Executive Summary
Denmark is a modern market economy containing global firms in renewable energy, maritime shipping, and pharmaceutical. The country is also celebrated for its high-tech agricultural sector, and it has also embraced a modern mixed economy that offers many opportunities to investors. With multiple businesses taking place in Denmark, investors should now focus on establishing logistic companies to facilitate the movement of goods to and from different places.
Economic Background of Denmark
The economy of Denmark is based primarily on manufacturing, trade, and service industries, while a small percentage of the population practices fishing and agriculture. The economy is dominated by small enterprises. In 1973, Denmark joined the European Economic Community to become its single important trading partner (Dubinka-Hushcha, 2020). The country has continued to enjoy long-term economic collaboration with European Union member countries. Being one of the Nordic countries that include Sweden, Norway, Iceland, and Finland, it has helped Denmark to expand its trade in these countries. Nordic countries are brought together by uniform commercial legislations that were established in the 19th century (Loxa, 2021). Within the diverse welfare-state economy of the Danish, the expenditures of the private sector sum up to more than half of the total national revenue. The country’s public expenditure is channeled toward national defense, foreign affairs, economic affairs, education, and health and social services. The Danish government lacks significant industrial or commercial income.
Background of the Political, Economic, Cultural, Demographic Aspects of Denmark
Politics
The Danish constitution provides for a unicameral legislature with the prime minister as the head of government. The monarch is the ceremonial head of the state that has the mandate to appoint the prime minister together with cabinet ministers. The country has universal adult suffrage by secret ballot and voluntary for both local and national elections. The voting age is 18 years, and every voter is eligible to run for elective office. Denmark has enjoyed political stability, and it conducts elections once every three years with alliances and smaller parties maintaining their seats in the legislature (Oktay, 2018).
Economy
Denmark is counted among the countries with the highest per capita gross national product in the world because of its well-established social amenities. Key areas of the economy are agriculture and fishing, natural resources and power, manufacturing, finance, trade, service industry, human capital, and transport and telecommunication (Hansen, 2020). The most important raw material for Danes is the soil. It is because half of its land is exploited and utilized for agriculture. The country has a mining and quarrying industry that operates on a small scale. However, the government plays a critical role in subsidizing it on the side of power. Large manufacturers in the country involve themselves in machinery, transport equipment, and metal products. The National Bank of Denmark is left with that responsibility for matters to do with finance and associated regulations. The country’s import of fuel and raw materials is usually balanced by tourism, shipping income, and agricultural products export.
Culture
Danes’ social customs and daily life show that they were traditionally believers of a nuclear family, but the meaning of marriage changed during the 20th century. Danes have embraced cohabitation without any formalities being followed. Currently, engagements and weddings are not held with regard as before since people can have children out of wedlock (Pesel, 2018). Denmark has experienced a rise in divorce cases, and, in1980, it was the first country to allow registered same-sex couples partnerships. This provided for the same duties and rights as to marriage.
Demography
Denmark is made of several ethnic groups, with ethnic Danes acting as the majority. A few Faroese who bear Danish citizenship have settled in continental Denmark. A handful majority of the Germans who settled in the country many years back have since been substantially assimilated (Doe, 2017). Important minority groups from the early 21st century include Somalis, Iranians, Bosniaks, Norwegians, Swedes, Iraqis, Poles, Germans, and Turks.
The official language in Denmark is Danish, which has a close relationship with Norwegian since it is mutually intelligible, specifically in its written form. Danish is a close relative to other Scandinavian languages, but they are very different from being understood unless one is experienced or schooled in them (Doe, 2017). Many Danes from urban centers or educated have learned to speak a second language, preferably English. Other minority languages like German, Arabic, and Turkish are spoken by their respective ethnic groups.
Freedom of worship is one of the fundamentally unopposed values in Denmark. For a very long time, the country’s top religious groups were signified by the presence of many Jewish synagogues and Roman Catholic churches. However, in 1536 during the Reformation, Roman Catholicism was replaced by Lutheranism. On the other hand, Islam became an important minority religion during the early 21st century. Even with many religious groups within the country, many Danes are members of the Evangelical Lutheran People’s Church of Denmark, which is regarded as a state church.
The settlement pattern of people in Denmark shows that the vast majority of the population lives in urban centers. Copenhagen is the largest city, followed by Arhus, Odense, Alborg, and Wsbjerg. More than 12 percent of Danes live in rural areas. With good transport infrastructure, no village or farm is isolated from the rest of the country. The population of Denmark was stable during the late 20th century, but it has shown slow growth in the early 20th century (Doe, 2017). However, the low fertility and emigration that have resulted in population losses have been compensated by the increases in migration.
Key Industries
Agriculture is extensively practiced in Denmark, which is reflected in more than 60 percent of its land being used for agricultural purposes (Ibanez, 2021). The country can produce about two times the food it requires locally while the remaining is exported. Denmark produces different food products for domestic use and exportation, including organic products, meat, milk, grass, seeds, and vegetables. The importance of agriculture is seen from its immense contribution to the total country’s export which is approximately more than 20 percent.
The tourism industry attracts annual revenue of about $125billion in the country’s economy (Ibanez, 2021). Denmark has a rich history, sandy beaches, and many other tourist attractions. Millions of tourists visit Denmark to experience its beauty every year. Tourists come from across the world since the country is regarded as an important travel destination globally.
The diverse energy sector plays a critical part in the economy of Denmark. 21.6 percent of the total energy required by the country is derived from coal power (Ibanez, 2021). Since the country exports crude oil and data, scientists believe that 33.4 percent of its crude oil is used to cover about 33.4 percent of Denmark’s energy demands. Natural gas covers up to 18 percent of the required energy demand, while the remaining 27 percent comes from renewable sources, including geothermal, nuclear, wind power, solar, and biomass. Denmark has the best energy policies that have enabled it to reduce its energy consumption.
One of the major investments that Denmark has made is visible in the transportation sector. It has been able to develop a modern transport network of railways and motorways. The country has three major airports, with another five offering better connectivity. Denmark also has ports that are used to serve millions of passengers annually and millions of tons of cargo shipments yearly.
Key Global Exports, Imports, and Trading Partnered Trade Agreement
Denmark is ranked 36 as the largest export economy worldwide. It has yearly exports of 101 billion dollars with a negative trade balance of 1.93 billion dollars after subtracting 103 billion dollars imports from the export. Denmark has a GDP of 356 billion dollars, equivalent to 61,350 dollars GDP per capita (Statistic Denmark, n.d.). The country’s top commodity exports are pigs, crude petroleum, iron structures, pig meat, and refined petroleum. Other notable exports are blood, vaccines, antisera, toxins, cheese, packaged medicaments, and electric generating sets. Its top imports include sawn wood, iron structures, soybean meal, and crude petroleum, while other notable imports are computers, broadcasting equipment, passenger and cargo ships, and cars. The charts and tables below show Denmark’s exports and imports.
Table 1: Top 10 countries that Denmark exports its products to (Andy, 2021)
Table 2: List of Export Goods from Denmark (Andy, 2021)
Table 3: Denmark’s Top 10 Imports (Export Genius, n.d.)
Denmark is a member of the World Trade Organization and European Union (Ministry of Foreign Affairs of Denmark, n.d.). Apart from the bodies mentioned, it has also entered into bilateral trade agreements with partnered countries. Such trade agreements have enabled the promotion of global trade among the partnered countries. The country has also entered into free trade agreements that have enabled businesses to increase their profit margins, and companies can reduce the prices of their products to increase competitiveness.
Recent Business-related News and Future Trends
Recently, the world was hit by the COVID-19 pandemic that shrank the economies of many countries around the world. For a consecutive nine months up to October 2021, the economy has shown that it can absorb more employees. However, analysts have cautioned about labor shortage sustainability. Based on remarks made by experts, Denmark has a shortage of labor which is an obstacle when it comes to economic growth. The forecasts that are made show that the country is heading to a season of increased unsustainable wages that could be disastrous. Statistics show that the hospitality industry is among the sectors that have been hiring because they seem to be recovering from the impact of the COVID-19 pandemic.
Analysis of Business Opportunities and Risks
Many business opportunities are found in Denmark, given that it does not depend on one sector of the economy. However, the effects created by the COVID-19 pandemic are still being experienced. They can act as barriers to new entrants because the economy has not yet picked the same way during the pre-COVID period. With many products exported and imported in the country, there is the need for better logistic companies to ensure that products reach the intended destinations. Disruptions in the global supply chain caused by the pandemic also offer an opportunity for a new logistic company to improvise its services by making most of its administration and communication online with adequate human power on the ground and promise quality services. The risk of starting a business after such a global crisis is that you may lack customers and understanding of business operations in the country. As much as it is a time of the internet, there are some things like conducting companies that might need services you are offering needs the management to have physical meetings that also increases trust.
Recommendations
Denmark imports and exports many products. It also has the best transportation network that facilitates the movement of people and transportation of goods from one place to another. As a company that wants to enter into such a country to do a profitable business, it would be good to set up a logistics company. There are agricultural products, medical supplies, crude oil, refined oil, and iron structures. All these products need someone to transport them since the current logistic companies cannot sustain their transportation.
Summary
Denmark is a country with many opportunities, and the government has made good policies that allow businesses to thrive. For instance, it has partnered with EU countries and is also a member of WTO. The bilateral trade agreements that it has entered with other countries increase companies’ competitiveness and profit margins when they are doing business on the global stage. Since the country has sufficient energy to run its economy, there are instances of subsidies. A stable political environment and good transport system enable investors to be confident doing business in such an environment.
References
Andy (2021). Denmark Exports and Imports 2021. [online] Tracking Docket. Available at: https://www.trackingdocket.com/denmark-exports-imports/ [Accessed 15 Feb. 2022].
Doe, J. (2017). Population: Demographic Situation, Languages, and Religions. [online] Eurydice – European Commission. Available at: https://eacea.ec.europa.eu/national-policies/eurydice/content/population-demographic-situation-languages-and-religions-22_en [Accessed 15 Feb. 2022].
Dubinka-Hushcha, L. (2020). An overview of Denmark and its integration with Europe, 1940s to the Maastricht Treaty in 1993. [online] nordics.info. Available at: https://nordics.info/show/artikel/denmark-and-the-european-union-1940s-2000s.
Export Genius (n.d.). Denmark Import Data | Denmark Shipment Data | Import Statistics. [online] www.exportgenius.in. Available at: https://www.exportgenius.in/export-import-trade-data/denmark-import.php.
Hansen, M. (2020). Social Studies in Denmark: A Country Report. Journal of social science education, 19(1), 95-117
Ibanez, F. (2021). What are the largest industries in Denmark? [online] alphatrad.dk. Available at: https://alphatrad.dk/en/news/largest-industries-denmark [Accessed 15 Feb. 2022].
Loxa, A. (2021). Confronting Legal Realities with the Legal Rule, On Why and How the European Court of Justice Changes Its Mind (University of Turku 2021). Nordic Journal of European Law, 4(2), pp.95–98.
Ministry of Foreign Affairs of Denmark (n.d.). International trade policy. [online] UM-ENEN. Available at: https://um.dk/en/foreign-policy/international-trade-policy [Accessed 14 Feb. 2022].
Oktay, S. (2018). Chamber of opportunities: Legislative politics and coalition security policy. The British Journal of Politics and International Relations, 20(1), pp.104–120.
Pesel, W.K. (2018). The Hygge Phenomenon. Between a Lifestyle and Nationalism. Przegląd Humanistyczny, 62(2 (461)), pp.35–47.
Statistic Denmark (n.d.). Imports and exports of goods and services. [online] www.dst.dk. Available at: https://www.dst.dk/en/Statistik/emner/oekonomi/betalingsbalance-og-udenrigshandel/import-og-eksport-af-varer-og-tjenester [Accessed 15 Feb. 2022].
write