Denmark’s economic virtuosity

An efficient welfare state system can promote economic development

  Articoli (Articles)
  Elisa Modonutti
  19 December 2024
  2 minutes, 57 seconds

Translated by Alessandra Fumagalli

In his work “The origin of the political order”, the political scientist Francis Fukuyama discusses the problem of “Getting to Denmark”, but what does this mean?

To be more precise, the author talks about “the problem of the creation of modern political institutions has been described as the problem of ‘getting to Denmark’. In his book, he explains that “Denmark is a mythical place, known to have good political and economic institutions: it is functional, democratic, peaceful, prosperous, inclusive and has very low levels of political corruption”. With these words, as explained by the author himself, Denmark is seen as a symbol of good, peaceful, prosperous and non-corrupted government, a model for the international development’s experts. In another book, “Political order and political decadence”, the author states that “the problem is that Denmark hasn’t become like this in a few years or months. Contemporary Denmark has gradually developed modern institutions in the years”. These modern institutions have been fundamental for the economic development and the success of Denmark. The country has indeed recorded an increase of 3% of the GDP than the previous year, but looking at the growth under an historical perspective, it can be seen that the Danish GDP has doubled compared to the early 2000.

Lots of factors contributed to this economic growth, but extremely important are the governmental actions in favour of economic growth and the respect of the fundamental rights of the free market.

Denmark has a strong guarantee of the fundamental principles and the inviolability of private property rights; moreover, it enables the freedom of bargaining and association and guarantees the state of law. These high levels enable the country to record high economic and commercial results.

The recent World Bank’s project “Doing Business” (2019) ranks Denmark at the 4° place in the world and 1st place in Europe for the ease of doing business.

With a 71.000 dollars GDP (FMI, 2023), higher than the global average (13.000 dollars) and the European average (34.000 dollars), Denmark has a flourishing business environment and a free market capitalist economy.

This was possible thanks to the state intervention, which created a significant “universal welfare model”. The country has a wide social security system, equality in the services (education and health assistance), but it has a strong attention towards the market: inclusive work policies (for example the equal integration of women and men, with grants for child assistance), negotiation of working hours and broad-based, union-led wages and high labor market flexibility.

These cutting edge policies, together with the market’s competition, the strong digitalization and a favourable business environment have sustained investments and productivity. Therefore, the Danish welfare model made the capitalist market economy and the business development easier.

It is not surprising that Denmark, together with Singapore and Switzerland, was entitled as the most competitive economy in the world in the world rank of the competitiveness 2024 made last June by the International Institute for Management Development (IMD).

The country, the established democracy, respecting the fundamental rights and with an economic sustaining welfare model represent a virtuous example in the economic and trading sector which needs a particular attention and research.

Mondo Internazionale APS - Riproduzione Riservata ® 2024

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L'Autore

Elisa Modonutti

Studentessa di Scienze internazionali e diplomatiche, amante della lettura, dei viaggi e con una curiosità innata di scoprire il mondo che ci circonda

Tag

Welfare state Denmark state of law economic development Economy