However, tax rates are not necessarily the most revealing feature of Scandinavian income tax systems. Denmark's economic freedom score is 77.6, making its economy the 9th freest in the 2023 Index. The Copenhagen Malm Port was also formed between the two cities as the common port for the cities of both nations. [66] Denmark has a very long tradition of maintaining a fixed exchange-rate system, dating back to the period of the gold standard during the time of the Scandinavian Monetary Union from 1873 to 1914. Why do the Danes score so highly on international happiness surveys? In fact, Denmark's 5.5 percent decline in real G.D.P. Denmark's economy is strong and stable because Danish companies enjoy tax advantages, favorable guidelines concerning R&D and depreciation, competitive labor charges, balanced foreign trade, and high-skilled qualified workers. [61], Machinery, chemicals and related products like medicine and agricultural products were the largest groups of export goods in 2017. A large part of the pension wealth is invested abroad, thus giving rise to a fair amount of foreign capital income. [56], According to Eurostat, the unemployment rate was 5.7% in 2017. 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. robotics: the country prides itself on the prime robots . There is an emphasis on achieving a desirable work-life balance. [71] Inflation has generally been low and stable for the last decades. Occasionally, the question of calling another referendum on the issue has been discussed, but since the Financial crisis of 20072008 opinion polls have shown a clear majority against Denmark joining the EMU,[68] and the question is not high on the political agenda presently. There are more than 550 American subsidiaries established in Denmark and a strong American Chamber of Commerce with approximately 240 members. [70], Inflation in Denmark as measured by the official consumer price index of Statistics Denmark was 1.1% in 2017. "Personaleomstning 2017: Flere skifter job isr i serviceerhverv". The economy of Denmark has grown to become a modern day market economy that possesses an advanced industrial sector alongside its traditional and now high-tech agricultural sector. per capita since 2007 is comparable to the declines in debt-crisis countries like Portugal or Spain, even though Denmark has never lost the . Instead of creating policies where the rich can get richer at the expense of the poor, everyone tends to earn about the same amount. On top of this, Danes pay a 25 % value-added tax on most items, and a tax of up to 150 % on new cars. The Danish fiscal policy is generally considered healthy. The reasons that make Denmark's economy so successful are a very developed infrastructure, an efficient workforce and an advanced welfare system. Government net debt was close to zero at the end of 2017, amounting to DKK 27.3billion, or 1.3% of GDP. A growing awareness that future demographic changes, in particular increasing longevity, could threaten fiscal sustainability, implying very large fiscal deficits in future decades, led to major political agreements in 2006 and 2011, both increasing the future eligibility age of receiving public age-related pensions. . [49] Its labour market policies are decided through tripartite cooperation between employers, employees and the government. Denmark has a competitive economy and ranks #1 on the IMD World Competitiveness Ranking 2022. OECD statistics, retrieved 23 November 2018", "Eurostat Employment and Unemployment Database, Table une_rt_a. In comparison to Americans, Danes work considerably less. In particular, the Danish national saving rate in financial assets increased by 11 per cent of GDP from 1980 to 2015. Denmark ranks 6 th out of 39 countries, whilst the US ranks 35 th. Its score is 0.4 point lower than last year. Average per capita income is high in an international context. Small enterprises are dominant. Unlike in most Western countries there is no legal minimum wage in Denmark. While unemployment benefits are provided, the policies are designed to motivate job-seeking. 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. Finanspolitisk holdbarhed. OECD Economic Surveys: Denmark. Official websites use .gov Many of the largest are interdisciplinary with business and sometimes research activities in several fields. A second national accounts release confirmed the economy dodged a sequential contraction in Q4 as GDP expanded 0.9%. 650 f. kr.-1020 Etablering af mntvsen. Secondly, compulsory funded pension schemes became normal for most employees from the 1990s. [36] Politically, mercantilism was gradually replaced by liberal thoughts among the ruling elite. In 2015, average household assets were more than 600% of their disposable income, among OECD countries second only to the Netherlands. At the end of the 18th century major agricultural reforms took place that entailed decisive structural changes. have a non-negative fiscal sustainability indicator. Placing it behind Luxembourg, the UK, Ireland, and Finland, but ahead of Germany, Italy, and France. 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. [83], Professor of Economics at Princeton University Henrik Kleven has suggested that three distinct policies in Denmark and its Scandinavian neighbours imply that the high tax rates cause only relatively small distortions to the economy: widespread use of third-party information reporting for tax collection purposes (ensuring a low level of tax evasion), broad tax bases (ensuring a low level of tax avoidance), and a strong subsidization of goods that are complementary to working (ensuring a high level of labour force participation). [120] As of 2015[update], Denmark has no environment tax on electricity. New cars are taxed by means of a registration tax (85% to 150%) and VAT (25%). The Danish tax-to-GDP-ratio of 46% was the second-highest among all OECD countries, second only to France. Regions administer mainly health care services, whereas municipalities administer primary education and social services. Denmark's death toll per million citizens over the course of the pandemic is just 22 percent of the U.S.'s, and daily deaths there have fallen to under 10. On the other hand, Denmark has had a logistic advantage through its long coastal line and the fact that no point on Danish land is more than 50 kilometers from the sea an important fact for the whole period before the industrial revolution when sea transport was cheaper than land transport. [87] A person that is not a member of an A-kasse cannot receive unemployment benefits. 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. Within a few years he went from being a . Exports to the United States constituted 11.9 percent of total Danish exports in 2021. At the turn of the century industry (including artisanry) fed almost 30% of the population. Comparatively, Denmark is favorably positioned 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. Household balance sheets are consequently very large in Denmark compared to most other countries. Denmark supports a high standard of livingits per capita gross national product is among the highest in the worldwith well-developed social services. [125][126] For both countries, fishing industry is a major economic activity. Uniform commercial legislation in the Nordic countries dates to the 19th century. Denmark has a very long tradition of adhering to a fixed exchange-rate system and still does so today. By September 2018, 831,000 people worked in the general government sector, corresponding to 29.9% of all employees. 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. 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? Approximately 90 percent of the production is exported. Another important factor is gender equality, with Denmark ranked second in the EU in . Nyt fra Danmarks Statistik nr. The krone and re were introduced in 1875, replacing the former rigsdaler and skilling. Denmark's economy is based on the flexicurity model, which combines a flexible labor market with a policy for the unemployed. The population size relative to arable agricultural land was small so that the farmers were relatively affluent, and Denmark was geographically close to the most dynamic and economically leading European areas since the 16th century: the Netherlands, the northern parts of Germany, and Britain. This system requires a paying membership of a state-recognized unemployment fund. About 4,200 farmers produce 28million pigs annually. A lower proportion of revenues in Denmark derive from taxes on corporate income and gains and property taxes than in OECD generally, whereas the proportion deriving from payroll taxes, VAT, and other taxes on goods and services correspond to the OECD average. [47] According to data from Eurostat, Denmark was the EU country with the seventh-lowest Gini coefficient in 2017. Denmark is ranked 6th out of 44 . From the 1980s economic policies have increasingly been oriented towards a long-term perspective, and gradually a series of structural reforms have solved these problems. People living in Denmark pay some of the world's highest taxes - up to half of their income. Denmark is presently the only OECD member country maintaining an independent currency with a fixed exchange rate. While workers unions often serve independently between companies in other countries, Denmark strives to unify workers unions for increased negotiation power. The leading United States exports to Denmark are industrial machinery, capital equipment, computers and telecom products, software, aircraft, and scientific instruments. [122] It has integrated fluctuating and less predictable energy sources such as wind power into the grid. [65] Consequently, Denmark has changed from a net debtor to a net creditor country. [25] The income distribution is relatively equal but inequality has somewhat increased during the last decades. transport equipment): 17.4%, Live animals, food, beverages and tobacco: 7.7%. The key category driving this increase continues to be chemicals, as one-fourth of Danish exports from this category went to the United States. 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. [14] As value added per person is relatively low, the share of national value added is somewhat lower. [60], As a small open economy, Denmark is very dependent on its foreign trade. (e.g. 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. The World Factbook, CIA, retrieved 7 December 2018", "The Faroe Islands and the European Union", "What is Greenland's relationship with the EU? This is to a large extent caused by two major institutional changes: A series of tax reforms from 1987 to 2009 considerably reduced the effective subsidization of private debt implicit in the rules for tax deductions of household interest payments. Members of an A-kasse are not obliged to be members of a trade union. Why is Denmark so successful? There are also income transfers to various groups, such as retired or disabled people, unemployed persons, students, etc. More than 75 percent of eligible citizens as of late October were fully vaccinated. [54] This is combined with education, skill development and work training programs. 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. 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. Date 2 November 2015. "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. DKK. Subscribe now for as little as $2 a month! CEPOS Think Tank for a liberal economy and limited Government etc. For more than 100 years the production of pigs and pig meat was a major source of income in Denmark. In January 2016 the rate was raised to 0.65%, at which level it has been maintained since then. health care, child care and education services). [14] Apart from public administration, education and health services, main service sub-industries were trade and transport services, and business services.[14]. Last update 31 October 2018", "Table NAN1: Demand and supply by price unit, transaction and time. After some years of stagnation, close to 10% of the cultivated land is now categorized as organically farmed, and 13.6% for the dairy industry, as of 2017. The Danish model of higher taxation and a more comprehensive, free, welfare state has both a cost and a benefit. The economy of Denmark is known for its government welfare measures, an equal distribution of income and a high standard of living. Marking a break with decades of pro-privatization dogma, the bill is a small step toward an economy that serves social need, not just profits for shareholders. Kapitel III i De konomiske Rds Formandskab: Dansk konomi, efterr 2016. The electricity grids of western Denmark and eastern Denmark were not connected until 2010 when the 600MW Great Belt Power Link went into operation. 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. Language links are at the top of the page across from the title. Retrieved on 23 November 2018". Two main reasons for this large change in domestic saving behaviour were the growing importance of large-scale compulsory pension schemes and several Danish fiscal policy reforms during the period which considerably decreased tax deductions of household interest expense, thus reducing the tax subsidy to private debt. The country has been a member of the European Union (EU) since 1973. The social welfare system ensures low poverty and low income-inequality. Beyond prioritization of the issue, Denmark combats poverty rates through the unification and centralization of social programs. transport equipment): 24.2%, Miscellaneous Manufactured Articles: 17.8%, Live animals, food, beverages, and tobacco: 13.8%, Services (2021) - Main imports (% of total services imports), Telecommunications, computer and information services: 11%, Goods - Main Imports (% of total goods imports), Machinery (excl.