by Anmol Arora
If you know Denmark just to be one of the best countries in the world to lead a happy life in, trust me, you don’t know the half of it. Putting aside the fact that the Danes are some of the most remarkable architects, evident from the Sydney opera house, Denmark is, in fact, doing an excellent job with its balance sheet.
The nation, as most of the Nordic countries are, has been a tad bit exclusive, might I add superior, in their ways and from what I or anybody else can tell, they have worked delightfully.
As one of the first members of the Organisation for Economic Co-operation and Development (OECD), Denmark has successfully maintained unique yet brilliant economic policies and practices. As we scroll further down, we take a look at some of the strong suits and limitations of their economy.
Strengths
One aspect of the economy that Denmark prides itself on is its 69.5% labour force participation rate (LFPR), as of 2019. Now, this statistic is especially significant here considering the fact that Denmark’s total population is a mere 58.1 lakh people.
Such a high LFPR comes on the back of exceptional female participation in the labour force and absolutely free higher education for each and every citizen.
The nation also boasts of something unheard of in the developing world of today- a current account surplus. Yes, you heard that right. In 2019, Denmark had imports of a total of $101 billion, compared to exports of $103 billion. Packaged medicaments, refined petroleum, and pig meat lead the charts of exports from Denmark.
On the other hand, cars and passenger and cargo ships were the most common imports in 2019. Most of Denmark’s trade (46.7%) is with Germany, Sweden, Netherlands, and China. An added benefit of a trade surplus is that it has aided the government to keep its debt to a mere 32% of GDP, drastically lower than countries like Germany and Switzerland.
Now, coming to the famous tax structure adopted by the government. 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. health care, child care, and education services) and income transfers to various groups like retired or disabled people, unemployed persons, and students.
The current personal tax rate in the country is 55% (varying slightly with the level of income). The unadorned fact that people are willingly ready to give more than half of what they earn to the government speaks volumes of the ability of the government to provide worthwhile benefits and services to the taxpayers.
The reason behind the high level of support for the welfare state in Denmark is the awareness of the fact that the welfare model turns our collective wealth into well-being. “We are not paying taxes. We are investing in our society. We are purchasing quality of life”.
