Norwegian FDI in Developing Countries

Investment in developing countries is crucial for accelerating economic growth and achieving sustainable development. This report examines on the potential impact of foreign direct investment (FDI) in developing countries on economic growth, the composition and trends of Norwegian FDI to developing countries over time, the motivations and barriers influencing such investments, and the role of public policy tools in stimulating investment. The report includes a literature review, and empirical analyses of data from international and Norwegian statistical offices, a survey conducted among all NHO members, and interviews with Norwegian companies. 

Norwegian FDI in developing countries is predominantly concentrated in South America and Asia, with significant investments in sectors such as petroleum and manufacturing. Both Norwegian and international FDI in developing countries tend to gravitate towards upper middle-income countries. There has been a significant reduction in Norwegian investments in least developed countries (LDCs) over the last decade, contrasting with international trends where investments in LDCs have more than doubled during the same period. 

The key motivations for Norwegian businesses with FDI in developing countries include proximity to customers, access to raw materials, and lower production costs. However, several barriers, such as informational and relational gaps, risk factors in the host country, and country-specific structural barriers, hinder investments. The report also examines the role of public policy tools in supporting businesses interested in investing in developing countries by addressing these barriers.