Denmark - Economic development



For many years, Danish governments followed a full-employment policy and relied chiefly on promotion of private enterprise to achieve this end. Beginning in the late 1970s, however, the government increased its intervention in the economy, in response to rising unemployment, inflation, and budget deficits. Inflation has been curbed and budget deficits reduced. This bolstered the currency from devaluation, but at the cost of restraining growth, and unemployment continued to rise.

Government influence on private enterprise through the exercise of import and export licensing has diminished in recent years. The discount policy of the National Bank is of major importance to the business community. Control of cartels and monopolies is flexible. The government has a monopoly or majority interest in railways, domestic air traffic, airports, and communications. Most of the country's power stations are owned and operated by local governments and municipalities.

Capital incentives are available to assist new industries, mainly in the less-developed areas of Denmark. Municipalities also provide infrastructure, industrial parks, or inexpensive land. Under a 1967 provision, the Regional Development Committee (composed of representatives of a number of special-interest organizations and central and local authorities) can grant state guarantees or state loans for the establishment of enterprises in less developed districts.

In 1978, Denmark reached the UN target for official developmental assistance in the mid-1970s: 0.7% of GNP. It reached 0.96% of GNP in 1991, second only to Norway. Denmark's official assistance to developing countries amounted to $1.35 million per year in the mid-1990s.

Unemployment was at a 25-year low in 2002, and the economy was weathering the global economic recession fairly well; the gross domestic product (GDP) growth rate was 1.6%. The 2002 budget surplus was projected to remain between 1.5–2.5% of GDP. The government ran fiscal surpluses in order to prepare for the costs of an aging population. Nevertheless, state spending to total economic activity remains one of the highest in the world. Government purchases of goods and services accounted for 24.7% of GDP in 2000. Small and medium-sized businesses characterize the private sector, with companies with less than 50 employees accounting for approximately half of total employment, and only 12% of the workforce work in firms with more than 500 employees. Women are highly represented in the labor force.

Also read article about Denmark from Wikipedia

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Dec 23, 2011 @ 5:17 pm
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