Denmark has a small, open, and flexible economy. The service sector makes up the vast amount of the employment and economy. Its industrialized market economy depends on imported raw materials and foreign trade. Within the European Union, Denmark advocates a liberal trade policy. Its standard of living is average among the Western European countries - and for many years the most equally distributed as shown by the Gini coefficient - in the world, and the Danes devote 0.8% of Gross National Income (GNI) to foreign aid. It is a society based on consensus (compromise) with the Danish Confederation of Trade Unions and the Confederation of Danish Employers in 1899 in Septemberforliget (The September Settlement) recognizing each others’ right to organize and thus negotiate. The employers’ right to hire and fire their employees whenever they find it necessary is recognized.
Denmark is self-sufficient in energy - producing oil, natural gas, wind- and bio-energy. Its principal exports are machinery, instruments and food products. The U.S. is Denmark’s largest non-European trading partner, accounting for around 5% of total Danish merchandise trade. Aircraft, computers, machinery, and instruments are among the major U.S. exports to Denmark. There are several hundred U.S.-owned companies in Denmark, some of them just registered for tax purposes, which is beneficial for holding companies. Among major Danish exports to the U.S. are industrial machinery, chemical products, furniture, pharmaceuticals, and canned ham and pork.
| Danish companies - source |
From 1982, a center-right government corrected accumulated economic imbalances, mainly inflation and balance-of-payments deficits, but lost power in 1993 to a Social Democratic coalition government led by Poul Nyrup Rasmussen, which remained in office following the March 1998 election. During the governments of Poul Nyrup Rasmussen, there was a drastic fall in official unemployment, which peaked at 12.4% (1993)- and at 13.8% in January 1994 (386,186 persons) - was 5.2% in 2001 and is (February 2008) 2.0%. This is the lowest level since the beginning of the 1970s, making up 55,400 persons, 3,300fewer than January 2008 and a reduction by 67% - 114,400 persons, on average 2,300 per month - since December 2003. Inflation fell from 1.9% in 2006 to 1.7% in 2007 and was 2.3% in December 2007. Average annual growth rates were less than 2% in 2007. In November 2001, a center-right government led by Anders Fogh Rasmussen won the election on wanting not to exceed the current tax level (the world’s highest), improving efficiency in the public administration and decreasing the number of immigrants and asylum seekers.