERFORMANCE AND ATTRACTIVENESS
IN MAJOR NORTHERN EUROPEAN CITY REGIONS
September 2018 1
INTRODUCTION
Copenhagen Capacity is a non-profit Too often, we find, benchmarks and try to rectify these lacunae through rigorous
organization established with the sole rankings for various reasons, not least use of the proprietary databases that
purpose to contribute to economic growth in costs and global scope, tend to neglect the Copenhagen Capacity has license to as
the Greater Copenhagen region density of highly innovative city regions in well as of public databases from national
encompassing all of Eastern Denmark and Northwest Europe and feature only two or statistical offices, accessed where
most of Southern Sweden. Its core three of the metropolitan areas here necessary in local languages, and of the, in
business is the attraction of resources – presented (e.g., either Berlin or Amsterdam our opinion, most robust, regularly
foreign companies, capital, and talent – to and either Copenhagen or Stockholm). published, indices out there.
the region, but over the years Copenhagen
Capacity (among other things) in addition Moreover, we find, the results of these We hope to provide a sound,
has been involved in a string of successful studies too often do not present a fair comprehensive yet neutral, knowledge
cluster initiatives. picture of activity levels in each city region base for international decision makers and
relying on the ready availability of data for national and local policy makers alike to
Every year Copenhagen Capacity national or local administrative units of use in their deliberations about future
publishes the Metro Monitor Northern varying size and structure (e.g., counties, investments.
Europe in an attempt to objectively municipalities, or postcode areas) with little
measure and highlight the performance of consideration for, or awareness of, the
Greater Copenhagen as well as of a extent of the actual functional metropolitan
number of comparable metropolitan regions areas (e.g., the Hamburg region extending
within the same geography (namely, into Schleswig-Holstein and Lower Saxony
Stockholm, Helsinki, Oslo, Berlin, Hamburg, or the Copenhagen region straddling the
Amsterdam, and Dublin, but not London or border between Denmark and Sweden).
Vienna, for instance).
With the Metro Monitor Northern Europe we
2
STRUCTURE OF THE REPORT
The Metro Monitor Northern Europe business case structure to describe and For easy reading all data sections are
consists of two major sections. compare business opportunities, costs, and made up of twinned pages containing first a
apparent hassles, uncertainties and risks chart and then a text commenting upon it
The first part of the report looks at the most that may or may not deter a company from as illustrated by pages 10 (chart) and
recent trends in foreign direct investments making an investment. Albeit plain, we find 11 (text) shown in small below.
(FDI) based on data from the fDi Markets this basic model to neatly encapsulate the
database maintained by fDi Intelligence, a fundamental logic behind most investment
division of Financial Times. It offers a decisions and the experience from the
contextual overview of the level and more than 600 investment cases that
direction of global FDI flows before turning Copenhagen Capacity has been involved in
its focus to a more detailed comparison of over the years (obviously no two
investment patterns in the eight Northern investment cases are exactly alike,
European city regions highlighted in this however, exceptions abound!).
publication: Copenhagen, Stockholm,
Helsinki, Oslo, Berlin, Hamburg, To validate our main point – that Northern
Amsterdam, and Dublin. Europe is highly competitive and innovative
and rife with attractive locations to do
The second part of the report instead of business – we also include as an annex to
looking at the investments flowing into each the second part of the report a brief
city region rather looks at the city regions overview of a handful of the most
themselves in order to outline what each recognized country level indices showing
city region reasonably has to offer a that Northwestern Europe across the board
potential investor from a business reads like a summary of the top countries in
perspective. We apply a simple three-tier Europe if not all the world.
3
4
PART 1: INVESTMENT (FDI)
PERFORMANCE IN 2017
THE YEAR IN REVIEW
56
SUMMARY OF INVESTMENT TRENDS
The total number of FDI (greenfield and comprising two out of every three two regions to receive less than 50 projects
expansion) projects in the world increased investment projects. It is notable, however, in 2017. Most of the eight regions saw a
again in 2017 after several years with that investment projects related to transport growing number of projects.
significant decreases following the onset of equipment as well as manufacturing
the financial crisis in 2008. projects made up smaller shares of Metropolitan patterns of investments in
investment projects in Western Europe than general follow the global and Western
Western Europe, North America, and Asia- elsewhere. European patterns with regards to source
Pacific were the sources for nine out of regions, industry cluster activity levels, and
every ten investment projects and also the Although decreasing in 2017, at least in types of business activities. Yet
destination for seven out of every ten part due to the negative impact of Brexit, metropolitan investment patterns by no
investment projects globally in 2017. the number of FDI projects in Northwestern means are identical clearly impacted by,
Compared to previous years Western and Europe (Denmark, Norway, Sweden, among other things, geographical location.
Emerging Europe had particularly good Finland, Germany, the Netherlands, the
years in 2017 while the opposite was true United Kingdom, and Ireland), unlike the
for Asia-Pacific as a destination region. global total, actually has been gradually
increasing for the last decade.
ICT and electronics was by far the most
active industry cluster responsible for Among the eight metropolitan regions,
nearly one out of every five investment Amsterdam received the most investment
projects in the world in 2017 followed by projects in 2017 with more than two
transport equipment while sales offices, hundred, followed by Dublin and then
marketing, and support, manufacturing, and Helsinki, Hamburg, Copenhagen, and
business services were the three most Berlin hovering around a hundred projects
frequent types of business activities each. Stockholm and Oslo were the only
78
GLOBAL FDI FLOWS
9GLOBAL FDI LEVEL SINCE 2008
Notes: Source fDi Markets. Figures include only greenfield and expansion projects, not mergers and acquisitions nor retention projects.
10The total number of FDI projects in the million in 2016. For estimates of the total worth of foreign
world (greenfield and expansion projects direct investments including mergers and
only, thus not including mergers and It is worth noting, however, that the number acquisitions we refer readers to UNCTAD
acquisitions nor retention projects) of jobs created by each project in 2017 is and central bank publications, e.g., the
recorded by fDi Intelligence (a division of estimated for about three out of every four World Investment Report.
Financial Times and owners of the fDi projects shrouding the real number of
Markets database) in 2017 grew by nearly associated jobs in much uncertainty
two percent to almost 13,600. (indeed the share of estimated job figures
in 2008 is even higher: about five out of
This is the second year in a row that the every six projects).
number of investment projects in the world
has grown, albeit slightly, according to fDi Also capital expenditure (capex) figures in
Intelligence figures, following a number of large part rely on estimates as it is rarely
years with more significant declines reported in public statements unless
reaching back with few exceptions to the projects are heavy on bricks and/or
onset of the global financial crisis in 2008 expensive equipment (or concern mergers
and the European debt crisis in 2011. or acquisitions not included here). Truth be
told, the companies themselves in our
While the number of investment projects in experience do not always know the value of
the world grew for the second year in row, a project up front. We consequently refrain
the number of associated jobs surprisingly from reporting further on either measure of
fell in 2017 according to fDi Intelligence FDI activity despite the obvious interest in
figures, after increasing steadily every year knowing these numbers.
from the recent low in 2012 to above two
11DESTINATION REGIONS 2017
Notes: Source fDi Markets. Southern Europe encompasses Spain, Portugal, Andorra, France, Monaco, Italy, San Marino, and Greece. UKIE encompasses United Kingdom and Ireland.
DACH encompasses Germany, Austria, Switzerland, and Liechtenstein. Benelux encompasses Belgium, Luxembourg, and the Netherlands. Nordics encompasses Denmark, Norway,
Sweden, Finland, and Iceland.
12The leading destination regions for FDI in 2017 compared to 2016, but looking at the Benelux (Belgium, the Netherlands, and
2017 by number of projects were Asia- trend in the three year moving average Luxembourg), and the Nordics (Denmark,
Pacific and Western Europe, which (from 2014-16 to 2015-17, evening out Norway, Sweden, Finland, and Iceland)
received about a third and a quarter of all annual fluctuations) all other destination received far more, which at least for the
projects, respectively, or more than three regions than Western and Emerging UKIE – for which the downward trend also
thousand projects each. Europe had worse years in 2017 than in is apparent in the three year moving
2016. average (from 2014-16 to 2015-17) – may
In comparison, Africa and the Middle East be more or less attributable to Brexit
each received about one twentieth of all Looking at sub-regions within Western concerns.
projects, or around six hundred projects Europe, Southern Europe (Spain, Portugal,
each. Andorra, France, Monaco, Italy, San
Marino, and Greece), UKIE (the English-
For most destination regions, the number of speaking countries, the United Kingdom
projects received in 2017 is very close to and Ireland), and DACH (the German-
the three year average (2015-17). However, speaking countries, Germany, Austria,
it is evident that Asia-Pacific has Switzerland, and Liechtenstein) not
experienced better years in recent times, surprisingly received the most investment
while 2017 was an exceptionally good year projects in 2017 given that they encompass
for Western and Emerging Europe (Eastern the five largest countries by population as
Europe, Russia, the Balkans, and Turkey) – well as by gross domestic product.
something which is also reflected in the
yearly changes from 2016 to 2017. But noticeably both UKIE and DACH
received fewer investment projects in 2017
North America likewise had a good year in than in 2016 while Southern Europe,
13SOURCE REGIONS 2017
Notes: Source fDi Markets. Southern Europe encompasses Spain, Portugal, Andorra, France, Monaco, Italy, San Marino, and Greece. UKIE encompasses United Kingdom and Ireland.
DACH encompasses Germany, Austria, Switzerland, and Liechtenstein. Benelux encompasses Belgium, Luxembourg, and the Netherlands. Nordics encompasses Denmark, Norway,
Sweden, Finland, and Iceland.
14Looking at where investments came from in good year receiving investment projects it performance.
2017, the leading source regions for FDI by also initiated many more projects in 2017
number of projects were Western Europe, while Asia-Pacific conversely both had a Interestingly, the apparent drops in the
North America, and Asia-Pacific, which poor year receiving investment projects in numbers of investment projects going into
together accounted for more than nine out 2017 and initiated significantly fewer, UKIE and DACH from 2016 to 2017 are not
of every ten projects, or over 12 thousand something also apparent in the annual apparent in the numbers of investment
projects combined. Of these, Western changes from 2016 to 2017. projects coming out of either of the two sub-
Europe alone was responsible for nearly regions, which both increased significantly
half of all projects, or more than six The significant increase in the number of in 2017.
thousand projects. projects coming from Emerging Europe in
2017 compared to 2016 reflects more of a
The single largest source country by far in return to normal levels from a down year in
2017 was the United States, while the 2016 than an actual uptick in investment
largest source countries in Western Europe projects – in fact, the three year moving
and Asia-Pacific were Germany and the average is negative.
United Kingdom, and Japan and China,
respectively. More than half of all projects in Looking at sub-regions within Western
the world came from one of these five Europe, DACH, UKIE, and Southern
countries. Europe again not surprisingly given their
inclusion of the largest countries in Western
For most source regions, the number of Europe were the largest sources of
projects initiated in 2017 is very close to the investment projects in 2017 although the
three year average (2015-17), but not only order of the countries noticeably is reversed
did Western Europe have an exceptionally to resemble their order of recent economic
15INDUSTRY CLUSTERS 2017
Notes: Source fDi Markets. Other industry clusters encompasses consumer goods, construction, physical sciences, wood, apparel, and related products, tourism, energy, and retail trade
(excl. retail stores).
16The most active industry cluster by far with activity within a range of other industry electronics, e.g., cosmetics, personal care
regards to FDI in 2017 in terms of number clusters including food, beverages, and and household cleaning products, furniture
of projects was ICT (Information and tobacco, creative industries (advertising, and homeware, and household appliances,
Communications Technology, including publishing, broadcasting, etc.), life sciences but also non-store, i.e., internet, retailers)
software and IT services) and electronics (including pharmaceuticals, medical and construction (construction and
(including computers, semiconductors, and devices, biotech, and healthcare), and engineering companies as well as building
electronic and electric components) transportation, warehousing, and storage, construction materials and machinery
followed in descending order by transport all accounting for between five and seven companies, in particular manufacturers of
equipment (in particular automotive and percent of investment projects in 2017, is cement and concrete and of paints) are the
aerospace), professional and financial not big, however. most active together accounting for nearly
services (in particular consultancy and half of the projects in 2017.
outsourcing services as well as office space Looking at the numbers of investment
providers and corporate and retail banking), projects over time, both annual changes
and industrial (primarily machinery, from 2016 and three year moving averages
equipment, and tools). (from 2014-16 to 2015-17) suggest
increasing activity levels within professional
This is also true looking at three year and financial services as well as food,
averages (2015-17) with the only difference beverages, and tobacco and life sciences in
that industrial in recent years has tended to 2017 and decreasing activity levels within
be slightly more active than professional industrial as well as creative industries.
and financial services.
Among the industry clusters grouped under
The gap from professional and financial the other industry clusters header,
services and industrial to the levels of consumer goods (consumer products and
17BUSINESS ACTIVITIES 2017
Notes: Source fDi Markets. Other business activities encompasses education and training, customer contact centres, maintenance and servicing, shared service centres, technical
support centres, extraction, and recycling.
18Sales, marketing, and support was the business services projects all increased investment projects.
most frequent type of investment project in from 2016 to 2017 after several years of
2017 in terms of number of projects decreasing project numbers while the long-
accounting for more than a quarter of all term upward trend in the number of design,
investment projects, or nearly four development, and testing projects stalled at
thousand projects. least temporarily in 2017.
This type of business activity was followed The number of logistics, distribution, and
by manufacturing and business services storage projects meanwhile continued its
respectively accounting for slightly more gradual downward trend in 2017, and the
than and slightly less than a fifth of all number of headquarter projects remained
investment projects. more or less stable, as also evident in the
three year moving averages (from 2014-16
Other types of business activities were to 2015-17).
much less frequent with design,
development, and testing, logistics, Among the business activities grouped
distribution, and transportation, and under the other business activities header,
headquarters each accounting for between most of the decrease apparent from 2016
five and seven percent of all investment to 2017 concerns shared services centre
projects, and research and development projects and education and training projects
accounting for as little as one percent. while the number of maintenance and
servicing projects increased slightly. None
Interestingly, the numbers of sales, of the activities account for much more than
marketing, and support, manufacturing, and one percent of the total number of
19SOURCES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations.
20In all destination regions Western Europe, Finland, and Iceland) stemming from other Canada).
North America, and Asia-Pacific were the Nordic countries in 2017 was 99. But the
three largest source regions in 2017. Nordics only received three percent, and Rather UKIE and North America received a
only initiated five percent, of all investment much higher proportion of investment
This ought not to be surprising given that projects implying an expected number of projects from, and invested at a much
Western Europe, North America, and Asia- projects in the Nordics from other parts of higher rate in, each other than predicted by
Pacific together were responsible for nine the Nordics closer to 18 (three percent of an “even” or proportionate distribution of
out of every ten investment projects in the five percent of about 13,600 projects investment projects, underscoring the
world in 2017. globally, with rounding errors). This is a strong historical linkages between the two
significant difference of nearly 19 standard regions. (In addition, North America
Perhaps more interesting then is the deviations in statistical terms where a invested at a much higher rate in Latin
prominence of inter-regional investment threshold of two or three standard America and Asia-Pacific, and UKIE at a
projects when adjusting for the size of deviations usually is applied as a rule of much higher rate in Southern Europe and
source and destination regions. Comparing thumb to delimit differences likely due to the Middle East.)
the actual numbers of investment projects chance.
to a proportionate scattering of projects
based on the marginal distributions, it is Only UKIE and North America appeared to
evident that all regions receive more break this pattern in 2017, which most likely
investment projects from other countries in can be attributed to UKIE and North
the same region than to be expected. America comprising just two countries, one
of which (the United Kingdom or the United
For instance, the actual number of States) is substantially larger, and the
investment projects in the five Nordic source of substantially more investment
countries (Denmark, Norway, Sweden, projects, than the other (Ireland or
21INDUSTRIES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations. Other industry clusters encompasses consumer goods, construction, physical sciences, wood, apparel, and related products, tourism, energy, and retail trade (excl.
retail stores).
22A somewhat more varied picture is evident order) in 2017. At the same time, the opposite is also true.
when looking at industry cluster activities For instance, all parts of Western Europe
across destination regions. This varied pattern also is brought out when received significantly fewer investment
comparing the actual numbers of projects in relation to transport equipment
While ICT and electronics, by far the most investment projects to an “even” or than the levels of investment activity within
active industry cluster globally in 2017, was proportionate distribution of investment that industry cluster and the size of the
one of the two most active industry clusters projects. There were many more region as a destination would seem to merit
in all destination regions, it was surpassed investment projects in 2016 related to (which is not to say that Western Europe
in numbers of projects by transport transport equipment in Emerging Europe did not receive any investment projects in
equipment in Emerging Europe and Latin and Latin America, as well as in North relation to transport equipment, it clearly
America (two low-cost regions adjacent to America, and many more investment did).
affluent markets) and by financial services projects related to financial services in
in Africa. Africa, as well as in the Middle East, Asia-
Pacific and UKIE, than to be expected.
Moreover, the five most active industry
clusters globally in 2016, ICT and Likewise, the Nordics and UKIE received
electronics, transport equipment, disproportionately high numbers of
professional and financial services, and investment projects in relation to ICT and
industrial were not the five most active electronics, whereas Africa and Latin
industry clusters in any destination region America received a disproportionately high
but DACH (in slightly different order). In number of investment projects in relation to
fact, the five most active industry clusters environmental technology (primarily
differed for all destination regions but the alternative/ renewable energy projects,
Nordics and Middle East (disregarding the here solar farms in particular).
23ACTIVITIES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations. Other business activities encompasses education and training, customer contact centres, maintenance and servicing, shared service centres, technical support
centres, extraction, and recycling.
24Looking instead at business activities, comparing the actual numbers of
sales, marketing, and support, investment projects to an “even” or
manufacturing, and business services were proportionate distribution of investment
the three most frequent types of investment projects. In particular, there were many
projects in 2017 in all destination regions more manufacturing projects in 2017 in
except Emerging Europe where the number Emerging Europe and Latin America, as
of business services projects was well as in Africa, and far fewer in Western
superseded by the number of logistics, Europe and the Middle East than could
distribution, and transportation projects. reasonably be expected.
However, the balance between the three Meanwhile, headquarter projects in 2017
most frequent types of business activities disproportionately were located in North
varied substantially. Thus, almost one out America, UKIE, and Benelux, while
of every two projects in Emerging Europe research and development projects and
and more than one out of every three design, development, and testing projects
projects in Latin America were disproportionately were located in North
manufacturing projects in 2017 compared America, on the one hand, and Asia-Pacific,
to between one out of every four and one on the other.
out of every five projects in Asia-Pacific,
and North America, and little more than one
out of every ten projects in the Middle East
and all parts of Western Europe.
This pattern also is brought out when
2526
METROPOLITAN FDI FLOWS
27NWE FDI LEVEL SINCE 2008
Notes: Source fDi Markets. Figures include only greenfield and expansion projects, not mergers and acquisitions nor retention projects. Northwestern Europe (NWE) encompasses
Denmark, Norway, Sweden, Finland, Germany, the Netherlands, the United Kingdom, and Ireland.
28Switching from global FDI flows to Northern investment projects appears to have been
European and metropolitan FDI, the total steadily decreasing.
number of FDI projects in Northwestern
Europe (Denmark, Norway, Sweden, Job figures too, for what they are worth due
Finland, Germany, the Netherlands, the to the large share of projects with an
United Kingdom, and Ireland) recorded by estimated job value, corroborate that
fDi Intelligence in 2017 declined by nearly Northwestern Europe in general has
two percent to just below 2,700. outperformed the global trend during the
last decade. Thus, fDi Intelligence
In contrast to global FDI flows, this is the estimates that the number of associated
second year in a row that the number of jobs percentagewise has increased by
investment projects into Northwestern twice the global average in Northwestern
Europe has declined, according to fDi Europe since the recent low in 2012.
Intelligence figures, partially reflecting the
negative effects of Brexit on investments It is notable, however, that the average
into the United Kingdom. project size in Northwestern Europe
continues to be no more than 40 percent of
Indeed, over the longer term the opposite is the global average.
actually the case: The number of
investment projects in Northwestern Europe
appears to have been steadily increasing
(although not entirely unaffected by the
financial and European debt crises, of
course) while the global number of
29DESTINATION CITIES TOTAL 2017
Notes: Source fDi Markets and own calculations.
30Together the eight metropolitan regions in Amsterdam, in particular, deviate quite a bit
focus in this report received close to one from the three year averages.
out of every three investment projects in
Northwestern Europe in 2017, or nearly two Overall, 2017 was a good year compared to
out of every five investment projects 2016 for most of the eight metropolitan
outside of the London region (the regions except for Berlin and Oslo (albeit
metropolitan regions as here defined from a small initial number) with Stockholm
extend approximately 1½ hours drive out having experienced the largest growth.
from each main city).
Beyond the geographic scope of the
Among the eight metropolitan regions, present report other significant metropolitan
Amsterdam by far received the most areas in Northwestern Europe as here
investment projects at more than two defined include London as well as
hundred, followed by Dublin with about one Manchester and Edinburgh in the United
hundred and fifty projects, and then Kingdom and Munich, Rhine-Ruhr
Helsinki, Copenhagen, Berlin, and (Dortmund-Dusseldorf-Cologne), Frankfurt,
Hamburg at a similar level somewhat below and Stuttgart, primarily in the Southern
that. Stockholm and Oslo were the only two parts of Germany.
regions to receive less than 50 projects in
2017 with 42 and 11, respectively.
Three year averages (2015-17) do not
substantially alter this division into tiers
although 2017 numbers for Berlin and
31DESTINATION CITIES LARGE 2017
Notes: Source fDi Markets and own calculations. Larger projects defined as projects associated with at least ten jobs, known or estimated.
32Sifting out smaller investment projects with have pronounced start-up initiatives).
less than ten associated jobs using fDi
Intelligence estimates, much the same Yearly changes from 2016 to 2017 as well
picture emerges for 2017 with Amsterdam as changes in the three year moving
ahead of Dublin in front, Copenhagen, averages (from 2014-16 to 2015-17) by and
Helsinki, Berlin, and Hamburg together in a large resemble those regarding the total
tier below that, and Stockholm and Oslo number of investment projects due to the
following suit. Only the gap between large shares of projects with at least ten
Amsterdam and Dublin narrows while the associated jobs. Consequently, 2017 was a
gap between Dublin and the middle group good year for most of the metropolitan
widens. regions except for Berlin and Oslo with
regards to larger projects with Stockholm
In particular, Hamburg, Helsinki, Berlin and experiencing particularly high growth.
Oslo received many smaller investment
projects in 2017 – around 40 (Berlin and
Oslo) to 50 (Hamburg and Helsinki) percent
compared to less than 25 percent in the
other regions and 28 percent in
Northwestern Europe overall – and looking
at three year averages (2015-17) relatively
large shares of projects with less than ten
associated jobs do not appear to be
atypical at least for Hamburg, Helsinki, and
Berlin (incidentally, all three city regions
33DESTINATION CITIES STRAT 2017
Notes: Source fDi Markets and own calculations. Strategic projects defined as headquarter, research and development, and design, development, and testing projects and projects
explicitly serving more than a national market.
34Zooming in instead on strategic investment year averages (2015-17) with the only
projects, here defined as headquarter, change that the share of strategic projects
research and development, and design, in Berlin resembles more the shares in
development, and testing projects and Helsinki and Hamburg than the share in
projects explicitly serving more than a Copenhagen.
national market (this information is not
available for all investment projects), does That being said, the number of strategic
not radically alter the relative positioning of investment projects increased significantly
the eight metropolitan regions although in Helsinki, as well as in Stockholm, in 2017
these projects make up at most half of all compared to 2016 (albeit in both instances
investment projects (and half of all larger from small initial numbers) whereas growth
projects) except for in Oslo. Amsterdam was more modest in Copenhagen and
and Dublin are still in front followed at some negative in Berlin and Hamburg.
distance by a group consisting of
Copenhagen, Berlin, Helsinki, and All eight metropolitan regions saw
Hamburg, and then by Stockholm and Oslo. increasing three year moving averages
(from 2014-16 to 2015-17), however,
It is notable, though, that just a fifth or less indicating that the 2017 drops in Berlin and
of all investment projects in Hamburg and Hamburg may be temporary fluctuations.
Helsinki in 2017 were comprised by
strategic projects as here defined
compared to close to a third in Copenhagen
and Berlin with the third and fourth lowest
shares, and this is true also looking at three
35SOURCES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations.
36The source regions for FDI into the eight was a relatively bigger source of investment the last three years, at best receiving a
metropolitan regions generally mirror the projects for the two Westernmost regions, number of projects proportionate to the
source regions for Western Europe as a Dublin and Amsterdam. relative size of the metropolitan region as a
whole. Thus, in each of the eight regions at destination for, and the relative size of Asia-
least eight out of every ten and typically These regional variations also are evident Pacific as a source of, investment projects,
more than nine out of every ten investment looking at how actual numbers of as in the case of, for instance, Amsterdam
projects the last three years (2015-17) investment projects deviate from an “even” and Hamburg and at worst significantly
came from Western Europe, North America, or proportionate distribution of investment fewer, as in the case of Helsinki and Dublin.
or Asia-Pacific. projects across Northwestern Europe. The
four Nordic metropolitan regions and the This relative lack of investment projects into
Yet source patterns over the last three Northernmost of the non-Nordic regions, the eight metropolitan regions from Asia-
years by no means are identical. The Hamburg, received far more investment Pacific at least in part reflect that larger
Nordics notably was a relatively bigger projects from (other) Nordic countries, the shares of investments from Asia-Pacific
source of investment projects for the for the two Easternmost regions, Helsinki and than from elsewhere are related to
four Nordic regions, Helsinki, Copenhagen, Berlin, far more investment projects from transport equipment and industrial and
Oslo, and Stockholm, as well as for the Emerging Europe, and Dublin, in a sense manufacturing – areas which are not
Northernmost region among the four non- the Westernmost region, far more particular strengths of any of the eight
Nordic regions, Hamburg, and, likewise, investment projects from North America regions (rather these types of investments
Emerging Europe (Eastern Europe, Russia, than to be expected. are disproportionally made in other parts of
the Balkans, and Turkey) was a relatively Germany).
bigger source of investment projects for the Interestingly, however, none of the eight
two Easternmost regions, Helsinki and metropolitan regions by this measure
Berlin. In fact, although not exactly received particularly large numbers of
bordering each other, even North America investment projects from Asia-Pacific over
37INDUSTRIES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations. Other industry clusters encompasses consumer goods, construction, physical sciences, wood, apparel, and related products, tourism, energy, and retail trade (excl.
retail stores).
38ICT and electronics was one of the most accounted for more than one out of every In addition, there were many more transport
active, if not the most active, industry seven investment projects. equipment and environmental technology
cluster over the last three years (2015-17) projects (here wind farms in particular) in
at metropolitan level too, only surpassed in Looking at the regional numbers of Hamburg and many more professional
numbers of projects, and then barely, by investment projects over the last three services projects in Berlin than to be
transport equipment in Hamburg. years compared to an “even” or expected.
proportionate distribution across
What is more, in all eight metropolitan Northwestern Europe, the high shares of
regions except for Hamburg the share of investment projects related to ICT and
investment projects related to ICT and electronics and creative industries are
electronics was higher than the Western somewhat less pronounced being only
European (as well as the global) average significantly higher than to be expected for
ranging between a small third of all Dublin, Stockholm, Amsterdam,
investment projects in Stockholm and a fifth Copenhagen, and Helsinki with regards to
in Berlin. ICT and electronics and for Berlin and
Dublin with regards to creative industries.
Also creative industries was more active in
each of the eight regions than in Western Likewise, by this measure Dublin received
Europe overall accounting for as much as a a disproportionately high number of
fifth of all investment projects in Oslo and investment projects related to financial
Berlin, whereas transport equipment in services and Amsterdam and Hamburg
general was relatively less active than in received disproportionately high numbers of
Western Europe overall except for in investment projects related to
Hamburg where transport equipment transportation, warehousing, and storage.
39ACTIVITIES BY DESTINATION 2017
Notes: Source fDi Markets and own calculations. Deviation measures difference between actual and expected number of projects based on marginal distributions (count) in terms of
standard deviations. Other business activities encompasses education and training, customer contact centres, maintenance and servicing, shared service centres, technical support
centres, extraction, and recycling.
40Over the last three years (2015-17) sales, number of manufacturing projects still Moreover, Amsterdam and Dublin not only
marketing, and support and business exceeded the number of research and received disproportionately high numbers of
services projects by far were the two most development projects. headquarter projects, but also
frequent types of investment projects in six disproportionately high numbers of
of the eight metropolitan regions comprising Comparing actual numbers of investment logistics, distribution, and transportation
two thirds or more of all investment projects projects to an “even” or proportionate projects and ICT and internet infrastructure
in those regions with no other business distribution of investment projects across projects in the case of Amsterdam and
activity accounting for more than a tenth. Northwestern Europe in particular Helsinki, disproportionately high numbers of design,
Amsterdam, Copenhagen, Hamburg, development, and testing projects in the
Only in Dublin and Amsterdam did another Berlin, and Stockholm received fewer case of Dublin.
type of business activity, namely manufacturing projects over the last three
headquarter projects, come close to a years than to be expected while Dublin and
share approaching either of the two, but Oslo received fewer than an “even” share,
even in those two regions sales, marketing but not significantly so.
and support and business services were
the two most frequent types of projects. It is also notable comparing actual numbers
of investment projects to a proportionate
On the other hand, the second most distribution that besides Dublin and
frequent type of business activity globally, Amsterdam, which received
manufacturing, was even less frequent in disproportionately high numbers of
all of the eight metropolitan regions than in headquarter projects, all other regions
Western Europe overall, which already had except Copenhagen received significantly
very low shares of manufacturing projects. fewer headquarter projects.
Nonetheless, in all eight regions the
4142
PART 2: LOCATION
ATTRACTIVENESS IN 2017
METROPOLITAN BUSINESS CASES
43THE NEED FOR A BUSINESS CASE
The second part of the report instead of not outweigh the potential gains and the
looking at the investments flowing into each same business opportunity cannot be
city region rather looks at the city regions realized cheaper elsewhere.
themselves in order to outline what each
city region has to offer a potential investor 3. Any associated hassle, uncertainty, and
from a business perspective. risk should be as small as possible.
Companies invest in a specific location only - Political stability
The business case model applied is simple. if the likelihood of (sustained) success is
However, we believe the fundamental logic acceptable and the same business Hassle, - Ease of doing business
- Ease of hiring and firing
behind most investment decisions can be opportunity cannot be realized elsewhere uncertainty, - Availability of talent
- Availability of services
described as follows: with fewer headaches and/or more
pleasure and gratification. and risk - Airport connectivity
- Quality of living
1. At the heart of every investment is a
business opportunity. Companies invest in In the following, we expound on each
a specific location only if there is a genuine component of the business case
opportunity either to sell something or to considering the elements in the figure.
Costs of - Corporate tax rates
- Labour costs
develop something that may then be operation - Property costs
monetized in that location and/or
elsewhere.
2. The costs associated with the business - Market size
opportunity should be reasonable. Business - Market wealth
- Innovation capacity
Companies invest in a specific location only
if the projected fixed and variable costs do
opportunities - Innovation capital
44SUMMARY OF LOCATION TRENDS
While not the largest markets for selling Stockholm and Berlin, and Amsterdam and Copenhagen and Hamburg.
products and services, the eight Dublin.
metropolitan regions constitute some of the All eight metropolitan regions are in general
most affluent markets in Europe on a per That being said, none of the eight secure and stable and easy places to do
capita basis as well as, for the most part, metropolitan regions are exactly cheap business although German compliance
growing markets. places to do business in Europe although laws may provide some headaches.
with significant variations in the costs of
Moreover, each of the eight metropolitan operation among the eight. In addition, all eight metropolitan regions
regions is ideally suited as a place to rank highly on the availability of general
develop new knowledge, technologies, In particular, labour unit costs tend to be talent from which to hire from as well as on
products, and services, arguably ranking high in an international perspective (but at the availability of global advanced producer
among the most innovative cities in the least in part offset by equally high labour services firms to help with professional,
world and certainly among the most productivity) whereas corporate tax rates creative, and financial matters.
innovative in Europe. with few exceptions are surprisingly
average. More variation exists with regards to the
For instance, WIPO in a recent study put ease of hiring and firing and airport
six of the eight metropolitan regions among In both regards, Dublin is the cost leader connectivity with Copenhagen providing
the 20 highest performing regions in among the eight metropolitan regions while some of the most flexible employment and
Europe with regards to science and Hamburg is the most expensive except redundancy rules in the world and
technology, and Amsterdam, Copenhagen, when considering lower skilled and Amsterdam providing one of the most
Stockholm, and Berlin among the 40 largest unskilled employees where Copenhagen connected regions by air as well as by sea
clusters of inventive activity in the world and Oslo are the most expensive. in Europe.
with Amsterdam just outside the top 10.
On the other hand, office space is most The quality of living is generally high in all
Also venture capital is soaring, not least in expensive in Dublin and least expensive in eight metropolitan regions.
4546
BUSINESS OPPORTUNITIES
47MARKET SIZE
Notes: Source Statistics Denmark (DST), Statistics Sweden (SCB), Statistics Finland (Tilastokeskus), Statistics Norway (SSB), Statistics Netherlands (CBS), Central Statistics Office
(CSO), Eurostat, Orbis/Bureau van Dijk, and own calculations. Percentages show percentage change from 2016 to 2017.
48Considering the eight metropolitan regions Agreement on the European Economic
as places to sell products and services Area). However, three regions, Stockholm,
Amsterdam, both by number of inhabitants Oslo, and Copenhagen, are not members
and number of enterprises, is the largest of the Eurozone, of which only Copenhagen
market encompassing within 1½ hours has a currency pegged to the Euro (albeit
driving distance most of the densely with a fluctuation band).
populated Netherlands including the entire
Randstad metroplex (the combined The number of inhabitants increased
metropolitan areas of Amsterdam, Utrecht, modestly in all eight metropolitan regions
Rotterdam, and the Hague). from 2016 to 2017 and in most cases
slightly faster than the national populations
Next after Amsterdam, Hamburg is the and well above the European average.
second largest consumer market (B2C) and Among the eight metropolitan regions,
the third largest business market (B2B) Stockholm and Dublin experienced the
followed by Berlin (the most populous city) fastest growth in the number of inhabitants.
on the consumer side and itself following
Stockholm on the business side. By both The number of enterprises on the other
measures Copenhagen is the fourth largest hand only increased in Stockholm,
market followed by Stockholm and Berlin Copenhagen, and Amsterdam from 2016 to
respectively. 2017 while it remained more or less stable
in Hamburg, Helsinki, and Oslo, and
Beyond the local metropolitan markets, all decreased in Dublin and Berlin.
eight regions provide equal access to the
European single market (Oslo via the
49MARKET WEALTH
Notes: Eurostat and own calculations. Information at national level. Percentages show percentage change from 2016 to 2017 (not available for gross national income per capita).
50While the biggest market, Amsterdam is not by non-profit institutions and government has exceeded the national averages by
the richest market among the eight for individual consumption (e.g., health and approximately 5 percent).
metropolitan regions on a per capita basis. education services), ranks at the lower end
among the eight regions. Nevertheless, even the least rich market
Whether looking at gross domestic product among the eight metropolitan regions on a
at one end, indicating the overall size of the It should be noted, however, that with few per capita basis still ranks among the most
economy, or consumption expenditure of exceptions, metropolitan GDP as well as affluent in Europe with GDP and household
households at the other end, indicating the household consumption tend to be higher consumption values well above EU
size of private disposable funds, the richest than the national averages here shown due averages.
market by far is Oslo due in large part to to lack of updated regional information. Metropolitan GDP Metropolitan net
the country’s substantial oil and natural gas Thus, available historic data suggest as per capita relative to disposable income
national GDP per per capita relative to
production. much as 20-25 percent higher GDP per capita, 2007-15 national net
capita values in Stockholm, Dublin, and disposable income
Also Dublin has a very high GDP per Helsinki, and 2-5 percent higher household per capita, 2007-15
capita, but the drop-off between gross consumption figures per capita in all the Average Last Average Last
for available for available
domestic product and gross national metropolitan regions except Amsterdam available year available year
income, which subtracts primary income and Berlin. years years
payable to non-resident units (e.g., foreign Copenhagen 97 101 102 102
owned companies), is noticeable and much In fact, only Berlin would appear to have Stockholm 124 125 106 105
higher than in any of the other countries. significantly lower per capita GDP and Helsinki 120 120 106 160
Hence, household consumption household consumption values than the Oslo 88 93 103 102
expenditure per capita in Dublin, and in national averages shown, historically Hamburg 107 105 103 103
particular adjusted individual consumption lagging 10-15 percent behind the national Berlin 85 86 89 88
factoring in the value of services provided averages (in contrast Hamburg historically Amsterdam 102 103 101 100
Dublin 118 124 103 104
Notes: Source Eurostat and own calculations. GDP per capita based
on NUTS3 whereas net disposable income per capita based on
NUTS2.
51INNOVATION CAPACITY
Notes: Source ShanghaiRanking Consultancy, Times Higher Education, QS, National Taiwan University, Leiden University (CWTS), Spanish National Research Council (Cybermetrics
Lab), Cornell University, INSEAD, World Intellectual Property Organization (WIPO), and own calculations. Numbers at end of bars indicate average global rank of highest ranked
university (left-hand side) and European regional cluster rank (right-hand side). Numbers in parenthesis due to highest ranked university being omitted from one or other of six rankings.
52Looking instead at the metropolitan regions regions feature five or more universities
as places to develop new knowledge, listed among the top 500 in one or other of
technologies, products, and services, all the major university rankings published
eight regions rank among the 50 most annually, and Copenhagen and Amsterdam
innovative cities in the world according to feature multiple universities consistently
the annual Innovation Cities Index by listed among the top 200, with the
2thinknow (all are top tier Nexus regions University of Copenhagen having the
led by Amsterdam, Berlin, Stockholm, and highest average rank (58 globally – only
Oslo in the European top 10) and the 70 one other European university outside of
most innovative regions in Europe the United Kingdom, and five other non-
according to the biennial Regional English speaking universities in the world,
Innovation Scoreboard by the European have a higher average rank).
Commission (five of the eight regions
belong to the top Innovation leader tier with Similarly, a recent clustering analysis of
Stockholm and Copenhagen at the very patent filings and scientific publications by
top). WIPO (as part of the most recent Global
Innovation Index publication) put six of the
The strong capacity for innovation is also eight metropolitan regions among the 20
reflected in the number of highly ranked highest performing regions in Europe with
universities in each region and each regards to science and technology, and
region’s share of global patent filings and Amsterdam, Copenhagen, Stockholm, and
scientific publications. Berlin among the 40 largest clusters of
inventive activity in the world with
For instance, six of the eight metropolitan Amsterdam just outside the top 10.
53VENTURE CAPITAL
Notes: Source CB Insights and own calculations. Percentages show percentage change for normal rounds from 2014-16 to 2015-17.
54A related, perhaps more dynamic, measure relatively few deals, indicatively named venture capital activity and that, for
of innovative capacity is the number of “mega-rounds”, account for relatively large instance, many companies founded in
companies in each metropolitan region with shares of the total values implying that Copenhagen will choose to move to
technologies, products, and/or services differences between regions are Stockholm or further abroad at the point of
interesting enough to get venture backing significantly smaller going by the total needing or getting additional funding in
for their further development and value, or average size, of the more frequent order to attract investors.
expansion. and typically much smaller normal deals
(the average normal round ranges in value
By this measure, Stockholm, Berlin and between two million dollars in Amsterdam
Amsterdam provide the most thriving and five million dollars in Dublin).
environments for innovation with close to
eight hundred successful deals to raise Comparing three year moving averages
capital each over the last three years (from 2014-16 to 2015-17), venture activity
(2015-17) according to CB Insights data, both by the number of financing deals and
followed by Copenhagen and then Dublin the total value of all normal rounds
with more than four hundred and close to increased by double digits in Stockholm,
four hundred financing deals, respectively Amsterdam, Berlin and Hamburg, and
(not including exits, i.e., IPOs, mergers, Dublin – outpacing global and European
and acquisitions). averages in most instances – but
decreased in Helsinki, Copenhagen and
By the total value of those financing deals Oslo.
Berlin come out on top followed at some
distance by Dublin and then Stockholm and It should be noted, though, that tax
Amsterdam. It should be noted though that incentives play some role for the level of
5556
COSTS OF OPERATION
57CORPORATE TAXES
Notes: Source OECD, PwC, and own calculations. Percentages show percentage point change from 2016 to 2017.
58It is no secret that Ireland and consequently lower tax rates further out). On the other hand, important exemptions
Dublin has one of the lowest corporate exist to the corporate income tax in some
income tax rates in Europe, fixed at just Statutory tax rates do not tell the whole countries not least what is known as patent
12.5 percent since 2003. story, however. On the one hand, box, innovation box or knowledge
companies are subject to other taxes development box schemes, which under
Perhaps less well known is that corporate beyond the corporate income tax as certain conditions allow companies with
income tax rates in the Nordic countries, exemplified by the total tax and contribution research, development, and innovation
often confounded with high personal rate also including social contributions and activities to significantly lower the tax rate
income tax rates, in reality also are lower labour taxes paid by the employer, property applied to income derived from any
than or at least on par with European and taxes, turnover taxes, and, for instance, resulting intellectual property.
OECD averages after series of tax any municipal fees.
reductions starting in Sweden in 2012 (the In the Netherlands and Ireland, for
corporate income tax rate in Norway is Adding these taxes to the profit tax for a instance, such schemes may reduce the
planned to decrease to 23 percent by model company with 60 employees, corporate income tax to five or six percent
2018). turnover equal to 1,050 times national for all or parts of the income.
income per capita, and a profit rate of 20
The highest corporate income tax rates are percent, total taxes are actually slightly In addition, differences in withholding tax
found in Hamburg and Berlin and vary lower in Copenhagen than in Dublin due to regimes may constitute an important factor
slightly due to the existence of a locally almost no mandatory employer paid social in the attractiveness of each metropolitan
determined trade tax (this also implies that contributions in Denmark whereas the total region from a cost perspective if the
the corporate income tax rates vary within tax and contribution rate suggests that objective is to lower as much as possible
the Hamburg and Berlin metropolitan Stockholm and Helsinki are just as the corporate taxes paid in each country.
regions with a tendency for higher tax rates expensive as Berlin and Hamburg.
close to the core parts of the regions and
59LABOUR COSTS
Notes: Source fDi Benchmark, Towers Watson, and own calculations. Total annual costs include salaries as well as any additional costs (social contributions payable by the employer,
employment taxes, etc.). Percentages show percentage change from 2016 to 2017.
60Also with regards to labour costs Dublin is Europe. Thus, according to fDi Intelligence
the cost leader among the eight and Towers Watson data, a professional, an
metropolitan regions. Depending on the associate professional, and a worker,
type of employee, labour costs including respectively, were approximately 30, 50,
salaries as well as any additional costs and 80 percent more expensive in Dublin
such as employer paid social security than in Ljubljana in Slovenia in 2017
contributions were between a quarter and a (indeed London at the moment appears
third lower in Dublin than in the most cheaper than Dublin due to the weak British
expensive of the eight regions in 2017 pound).
(varyingly Hamburg (managers and
professionals) and Copenhagen and Oslo While labour costs in general are high in all
(associate professionals and workers, eight metropolitan regions, labour costs for
respectively)). the most part increased at modest rates
from 2016 to 2017 if not actually decreased
Next after Dublin, labour costs are lowest in as appears to have been the case in
Helsinki and Stockholm where they were Stockholm, Oslo, and Helsinki (possibly, in
between a fifth and quarter below the most the case of Sweden, as an artefact of a
expensive level in 2017. depreciating Swedish krona).
But none of the eight regions are exactly
low cost destinations in a European context
as labour costs in Dublin across the board
were significantly higher than in even the
most expensive capital region in Emerging
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