Economy of Denmark

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Economy of Denmark
Kopenhamn Danmark, Johannes Jansson.jpg
Currency Danish krone (DKK, kr) = 0.15 USD
calendar year
Trade organisations
EU, OSCE, WTO, OECD and others
Statistics
GDP

Increase $0.3 trillion (2016) (nominal)[1]

Increase $0.27 trillion (2016) (PPP)[1]
GDP growth
Increase 1.8% (2015)
GDP per capita

Increase $54,000 (2016) (nominal) [1]

Increase $47,000 (2016) (PPP) [1]
GDP by sector
agriculture: 4.5%; industry: 19.1%; services: 76.4% (2011 est.)[citation needed]
0.5% (2014)[citation needed]
Population below poverty line
N/A
24.7 (List of countries)
Labour force
3 million (2015)[2]
Labour force by occupation
agriculture: 2.5%; industry: 20.2%; services: 77.3% (2005 est.)[citation needed]
Unemployment 3.9% (August 2014)[citation needed]
Average gross salary
466,000 DKK, 62,000 € / 70,000 $, annual (2015)[3]
277,000 DKK, 37,000 € / 42,000 $, annual (2015)[3]
Main industries
3rd (2017)[4]
External
Exports Decrease$93.6 billion (2016) 35rd [5]
Export goods
[citation needed]
Main export partners
 Germany 18.6%
 Sweden 12.1%
 United Kingdom 8.1%
 United States 6.7%
 Norway 6.5%
 Netherlands 4.4% (2014 est.)[6]
Imports Decrease$82.29 billion (2016)[7]
Import goods
[citation needed]
Main import partners
 Germany 21.3%
 Sweden 12.8%
 Netherlands 8.0%
 China 6.3%
 Norway 6.3%
 United Kingdom 4.9% (2014 est.)[8]
$484.8 billion (31 March 2016 est.)[9]
Public finances
44.5% of GDP (2014)
Revenues $0.2 trillion (2015 est.)[citation needed]
Expenses $0.2 trillion (2015 est.)[citation needed]
Economic aid ODA, $2.1 billion (2005)[citation needed]
AAA (Domestic)
AAA (Foreign)
AAA (T&C Assessment)
(Standard & Poor's)[10]
Foreign reserves
$0.1 trillion (March 2011)[11]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Denmark is the 39th largest national economy in the world measured by nominal gross domestic product (GDP) and 60th largest in the world measured by purchasing power parity (PPP).

Denmark has a mixed economy based on services and manufacturing.[12] It relies heavily on human resources, but not exclusively, as there are a few significant and valuable natural resources available, including mature oil and gas wells in the North Sea.[citation needed] Cooperatives form a large part of some sectors, be it in housing, agriculture or retail.[citation needed] Foundations play a large role as owners of private sector companies.[citation needed] Denmark has one of the world's lowest levels of income inequality, according to the World Bank.[13] Its standard of living is average among the Western European countries[14][15] - and for many years the most equally distributed[16] as shown by the Gini coefficient - in the world, and the Danes devote 0.8% of gross national income (GNI) to foreign aid.[citation needed]

As of January 2015 the unemployment rate is at 6.2%, which is below the Euro Area average of 11.2%.[17] As of 28 February 2014 Denmark is among the countries with the highest credit ratings.[citation needed]

Denmark's main exports[18] are: industrial production/manufactured goods 73.3% (of which machinery and instruments were 21.4%, and fuels, chemicals, etc. 26%); agricultural products and others for consumption 18.7% (in 2009 meat and meat products were 5.5% of total export; fish and fish products 2.9%).[19] Denmark is a net exporter of food and energy and has since the 1990s had a balance of payments surplus.[citation needed] The total value of service and merchandise exports in 2013 amounted to 54% of GDP, and imports in 2013 amounted to 49% of GDP.[citation needed] Notable among the service exports are container shipping.[citation needed] There is no net foreign debt as other countries owe more money to Denmark than Denmark owes to them,[20] but because of large deficits due to increased unemployment levels the central government has increased its debt level since the end of September 2008[citation needed], when it stood at 21 percent (gross debt) of GDP[citation needed], according to the central bank[citation needed] - in accordance with the Eurostat EMU- gross debt numbers, which only take liabilities into account.[citation needed] (See below (Budgets)). Taking assets into account as well net debt of the central government was 11 percent.[citation needed] The public sector as a whole had net assets of 108 billion kroner in 2008.[citation needed] Within the European Union, Denmark advocates a liberal trade policy.[citation needed] It is a society based on consensus (dialogue and compromise) with the Danish Confederation of Trade Unions and the Confederation of Danish Employers in 1899 in Septemberforliget (The September Settlement) recognising each other's right to organise, thus, negotiate.[21] The employer's right to hire and fire their employees whenever they find it necessary is recognised.[citation needed] There is no legally-stipulated minimum wage (Danish: minimumsløn) set by the government;[22] the minimum of wages (Danish: mindsteløn) is determined by negotiations between the organisations of employers and employees.[citation needed]

Overview[edit]

Denmark Export Treemap by Product (2014) from Harvard Atlas of Economic Complexity

This thoroughly modern market economy features high-tech agriculture, up-to-date small-scale and corporate industry, extensive government welfare measures, comfortable living standards, and high dependence on foreign trade.[citation needed] Denmark is a net exporter of food.[citation needed] The center-left coalition government (1993–2001) concentrated on reducing the unemployment rate and turning the budget deficit into a surplus, as well as following the previous government's policies of maintaining low inflation and a current account surplus.[citation needed] The coalition also committed itself to maintaining a stable currency.[citation needed] The coalition lowered marginal income tax rates while maintaining overall tax revenues; boosted industrial competitiveness through labor market and tax reforms, increased research and development funds.[citation needed] The availability and duration of unemployment benefit has been restricted to four years[citation needed] and because of rapidly rising prices on housing this has led to an increase in poverty from below 4% in 1995 to 5% in 2006 according to the Danish Economic Council [3]. Despite these cuts, the part of the public sector in Denmark which buys goods and services from the private sector and provides the public sector administration and direct service to the public - nursing institutions for the young or old, hospitals, schools, police, and so on.[citation needed] - has risen from 25.5% of GDP during the former government to 26% today and is projected to be at 26.5% in 2015 if current policies continue [4].

Denmark chose not to join the 11 other European Union members who launched the euro on 1 January 1999.[citation needed] Especially from 2006, economists and political pundits have expressed concern that the lack of skilled labour will result in higher pay increases and an overheating of the economy[citation needed], which would repeat the boom-and-bust cycle in 1986[citation needed], when government introduced a tax reform and restricted the private loan market because of a record balance-of-payments deficit.[citation needed] As a consequence, the trade balance showed a surplus in 1987[citation needed], and the balance-of-payments in 1990 (first surplus since 1963).[citation needed] They have remained in surplus since[citation needed], except for the balance of payments in 1998.[citation needed]

Welfare state[edit]

Main article: Welfare state
The labour productivity level of Denmark is one of highest in Europe. OECD, 2012

Denmark has a broad-reaching welfare system, which ensures that all Danes receive tax-funded health care.[citation needed] Expenses to medicine is only partially funded and some non-vital medical treatments are not funded at all.[citation needed] Denmark has an unemployment insurance system called the A-kasse (arbejdsløshedskasse).[citation needed] This system requires a paying membership of a state recognized unemployment fund.[citation needed] Most of these funds are managed by trade unions[citation needed], and a high percentage of their expenses are financed through the state tax-system.[citation needed] Members of an A-kasse are not obliged to be members of a trade union.[23] Not every Danish citizen or employee qualifies for a membership of an unemployment fund and membership benefits will be terminated after 2 or more years of unemployment.[24] A person that is not member of an A-kasse, can not receive unemployment benefits.[25] Unemployment funds does not pay benefits to sick members[citation needed], they will be transferred to a municipal social support system instead.[citation needed] Denmark has a countrywide, but municipal administered social support system against poverty[citation needed], securing that qualified citizens has a minimum income of living.[citation needed] All Danish citizens above 18 years of age can apply for some financial support, if they cannot sustain themselves or their family.[citation needed] Approval is by no means automatic and the extent of this system has generally been diminished over the last 30 years.[citation needed] After a newly implemented reform by 5. January 2015, sick people can receive some financial support throughout the extent of their illness and not just for the maximum of 1 year as previously.[citation needed] Their ability to work will be re-evaluated by the municipality after 5 months of illness.[26][27] Denmark ranked the first in the European pensions barometer survey for the past two years.[28] The lowest-income group before retirement from the age of 65 receive 120% of their pre-retirement income in pension and miscellaneous subsidies.[citation needed]

The worlds largest public sector (30% of the entire workforce on a full-time basis[29]) is financed by the world's highest taxes. A value added tax of 25% is levied on the sale of most goods and services (including groceries).[citation needed] The income tax in Denmark ranges from 37.4%[30] to 63% progressively, levied on 4 out of 10 full-time employees.[31] Such high rates meant that 1,010,000 Danes[citation needed] before the end of 2008 (44% of all full-time employees) were paying a marginal income tax of 63% and a combined marginal tax of 70.9% resulting in warnings from organisations such as the OECD.[32][33] TV2 (Denmark) reported[citation needed] in April 2008 that abolishing the middle- and top-level income tax brackets would amount to two (2) and one (1) percent of public sector revenue, respectively, which equals one and a half percent of GDP.[citation needed] The public sector as a whole had a budget surplus of 4.4% of GDP in 2007[citation needed], but the tax cuts would increase private consumption and the labor shortage, thus, resulting in a deficit on the trade balance and pressure to increase wages even further.[citation needed] Proceeds from selling ones home are not taxed, as the marginal tax rate on capital income from housing savings is around 0 percent.[34] A survey by Standard & Poor's found that the total debt secured by mortgages in Danish homes amounts to 89.8% of GDP, which is above the debt level in other EU countries (and the USA at 74.6% of GDP).[35]

Political agendas for increasing the labor supply has resulted in several reforms and financial cuts.[citation needed] Reforms were initiated with the abolishing of the labor market arrangement called efterløn (eng.:early retirement pay),[36] at the present (end of 3rd quarter 2008) with more than 130,000 participants (60 years until 64 years of age).[37] Participation in this scheme was also open for self-employed people (farmers, fishermen, lawyers, and so on).[citation needed] Several reforms of the rights of the unemployed has followed up, partially inspired by the Danish Economic Council.[38] Halving the time unemployment benefits can be received from four to two years and making it twice as hard to regain this right, has recently been implemented for example.[citation needed] Contrary to the official intention, this particular reform resulted in more than 50,000 unemployed people dropping out of the social benefit system within the first year and the majority were not qualified for the municipal administered social support system either.[citation needed] This situation has caused a lot of debate and political conflict in Denmark in recent years.[citation needed] The Cabinets of Helle Thorning-Schmidt attempted several short term solutions, but there were no political mandate to roll back the reforms.[39][40] From 2015, a large majority of the population and a new found broad political alliance now suggests a partial roll back, but nothing has been effectuated yet.[41][42]

Taxation and employment[edit]

Taxation[edit]

Main article: Taxation in Denmark

With a GDP of 1,642,215 million DKK and revenue from taxes and ownership at 803,693 million DKK (2006),[43] 49.07% of GDP, it is of extreme importance what happens in the tax-financed part of the economy.[citation needed] According to newly revised statistics, Denmark had the world's highest tax level in 2005 and 2006, when tax revenue collected amounted to 50.7% and 49.1% of GDP respectively and also held this position 1970-74 and 1993-95.[citation needed] These figures do not include income from ownership.[44][citation needed] In 2013, the total tax revenues collected (Danish:samlede indtægter fra skatter og afgifter) amounted to 47.9% of GDP.[citation needed]

Budgets[edit]

The overall surpluses after operating and capital expenditure in the whole public sector for the years 2004-2008: (million DKK) 27,327; 77,362; 79,937; 75,560 ('07 preliminary); 69,140 ('08 estimate).[45] The public sector debt-liabilities still outstanding 1 January 2008 in accordance with the Eurostat EMU-debt numbers (gross debt) are 440.9 billion DKK (26.0% of GDP).[citation needed] In spite of falling surpluses this debt is expected to fall until 2015.[citation needed] As of 2008 there is no net debt in the public sector as a whole, but instead net assets of 43 billion DKK.[citation needed] The central government is determined to pay off the debt as fast as possible, avoiding the temptation to increase spending which might overheat the economy (increase wages and eventually prices drastically) because of a short supply of skilled labor and in the end require financial austerity measures to cool off the economy.[citation needed] Reporting on the record low unemployment numbers of under 50,000 persons in April 2008 published 9.30 am 29 May by Statistics Denmark, TV2 (Denmark), at 10 pm, with comments from Nordea Bank's (Denmark) chief economist Helge Pedersen, and DR2 (Danish Broadcasting Corporation), at 10.30 pm stressed the danger of overheating the economy and keeping public sector spending in check or otherwise risk economical-political measures.[citation needed] Being surprised at how low unemployment was, Helge Pedersen said (TV2) that compared with previous periods with such a low unemployment rate, a trade deficit was avoided mainly because of the oil export.[citation needed]

The EMU-gross debt was 730 billion DKK at the end of 1993, 80.1% of GDP.[46] During the four-year period 2004-2007 the public sector EMU-gross debt fell from 43.8% (641.9 billion DKK) to 26.0% (440.9 billion DKK) of GDP. The budget surpluses were (in billion DKK) 1.9% (27.2), 5.0% (77.4), 4.8% (79.3), and 4.4% (74.6) of GDP, respectively.[47]

Employment[edit]

Public sector employment (full-time and part-time) has been relatively steady at more than 800,000 a year this first decade, making up around 38% of total full-time (28% of full-time and part-time) employment,[48] whereas private sector employment has risen by over 300,000 since the 1990s to slightly over 2 million in 2007 (full-time and part-time).[49] With the information based partly on payments to the Arbejdsmarkedets Tillægspension pension fund of all employees and insured but unemployed members of an unemployment fund in Denmark, full-time employment is calculated at over 2.3 million persons in the third quarter of 2007.[citation needed] The increase in the fourth quarter of 2007 from a year ago in the number of employed persons was 1.0% and the amount of hours worked was 2.9% higher.[50]

The share of employees leaving jobs every year (for a new job, retirement or unemployment (unempl.:15% of job leavers)) in the private sector is around 30% (of 1.25 million)[citation needed], at more than 300,000 - a level also observed in the U.K.[citation needed] and U.S.- but much higher than in continental Europe[citation needed], where the corresponding figure is around 10%[citation needed], and in Sweden[citation needed]. 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.[51] Productivity increased at an average of 2.3% a year in 2004, 2005 and 2006, recently being revised upward from an average of just 0.9% and previously with a too high employment level estimated.[52] The upward revision is good[citation needed], because a high wage economy like Denmark's with very few valuable natural resources needs to be highly productive, or efficient, and innovative to compete with other countries for a market share in the global economy.[citation needed] However, according to OECD, the distortions imposed by a combined marginal tax wedge of 70% (60% income tax plus 25% VAT, not counting elevated excise duties on certain goods) are hurting productivity and in turn the country's competitiveness.[53]

Sectors[edit]

Public sector reform[edit]

To gain synergies through economies of scale (critical mass)[citation needed] (greater professional and financial sustainability)[citation needed] and big item discounts and to offer a wider array of services closer to the public (be a one-stop place of access to the public sector not unlike the unitary councils), it was deemed necessary to merge the municipalities and other administrative entities in the public sector.[citation needed] This would also help alleviate the financial problems of depopulation due to limited job opportunities, high unemployment and aging and make introduction of new information technology more affordable[54] With the tax burden at around half of GDP, a survey July 2008 found that 81% of Danes are of the opinion that the public sector can deliver more service for the same money, harnessing the advantages of the recent reform.[55] Mainly from 1 January 2007, the new center-right government streamlined the public sector extensively by decreasing the number of administrative units drastically in the different tiers of government, that is, in the number of city court circuits (from 82 to 24), police districts (from 54 to 12),[56] tax districts (before 2007 the responsibility of the municipalities;after that part of the central government Ministry of Taxation), reshuffling tasks among the three government levels and abolished the counties in Kommunalreformen ("The Municipal Reform" of 2007), thereby reducing the number of local and regional politicians by almost half to 2,522 (municipal councillors) (council elections November 2005;reduced in the 2009 elections to 2,468;in 2013 to 2,444) (1978: 4,735;1998: 4,685; reduced somewhat in council elections November 2001 (Bornholm)) and 205 (regional councillors) (1998: 374)[57] respectively. Before 1970 (a previous reform in effect from 1 April that year) the number of councillors (both categories) was around 11,000[58] in around 1,000 parish municipalities (sognekommuner), being supervised by their county, and market city municipalities (købstadskommuner), the latter numbering 86[59] (including Bornholm whose county as an exception supervised the county's 6 market city municipalities (of 22 in total)) and not being part of a county but being supervised by the Interior Ministry. This distinction (having independent municipalities not being under county supervision) ending (except for Copenhagen, Frederiksberg and Bornholm (2003–06)) with the reform of 1970, the term municipality (kommune) replaced the previous two terms, which are now never used except for historical purposes.[citation needed] The number of municipalities had been reduced when during the period from April 1962 to 1966 398 municipalities merged to form 118 voluntarily.[citation needed] The number of municipalities was the highest in 1965, at 1345 - with more than 13,000 councillors - of which 88 were market city municipalities, including Copenhagen and Frederiksberg, and 1257 were parish municipalities .[60] Many of the 275 municipalities after 1 April 1974 built large city halls to consolidate the administration, thus, changing the cityscape of Denmark.[citation needed] It also consolidated other municipal enterprises and the purchase of goods and services from the private sector, as will some of the present 98 municipalities over time.TV2(Denmark) reported 24 September 2007[citation needed], that SKI, a mutual purchasing service company for central government, regions, and municipalities, made purchases of 140 billion DKK (almost 9% of GDP) of goods and services in bulk every year, prompting private sector companies to complain over razorthin profit margins and that for instance innovative (but expensive) products and energy efficiency sometimes were better than a very low price.[citation needed]

Agriculture[edit]

A cow pasture in Bornholm

Denmark is home to various types of agricultural production.[citation needed] Within animal husbandry, it includes dairy and beef cattle, pigs, poultry and fur animals – primarily mink -, all sectors with a major export.[citation needed] Regarding vegetable production, Denmark is a leading producer of grass-, clover- and horticultural seeds.[citation needed]

The Danish agricultural industry is characterized by freehold and family ownership[citation needed] but due to structural development farms have become fewer and larger.[citation needed] With modern trade patterns the profitability increasingly depends on global market trends.[citation needed] The arable land in Denmark is approximately 2,646,000 hectares[citation needed], and the number of farms approximately 40,000[citation needed], out of which approximately one third is owned by full-time farmers.[citation needed]

The agriculture is intensive with 64 per cent of the land area being used for production.[citation needed] This equals production of food for 15 million people.[citation needed] The value of Danish agricultural export, including the agribusiness sector, has risen steadily in recent years and accounted for 16 billion Euros in 2011.[citation needed][61] The agriculture and food sector as a whole represents 20 per cent of total Danish commodity exports.[citation needed][62]

Animal production[edit]

The tendency towards fewer and larger farms has been accompanied by an increase in animal production, using fewer resources per produced unit.[citation needed]

The number of dairy farmers has reduced to about 3,800[citation needed] with an average herd size of 150 cows.[citation needed] The milk quota is 1,142 tonnes.[citation needed] Danish dairy farmers are among the largest and most modern producers in Europe.[citation needed] More than half of the cows live in new loose-housing systems.[citation needed] Export of dairy products accounts for more than 20 per cent of the total Danish agricultural export.[citation needed] The total number of cattle in 2011 was approximately 1.5 million.[citation needed] Of these, 565,000 were dairy cows and 99,000 were suckler cows.[citation needed] The yearly number of slaughtering of beef cattle is around 550,000.[citation needed]

For more than 100 years the production of pigs and pig meat has been a major source of income in Denmark.[citation needed] The Danish pig industry is among the world’s leaders in areas such as breeding, quality, food safety, animal welfare and traceability[citation needed] creating the basis for Denmark being among the world’s largest pig meat exporters.[citation needed] Approximately 90 per cent of the production is exported.[citation needed] This accounts for almost half of all agricultural exports[citation needed] and for more than 5 per cent of Denmark’s total exports.[citation needed] About 4,200 farmers produce 28 million pigs annually.[citation needed] Of these, 20.9 million are slaughtered in Denmark.[citation needed]

Fur animal production on an industrial scale started in the 1930s in Denmark. Denmark is now the world’s largest producer of mink furs, with 1,400 mink farmers fostering 17.2 million mink and producing around 14 million furs of the highest quality every year.[63] Approximately 98 per cent of the skins sold at Kopenhagen Fur Auction are exported.[citation needed] Fur ranks as Danish agriculture’s third largest export article, at more than DKK 7 billion annually. 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.[63] Danish mink farmers claims 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. Special attention is given to the welfare of the mink, and regular “Open Farm” arrangements are made for the general public.[64] Mink thrive in, but are not a native to Denmark, and it is considered an invasive species.[citation needed] American Mink is now widespread in Denmark and continues to cause problems for the native wildlife, in particular waterfowl.[65] Denmark also has a small production of fox, chinchilla and rabbit furs.[64]

Two hundred professional producers[citation needed] are responsible for the Danish egg production, which was 66 million kg in 2011.[citation needed] Chickens for slaughter are often produced in units with 40,000 broilers.[citation needed] In 2012, 100 million chickens were slaughtered.[citation needed] In the minor productions of poultry, 13 million ducks, 1.4 million geese and 5.0 million turkeys were slaughtered in 2012.[citation needed]

Organic production[edit]

Organic farming and production has increased dramatically in Denmark in the last 25 years and continues to expand with more than a quadrupling of exports since 2006.[citation needed][66] In 2012 the export of organic products reached DK 1.2 billion, a 12.3% increase from 2011.[citation needed][67] This figure should be seen in the context of a DK 360 billion global market for organic products[citation needed] and a total export from the Danish food and agriculture sector at DK 148 billion that same year.[citation needed] The import of organic products has always been higher than the exports though[citation needed] and reached DK 1.5 billion in 2012.[citation needed] 7% of the cultivated land is now categorized as organically farmed and 10% for the dairy industry as of 2008.[68] Denmark has a high consumption of organic products per capita compared to other European countries, only surpassed by Switzerland.[citation needed] In 2011 Denmark surpassed Switzerland with the highest retail consumption share for organic products in the world. In 2012 the share was at 7.8%, accounting for a total of DK 5.5 billion.[69][70]

Organic farming and production is officially a target and focus area for the Danish government in its ambition to effect a so-called green transition (Danish: Den Grønne Omstilling).[citation needed] In this respect it is the official goal of the government to double the area used for organic farming in the country from 2011 to 2020.[70] The rise and increase of organic production has been driven by a plethora of activist groups and NGOs in all levels of production and consumption since the 1970s, a number of governmental institutions and subsidies.[71][72][73][74][75]

Tourism[edit]

Main article: Tourism in Denmark

Tourism is a major economical and job contributor in Denmark and it constitutes a growth sector.

Transport[edit]

Main article: Transport in Denmark
Copenhagen Central Station with S-Trains.

Significant investment has been made in building road and rail links between Copenhagen and Malmö, Sweden (the Øresund Bridge)[citation needed], and between Zealand and Funen (the Great Belt Fixed Link).[citation needed] The Copenhagen Malmö Port was also formed between the two cities as the common port for the cities of both nations.[citation needed]

The main railway operator is Danske Statsbaner (Danish State Railways) for passenger services and DB Schenker Rail for freight trains.[76] The railway tracks are maintained by Banedanmark.[citation needed] Copenhagen has a small Metro system[citation needed], the Copenhagen Metro and the greater Copenhagen area has an extensive electrified suburban railway network, the S-train.[citation needed]

Private vehicles are increasingly used as a means of transport.[citation needed] Because of the high registration tax (180%) and VAT (25%)[citation needed], and the world's highest income tax rate[citation needed], new cars are very expensive.[citation needed] The purpose of the tax is to discourage car ownership.[citation needed] Whether a smaller fleet of aging cars is better than a larger fleet of modern cars is a matter for debate, however as the car fleet has increased by 45% over the last 30 years[citation needed] the effect of high taxation on the fleet size seems small.[citation needed] The motorway network now covers 1,111 km[77]

In 2007, an attempt was made by the government to favour environmentally friendly cars by slightly reducing taxes on high mileage vehicles.[78] However, this has had little effect, and in 2008 Denmark experienced an increase in the import of fuel inefficient old cars (mostly older than 10 years),[79] primarily from Germany as their costs including taxes keeps these cars within the budget of many Danes.[citation needed]

Denmark is in a strong position in terms of integrating fluctuating and unpredictable energy sources such as wind power in the grid. It is this knowledge that Denmark now aims to exploit in the transport sector by focusing on intelligent battery systems (V2G) and plug-in vehicles.[80]

Energy[edit]

Main article: Energy in Denmark
Denmark has invested heavily in windfarms. In 2015, 42% of the domestic electricity consumption comes from wind.
Fossil fuel consumption in Denmark.
External image
Danish energy flow 2014

Denmark has changed its energy consumption from 99% fossil fuels (92% oil (all imported) and 7% coal) and 1% biofuels in 1972 to 73% fossil fuels (37% oil (all domestic), 18% coal and 18% natural gas (all domestic)) and 27% renewables (largely biofuels) in 2015.[citation needed] The goal is a full independence of fossil fuels by 2050.[citation needed][81] 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.[82] The course took a giant leap forward in 1984, when the Danish North Sea oil and gas fields, developed by native industry in close cooperation with the state, started major productions.[83] In 1997, Denmark became self-sufficient with energy[84] and the overall CO2 emission from the energy sector began to fall by 1996.[85] Wind energy contribution to the total energy consumption has risen from 1% in 1997 to 5% in 2015.[86]

Since 2000, Denmark has increased Gross National Product (GNP) and at the same time decreased energy consumption.[87] Since 1972, the overall energy consumption has dropped by 6%, even though the GNP has doubled in the same period.[86] Denmark had the 6th best energy security in the world in 2014.[88] Denmark has had relatively high energy taxation to encourage careful use of energy since the oil crises in the 1970s, and Danish industry has adapted to this and gained a competitive edge.[89] The so-called "green taxes" have been broadly criticised partly for being higher than in other nations, but also for being more of a tool for gathering government revenue than a method of promoting "greener" behaviour.[90][91]

2015 overall energy taxes, in billions DKK[92]
Oil Gasoline Natural gas Coal Electricity
Excise&VAT 9.3 7.3 3.3 2.5 11.7

Denmark has low electricity costs (including costs for cleaner energy) in EU,[93] but general taxes (11.7 billion DKK in 2015)[92] increase the price to the highest in Europe.[94] As of 2015, Denmark has no environment tax on electricity.[95]

Denmark is a long time leader in wind energy and a prominent exporter of Vestas and Siemens wind turbines, and as of May 2011 Denmark derives 3.1% of its gross domestic product from renewable (clean) energy technology and energy efficiency, or around €6.5 billion ($9.4 billion).[96] It has integrated fluctuating and less predictable energy sources such as wind power into the grid, and wind produced the equivalent of 42% of Denmark's total electricity consumption in 2015.[97][98] When viewed in the context of overall energy consumption, wind only accounts for 5%.[86]

Energinet.dk is the Danish national transmission system operator for electricity and natural gas.[citation needed] The electricity grids of western Denmark and eastern Denmark were not connected until 2010, when the 600MW Great Belt Power Link went into operation.[citation needed]

Cogeneration plants are the norm in Denmark[citation needed], usually with district heating which serves 1.6 million households.[citation needed]

Waste-to-energy incinerators produce heating.[citation needed] Vestforbrænding in Glostrup Municipality operates Denmark's largest incinerator[citation needed], supplying heating equivalent to the consumption in over 50,000 households.[citation needed] Amager Bakke is an example of a new incinerator being built.[citation needed]

Oil and Natural Gas[edit]

Denmark has considerable sources of oil and natural gas in the North Sea and ranks as number 39 in the world among net exporters of crude oil.[99] Esbjerg is Denmark's main city for the oil and gas industry[citation needed], this is because of its ideal location close to the North Sea, which is where most of Denmark's oil and gas deposits are found.[citation needed] Companies like Maersk Oil, Ramboll, Stimwell Services, ABB, Schlumberger, COWI and Atkins all have offshore related activities in the city. Denmark could have large oil and gas reserves near the Faroe Islands and in Greenland.[citation needed]

Greenland and the Faroe Islands[edit]

Greenland suffered negative economic growth in the early 1990s[citation needed], but since 1993 the economy has improved.[citation needed] A tight fiscal policy by the Greenland Home Rule Government since the late 1980s helped create a low inflation rate and surpluses in the public budget[citation needed], but at the cost of rising foreign debt in the Home Rule Government's commercial entities.[citation needed] Since 1990, Greenland has registered a foreign trade deficit.[citation needed]

Following the closure of Greenland's last lead and zinc mine in 1989[citation needed], Greenland's economy is solely dependent on the fishing and tourism and financial transfers from the Danish central government.[citation needed] Despite resumption of several interesting hydrocarbon and mineral exploration activities[citation needed], it will take several years before production will begin.[citation needed] Greenland's shrimp fishery is by far the largest source of income[citation needed], since cod catches have dropped to historically low levels.[citation needed] Greenland also has a prominent whaling industry[citation needed], Greenlandic Inuit whalers catch around 175 whales per year[citation needed], making them the third largest hunt in the world after Japan and Norway[citation needed], though their take is small compared to those nations[citation needed], who annually averaged around 730 and 590 whales respectively in 1998–2007.[citation needed] The IWC treats the west and east coasts of Greenland as two separate population areas[citation needed] and sets separate quotas for each coast.[citation needed] The far more densely populated west coast accounts for over 90 percent of the catch.[citation needed] In a typical year around 150 minke[citation needed] and 10 fin whales[citation needed] are taken from west coast waters and around 10 minkes are from east coast waters.[citation needed] Since the fishing industry is in decline including whaling,[citation needed] tourism is the only sector offering any near-term potential[citation needed], and even this is limited due to the short season and high costs.[citation needed] The public sector plays a dominant role in Greenland's economy.[citation needed] Grants from mainland Denmark and EU fisheries payments make up about one-half of the home-rule government's revenues.[citation needed] Recently[when?], Greenland has seen interest from other countries due to the possibilities of large amounts of natural resources, which include: coal, iron ore, lead, zinc, molybdenum, diamonds, gold, platinum, niobium, tantalite, uranium, fish, seals, whales, hydropower, possible oil and gas.[citation needed]

The Faroe Islands also depend almost entirely on fisheries[citation needed], salmon farming[citation needed], tourism[citation needed] and related exports.[citation needed] Without Danish Government bailouts in 1992 and 1993, the Faroese economy would have gone bankrupt.[citation needed] Since 1995, the Faroese economy has seen a noticeable upturn[citation needed], but remains extremely vulnerable.[citation needed] Recent off-shore oil finds close to the Faroese area[citation needed] give hope for Faroese deposits, too, which may form the basis for an economic rebound over the longer term.[citation needed] Like Greenland, the Faroe Islands are also known for its whale hunting[citation needed], around 950 long-finned pilot whales (Globicephala melaena) are caught each year, mainly during the summer.[citation needed] This should be seen in the context of an estimated local pilot whale population of more than 100,000.[citation needed] Other species are not hunted[citation needed], though occasionally Atlantic white-sided dolphin can be found among the pilot whales.[citation needed] The Faroese whale slaughter has recently been under attack by the media because of the way it is generally perceived. The whale hunting is not a commercial industry, of no significance to the economy other than the fact that the Faroes need to import less meat from other animals because people get meat for free from the pilot whales, and the whales are for local consumption only.[100]

Neither Greenland nor the Faroe Islands are members of the European Union. Greenland left the European Economic Community in 1986 and the Faroe Islands declined membership in 1973, when Denmark joined.[101][102]

GDP[edit]

Table showing selected PPP GDPs and growth - 2002 to 2007 est.:[citation needed]

Year GDP
in billions of USD PPP
 % GDP Growth
2002 166.876 0.5
2003 170.798 0.7
2004 178.477 2.4
2005 187.721 3.1
2006 195.581 3.2
2007 212.404 1.8

Major companies[edit]

Denmark has fostered and is home to many multi-national companies.[citation needed] Many of the largest are interdisciplinary with business, and sometimes research activities, in several fields.[citation needed] The most notable companies include:

Agribusiness
Banking
Clothing and attire
  • ECCO (shoe and leather accessories manufacturer and retailer)
  • Bestseller
Construction
Energy technology
Food and drink
Medical equipment
Pharmaceutical and biotechnology

Many of the largest food producers are also engaged in biotechnology and research. Notable companies dedicated to the pharmaceutical and biotechnology sector, includes:

Retail
Transport
Miscellaneous

Notable international corporations present in Denmark includes:

Cooperatives[edit]

Denmark has a long tradition for cooperative production and trade on a large scale.[citation needed] The most notable cooperative societies today includes the agricultural society of Dansk Landbrugs Grovvareselskab (DLG), dairy producer Arla Foods and the retail business FDB.[citation needed] Fællesforeningen for Danmarks Brugsforeninger (FDB) was founded in 1896 and has around 1.6 million members in Denmark.[citation needed]

The cooperative structure also extends to both the housing and banking sector.[citation needed] Arbejdernes Landsbank, founded in 1919, is the largest bank cooperative and it is currently the 7th largest bank in the country.[citation needed] The municipality of Copenhagen alone holds a total of 153 housing cooperatives and Arbejdernes Andelsboligforening Århus (AAB Århus) is the largest individual housing cooperative in Denmark, with 23,000 homes in Aarhus.[103]

See also[edit]

Footnotes[edit]

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References[edit]

External links[edit]