why is denmark's economy so good

Here's the first and most important reason the Danes enjoy such a high quality of life: because of the welfare state and an otherwise activist government that attempts to govern in the interest. Confederation of Danish Industry, 18 June 2018. While workers unions often serve independently between companies in other countries, Denmark strives to unify workers unions for increased negotiation power. On 6 February 2015 the certificates of deposit rate, one of the four official Danish central bank rates, was lowered to 0.75%. Unlike most of its neighbours, Denmark has not had extractable deposits of minerals or fossil fuels, except for the deposits of oil and natural gas in the North Sea, which started playing an economic role only during the 1980s. There are also income transfers to various groups, such as retired or disabled people, unemployed persons, students, etc. 650 f. kr.-1020 Etablering af mntvsen. While unemployment rates have soared across Europe, the official Polish figures have hardly budged, and are the lowest in the EU according to the latest Eurostat figures. The five countries from which Denmark imported most goods and services in 2017 were Germany, Sweden, the Netherlands, China and United Kingdom. Agricultural exports. They result from relatively high levels of social solidarity and taxation, alongside a political and economic system that preserves enterprise, economic autonomy and aspiration. It's Scandinavia's most cost-efficient location with favourable business conditions. The OECD average was 34.2%. Our deaths are again running at more than 2,000 a day. From danmarkshistorien.dk, Aarhus University. Denmark, and to a lesser extent the other Nordic countries, are surfacing in the Democratic debates as examples of relatively equal societies that provide generous benefits for their citizens,. Neither Greenland nor the Faroe Islands are members of the European Union. Enjoy a year of unlimited . A lock ( A locked padlock ) or https:// means youve safely connected to the .gov website. In Spring 2018, the so-called Fiscal Sustainability Indicator was calculated to be 1.2 (by the Danish government) respectively 0.9% (by the Danish Economic Council) of GDP. This flexicurity model allows for businesses to establish. By 1 July 2018, the net foreign wealth or net international investment position of Denmark was equal to 64.6% of GDP, Denmark thus having the largest net foreign wealth relative to GDP of any EU country. The economic role of the public sector increased considerably, and the country was increasingly transformed from an industrial country to a country dominated by production of services. [97] Danish mink farmers claim their business to be sustainable, feeding the mink food industry waste and using all parts of the dead animal as meat, bone meal and biofuel. Maintenance of the fixed exchange rate is the responsibility of Danmarks Nationalbank, the Danish central bank. For example, 80% of participants in the Building Bridge for Education program felt that "the initiative has helped them to move towards completing an education". The tendency toward fewer and larger farms has been accompanied by an increase in animal production, using fewer resources per produced unit. This increase was attributed to both a larger spread in gross incomes and various economic policy measures. This accounts for almost half of all agricultural exports and for more than 5 percent of Denmark's total exports. Denmark has one of Europe's most efficient distribution systems. 10 EU member countries had a lower unemployment rate than Denmark in 2017. The milk quota is 1,142 tonnes. The economy of Denmark is known for its government welfare measures, an equal distribution of income and a high standard of living. George Lakey July 19, 2017 The waterfront district in Copenhagen. English Summary", "SKTRYK: Tax level by national account groups", "LBESK02: EMPLOYEES (MONTH) BY SECTOR (2-GRP)", "Introducing Masters Unemployment Insurance Fund", "konomisk tilskud fra kommunen [financial support from the municipality]", "Sygedagpenge [Social benefits for the sick]", "F overblikket over dagpengereformen [Get an overview of the unemployment benefit reform]", "Table BDF11: Farms by region, unit, type of farms and area. Prescription drugs are inexpensive and free for those under 18 years of age. [93], 63% of the land area of Denmark is used for agricultural production the highest share in the world according to a report from University of Copenhagen in 2017. [120] As of 2015[update], Denmark has no environment tax on electricity. Denmark invests heavily in active labor market policies and the concept of flexicurity has been important historically. Information in English on website of Danish Economic Councils, retrieved 24 November 2018". In 2017, the export of organic products reached DK 2.95billion, a 153% increase from 2012 five years earlier, and a 21% increase from 2016. Similarly, in 2010 Denmark was ranked number one amongst Nordic countries for expenditure on ALMPs.[52]. Waste-to-energy incinerators produce mostly heating and hot water. [97] Approximately 98 percent of the skins sold at Kopenhagen Fur Auction were exported. The Scandinavian country's unemployment rate now stands at an incredibly low 4.3 per cent, which basically means that anyone who is willing and able to work is working. Danish exports to the United States have increased substantially, and in 2020 the United States surpassed Germany to become Denmarks largest export market. For the next decades the Danish economy struggled with several major so-called "balance problems": High unemployment, current account deficits, inflation, and government debt. [14] As value added per person is relatively low, the share of national value added is somewhat lower. Instead, it is a country much like the U.S., where the. Overall activity has all more or less recovered to pre-pandemic levels, and the Danish economy is supported by a strong expansion in private demand. Among which are the high-performing Danish economy, attractive taxation schemes, flexible labour market, and collaborative work culture. Instead of creating policies where the rich can get richer at the expense of the poor, everyone tends to earn about the same amount. After the breakdown of the international Bretton Woods system in 1971, Denmark devalued the krone repeatedly during the 1970s and the start of the 1980s, effectively maintaining a policy of "fixed, but adjustable" exchange rates. [31] However, the Napoleonic Wars caused Copenhagen to lose its status as an international centre of finance and trade. In addition to Denmark proper, the Kingdom of Denmark comprises two autonomous constituent countries in the North Atlantic Ocean: Greenland and the Faroe Islands. [101], Denmark has large proven reserves of oil and natural gas in the North Sea with Esbjerg being the main city for the oil and gas industry. Finanspolitisk holdbarhed. Retrieved on 29 November 2018", "People at risk of poverty or social exclusion", "Gini coefficient of equivalised disposable income EU-SILC survey", "Employment rate by sex, age group 2064", "Table RAS300: EMPLOYED (END NOVEMBER) BY INDUSTRY (DB07), SOCIOECONOMIC STATUS, AGE AND SEX. These reasons cannot be described in a few sentences. The key category driving this increase continues to be chemicals, as one-fourth of Danish exports from this category went to the United States. Why is Denmark so successful? [45] However, inequality has increased during the last decades. Danfoss, headquartered in Nordborg, designs and manufactures industrial electronics, heating and cooling equipment, as well as drivetrains and power solutions. Average per capita income is high in an international context. Another important factor is gender equality, with Denmark ranked second in the EU in . [46] The Danish Economic Council found in an analysis from 2016 that the increasing inequality in Denmark is due to several components: Pre-tax labour income is more unequally distributed today than before, capital income, which is generally less equally distributed than labour income, has increased as share of total income, and economic policy is less redistributive today, both because public income transfers play a smaller role today and because the tax system has become less progressive. Retrieved on 23 November 2018". Within animal husbandry, it includes dairy and beef cattle, pigs, poultry and fur animals (primarily mink) all sectors that produce mainly for export. Its score is 0.4 point lower than last year. This attrition can be very costly, with new and old employees requiring half a year to return to old productivity levels, but with attrition bringing the number of people that have to be fired down. In 2000, the Danish government advocated Danish EMU membership and called a referendum to settle the issue. However, these countries still suffer from. Denmark is the easiest place in Europe to do business*. The welfare system related to the labor market has experienced several reforms and financial cuts since the late 1990s due to political agendas for increasing the labor supply. Why is Denmark's economy so good? robotics: the country prides itself on the prime robots . Brief from Danske Bank, published 24 March 2014. Prior to a government-mandated culling during the COVID-19 pandemic, Denmark was the world's largest producer of mink furs, with 1,400 mink farmers fostering 17.2million mink and producing around 14million furs of the highest quality every year (see mink industry in Denmark). The Krone is issued by the central bank of Denmark (Danmarks Nationalbank) and this video explores whether or not is has done a good job.WANT TO HELP ME PROD. You Will Work Less. In 2017, 78.8% of all 15-to-64-year-old people were active on the labour market, the sixth-highest number among all OECD countries. But most Danes will tell you that they are happy to pay taxes because they can see what they get in return. OECD statistics, retrieved 23 November 2018", "Eurostat Employment and Unemployment Database, Table une_rt_a. There exists national accounting data for Denmark from 1820 onwards thanks to the pioneering work of Danish economic historian Svend Aage Hansen. New cars are taxed by means of a registration tax (85% to 150%) and VAT (25%). This system requires a paying membership of a state-recognized unemployment fund. The first half of the century was marked by the two world wars and the Great Depression during the 1930s. Scandinavian countriesspecifically, Norway, Sweden, Denmark, and Finlandare perceived as socialist because their citizens pay very high income taxes. [31] Parallelly industrialization took off in Denmark from the 1870s. In an international context, a relatively large proportion of the population is part of the labour force, in particular because the female participation rate is very high. Website of Ministry of Finance, Denmark. Export of dairy products accounts for more than 20 percent of the total Danish agricultural export. Finland has been the world's happiest country for four years running; Denmark and Norway hold all but one of the other titles (which went to Switzerland in 2015). P. 146. [62] Service exports were dominated by freight sea transport services from the Danish merchant navy. With a turn-out of 87.6%, 53% of the voters rejected Danish membership. Its score is 0.4 point lower than last year. Denmark's active labour market policies particularly focus on tackling youth unemployment. American firms are also notably present in business and financial services, pharmaceuticals, and offshore oil and gas exploration and production. The most notable cooperative societies today includes the agricultural coop of Dansk Landbrugs Grovvareselskab (DLG), dairy producer Arla Foods and the retail cooperative Coop Danmark. Whereas in 1980 annual inflation was more than 12%, in the period 20002017 the average inflation rate was 1.8%. The Danish model of higher taxation and a more comprehensive, free, welfare state has both a cost and a benefit. For more than 100 years the production of pigs and pig meat was a major source of income in Denmark. [87] A person that is not a member of an A-kasse cannot receive unemployment benefits. Since the 19th century Denmark has gone through an intense technological and institutional development. "Danske minkfarmere [Danish Mink Farmers]", "Danfoss Rejsen mod Engineering Tomorrow", "Danish Grundfos the world's largest pump group", "Table NABP69: 12.1.1 Production and generation of income (69-grouping) by transaction, industry and price unit. Read More About DenmarkDenmark's economic freedom score is 77.6, making its economy the 9th freest in the 2023 Index. U.S. Department of Commerce [122] It has integrated fluctuating and less predictable energy sources such as wind power into the grid. Unemployed persons are defined as those who are not currently working but are willing to do so and actively searching . The krone and re were introduced in 1875, replacing the former rigsdaler and skilling. Denmark is an example of the Nordic model, characterized by an internationally high tax level, and a correspondingly high level of government-provided services (e.g. [54] This is combined with education, skill development and work training programs. But, in fact, Denmark, separated from Sweden by a bridge, has been far more successful: Denmark's death rate from Covid-19 per million people is less than one-third of Sweden's, and . Within the technology / ICT sector, there are a few specific areas in which Denmark stands out: audio and sound technology: Denmark is a global leader in the audio and sound technology industries, with many internationally recognized brands such as Bang&Olufsen, Brel & Kjr, and Oticon. By September 2018, 831,000 people worked in the general government sector, corresponding to 29.9% of all employees. Unlike in most Western countries there is no legal minimum wage in Denmark. Denmark houses a number of significant engineering and high-technology firms, within the sectors of industrial equipment, aerospace, robotics, pharmaceutical and electronics. [26], In international comparisons, Denmark has a relatively equal income distribution. It's a great place for families - it has 16 months of parental leave and free day care services - it invests in green living, has favourable economic growth, is a safe country for women, has transparency in the media and last, but by no means least - it's a beautiful country. Vestforbrnding in Glostrup Municipality operates Denmark's largest incinerator, a cogeneration plant which supplies electricity to 80,000 households and heating equivalent to the consumption in 63,000 households (2016). During the 2000s, a challenge was perceived to government expenditures in future decades. [57], Altogether, total employment in 2017 amounted to 2,919,000 people according to Statistics Denmark. Top Personal Income Taxes. The global Great Recession during the late 2000s, the accompanying Euro area debt crisis and their repercussions marked the Danish economy for several years. The most notable companies include: Many of the largest food producers are also engaged in biotechnology and research. Denmark has a competitive economy and ranks #1 on the IMD World Competitiveness Ranking 2022. . Date 2 November 2015. However, most are more than happy to pay this, because they get a lot of benefits in return. The reasons that make Denmark's economy so successful are a very developed infrastructure, an efficient workforce and an advanced welfare system. American-owned firms play an important role in Denmark. The number of dairy farmers has reduced to about 3,800 with an average herd size of 150 cows. elderly or unemployed people) amounted to 16.8% of GDP. 126, 23 March 2018. However, we tried to offer the most important of them: 1st reason: One of the hallmarks of the Nordic countries is the combination of large area and small number of people living there. [70], Inflation in Denmark as measured by the official consumer price index of Statistics Denmark was 1.1% in 2017. Date 6 October 2006". American Mink are now widespread in Denmark and continues to cause problems for the native wildlife, in particular waterfowl. The announcement of a consistent and hence more credible fixed exchange rate in 1982 has helped reducing the inflation rate. 16001917. [50] Denmark has one of the highest expenditures on ALMPs and in 2005, spent about 1.7% of its GDP on labour market policies. Date 9 February 2015. According to the World Bank, gross national income per capita was the tenth-highest in the world at $55,220 in 2017. a combination of labour market flexibility and economic security for workers. Denmark is a high-income, modern society with state-of-the-art infrastructure and distribution systems, a highly skilled labor force, and a central location that makes it an excellent distribution point for the Scandinavian, Northern European, and Baltic markets. Looking good despite it all (photo: Pixabay/ASSY) Denmark's economy is forecast to be the second best performer as the EU emerges from the Coronavirus Crisis, according to the European Commission. Members of an A-kasse are not obliged to be members of a trade union. In December, Denmark's . In 2012, the Danish parliament passed a Budget Law (effective from January 2014) which governs the over-all fiscal framework, stating among other things that the structural deficit must never exceed 0.5% of GDP,[72] and that Danish fiscal policy is required to be sustainable,[73] i.e. Data retrieved 25 November 2018", "Denmark. Kapitel III i De konomiske Rds Formandskab: Dansk konomi, efterr 2016. The Copenhagen Malm Port was also formed between the two cities as the common port for the cities of both nations. Small enterprises are dominant. Washington, DC 20230. ", "Scope affirms Denmark's AAA rating with Stable Outlook", "Gross national income per capita 2017, Atlas method and PPP", "Danish Economic Council: Danish Economy Fall 2016. While each country has its own unique market and characteristics, there are certain synergies that tie together these highly innovative marketplaces. Denmark's economic freedom score is 77.6, making its economy the 9th freest in the 2023 Index. Retrieved on 28 November 2018", "Country Comparison: Distribution of family income Gini index", "Costs and benefits of Danish active labour market programmes", "Denmark a Nordic Welfare State Are the Active Labour Market Policy Withering Away? [41] Instead, issues like decreasing productivity growth rates and increasing inequality in income distribution and consumption possibilities are prevalent in the public debate. The claim that Denmark is ranked the happiest country in the world due to its short workweeks, high minimum wage, and free university and health and child care is rated PARTLY FALSE, based on our. Following a monetary reform after the Napoleonic wars, the present Danish central bank Danmarks Nationalbank was founded in 1818. They have had a "youth initiative" or the Danish Youth Unemployment Programme in place since 1996. [56], According to Eurostat, the unemployment rate was 5.7% in 2017. Center for Alternativ Samfundsanalyse Centre for Alternative Social Analysis, Economic History Services Encyclopedia: Denmark, Organisation for Economic Co-operation and Development (OECD), Convention on the Organisation for Economic Co-operation and Development, Programme for International Student Assessment, Programme for the International Assessment of Adult Competencies, Trade-Related Aspects of Intellectual Property Rights, Special administrative regions of the People's Republic of China, Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Patents, trademarks, and industrial design filing activity, Number of broadband Internet subscriptions, https://en.wikipedia.org/w/index.php?title=Economy_of_Denmark&oldid=1152229713, Articles with Danish-language sources (da), Short description is different from Wikidata, Articles containing potentially dated statements from 2015, All articles containing potentially dated statements, Creative Commons Attribution-ShareAlike License 3.0, wind turbines, pharmaceuticals, medical equipment, shipbuilding and refurbishment, iron, steel, nonferrous metals, chemicals, food processing, machinery and transportation equipment, textiles and clothing, electronics, LEGO, construction, furniture and other wood products, wind turbines, pharmaceuticals, machinery and instruments, meat and meat products, dairy products, fish, furniture and design, machinery and equipment, raw materials and semimanufactures for industry, chemicals, grain and foodstuffs, consumer goods, Officially the Republic of China, participates as ", This page was last edited on 28 April 2023, at 23:53. Regarding vegetable production, Denmark is a leading producer of grass-, clover- and horticultural seeds. [131] The municipality of Copenhagen alone holds a total of 153 housing cooperatives and "Arbejdernes Andelsboligforening rhus" (AAB rhus) is the largest individual housing cooperative in Denmark, with 23,000 homes in Aarhus.[132]. Jacob Isaksen, Uffe Mikkelsen and Peter Beck Nellemann (2012): Arbejdsmarkedsreformer i Danmark og Tyskland. For instance, the Building Bridge to Education program was started in 2014 to provide mentors and skill development classes to youth that are at risk of unemployment. Since 2012, calculations of future fiscal challenges, from both the government and independent analysts, have generally perceived Danish fiscal policy to be sustainable. [72], Danish fiscal policy is generally considered healthy. Approximately 90 percent of the production is exported. At first, the krone was pegged to the European Currency Unit or ECU, from 1987 to the Deutsche Mark, and from 1999 to the euro.[67]. However, tax rates are not necessarily the most revealing feature of Scandinavian income tax systems. ", "Report for Selected Countries and Subjects", "Statistik for registrede andelsboligforeninger p andelsboligforeninger.com [Statistics for registered housing cooperatives at andelsboligforeninger.com]", Danmarks Nationalbank central bank of Denmark, Bureau of Public Affairs, U.S. Department of State, country overview for Denmark, World Bank Summary Trade Statistics Denmark, Dansk Arbejdsgiverforening Confederation of Danish Employers, Landsorganisationen i Danmark The Danish Confederation of Trade Unions, Anvendt Kommunal Forskning Danish Institute of Governmental Research, The Danish National Centre for Social Research, De konomiske Rds sekretariat Danish Economic Councils. [88] Unemployment funds do not pay benefits to sick members, who will be transferred to a municipal social support system instead. The net government debt is very close to zero, amounting to 1.3% of GDP in 2017. We spend almost 18 percent. English Summary, p. 297", "Danish Economic Councils. "Nej"-sidens forspring skrumpet en smule. Denmark is presently the only OECD member country maintaining an independent currency with a fixed exchange rate. Denmark has a lot to offer, so you will find that there are plenty of pros to living in this beautiful country, whether it's in a major city or in the countryside. "Personaleomstning 2017: Flere skifter job isr i serviceerhverv". [25] The income distribution is relatively equal but inequality has somewhat increased during the last decades. With a gross domestic product (GDP) of $2.83 trillion in 2019 and a population of more than 66 million, the United Kingdom has the sixth-largest economy after . As a consequence of the exchange rate policy, the bank must always adjust its interest rates to ensure a stable exchange rate and consequently cannot at the same time conduct monetary policy to stabilize e.g. . The five main importers of Danish goods and services in 2017 were Germany, Sweden, United Kingdom, United States and Norway. [58], The share of employees leaving jobs every year (for a new job, retirement or unemployment) in the private sector is around 30%[59] a level also observed in the U.K. and U.S.- but much higher than in continental Europe, where the corresponding figure is around 10%, and in Sweden. [14] Main sub-industries are manufacture of pharmaceuticals, machinery, and food products. The most important sectors of Denmark's economy in 2020 were public administration, defence, education, human health and social work activities (21.5%), wholesale and retail trade, transport, accommodation and food services (19.3%) and industry (18.2%). [106], Denmark is in a strong position in terms of integrating fluctuating and unpredictable energy sources such as wind power in the grid. have a non-negative fiscal sustainability indicator. [14] Apart from public administration, education and health services, main service sub-industries were trade and transport services, and business services.[14]. Denmark has fostered and is home to many multi-national companies. Notable companies dedicated to the pharmaceutical and biotechnology sector, includes: Denmark has a long tradition for cooperative production and trade on a large scale. This makes the conduct of stabilization policy fundamentally different from the situation in Denmark's neighbouring countries like Norway, Sweden, Poland and the United Kingdom, in which the central banks have a central stabilizing role. The agriculture and food sector as a whole represented 25% of total Danish commodity exports in 2015. Both of these industries are a major source of income and combined, they make up a quarter of all of Denmark's agricultural exports. The extent of the support depends on the ability to work, and people below 40 can not receive social pension unless they are deemed incapable of any kind of work. This drastic change was initially inspired largely by the discovery of Danish oil and gas reserves in the North Sea in 1972 and the 1973 oil crisis. The labour market is also traditionally characterized by a high degree of flexicurity, i.e. English Summary, p. 341", "Household wealth and debt. The number of farms peaked in the late 1980s at more than 5,000 farms, but the number has declined steadily since, as individual farms grew in size. [109] In 1997, Denmark became self-sufficient with energy[110] and the overall CO2 emission from the energy sector began to fall by 1996. Consequently, the Danish krone is the only currency in the European Exchange Rate Mechanism II (ERM II). They spend about 11 percent of their GDP on health care. De konomiske Rds Sekretariat. Offentligt kvartalsregnskab 4. kvt. Denmark supports a high standard of livingits per capita gross national product is among the highest in the worldwith well-developed social services. In the minor productions of poultry, 13million ducks, 1.4million geese and 5.0million turkeys were slaughtered in 2012. About 4,200 farmers produce 28million pigs annually. Several reforms of the rights of the unemployed have followed up, partially inspired by the Danish Economic Council. In most of recorded history Denmark has been an agricultural country with most of the population living on a subsistence level. (e.g. [103], In 2017 total output (gross value added) in manufacturing industries amounted to 14.4% of total output in Denmark. Denmark now faces a potential mild contraction of GDP in 2023 due to geopolitical developments, high inflation and energy prices, and a tight labor market. Moreover, Denmark is among the world leaders in wireless communications, internet and new media. [6] The sector is very capital-intensive, so the share of employment is much lower: About 2,000 persons worked in the oil and gas extraction sector in 2016, and another 1,000 persons in extraction of gravel and stone, or in total about 0.1% of total employment in Denmark.[14]. The country aims for renewables to cover at least half of the country's total energy consumption by 2030 and by 2050, Denmark aims to be a low-carbon society . [104], In 2017 total output (gross value added) in service industries amounted to 75.2% of total output in Denmark,[6] and 79.9% of all employed people worked here (in 2016). The reasons that make Denmark's economy so successful are a very developed infrastructure, an efficient workforce and an advanced welfare system. Approval is not automatic, and the extent of this system has generally been diminished since the 1980s. At the same time, average household gross debt was almost 300% of disposable income, which is also at the highest level in OECD. Denmark ranks 10th most competitive economy in the world, according to the World Economic Forum's Global Competitiveness Report 2018. [55] Such active labour market policies have been successful for Denmark in the short-term and the long-term.
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