The Economy of Denmark

Denmark shares a similar economic problem with other small countries. Due to the dwarfed size of the country, natural resources are sparse. When countries do not have many natural resources, they rely on manufactured products and imported goods. Due to the scarcity of natural resources, they come at a high price. Because of this, Denmark has a high focus on the service industry.

Danes pride themselves on their acute attention to detail and the fine quality of their products. Denmark’s most popular exports are machinery, instruments and food. Other exports to the United States include Legos, canned foods and pharmaceuticals. Denmark has an average standard of living compared to other countries in the world, with their revenue comprising .8% of the gross national income.


Beginning in 2007, public reform started to be a current issue in Denmark. This is due to the decrease in population from loss of jobs, increasing unemployment, and aging. It is believed that the combination of some public sectors may help prevent or even subdue these problems. Some of the public sectors decreased were city court districts, police precincts, and tax administrative services. The reduction of politicians also worked to help streamline the government’s processes.

Welfare and Taxes

Danes believe in a large-scale, tax-based welfare system to help those in need. Some of the benefits included in the system are funded healthcare and unemployment insurance. Denmark’s economy holds some of the highest tax rates in the world. The largest sector of employment in the country, at nearly 30% of working citizens, is the public sector. This sector is fully funded by taxes. The income tax rates for workers range from 40% to 60%. The public sector reported a budget surplus of over 4% in 2007, but these tax cuts would result in a labor shortage and a trade deficit to follow.

As of 2008, the outstanding public sectors debt was over 400 billion, or nearly 27% of the GDP. Government action was, and still is, focused on relinquishing the debt as quickly as possible. Although debt has drastically increased, it is not regarded to be as bad as their debt in the 80s. Critics are skeptical that the economy may overheat due to the public sectors’ current issues. The trade deficit is mainly being avoided by the oil exports.

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