Scandinavian countries are known for their high standard of living, and Denmark is no exception. Not only are Danes one of the happiest people on the earth, but they are also among the richest populace in the world. This prosperity is why many politicians want to replicate the Danish model in their countries.
Denmark is rich because of its highly skilled human capital and world-leading firms operating in maritime shipping, pharmaceuticals, processed foods, and renewable energy. The Danish economy also benefits a lot from foreign trade, which accounts for a major chunk of the GDP.
This article will explain how wealthy Danes are compared to the rest of the world. It will also describe how Denmark became a prosperous nation and some prominent industries that contributed the most to the Danish economy.
Also, see Why Is Denmark So Expensive? to learn more.
How Rich Is Denmark?
Denmark, with a gross domestic product (GDP) of 0.39 trillion USD, ranks 35th on the list of the world’s largest national economies. [1]
Thus, at first glance, it might be a bit challenging to understand why Denmark is one of the wealthiest countries in the world.
After all, countries like China and India, the second and sixth largest economies in the world, are still considered developing and relatively poor.
This is when China and India’s GDPs of 17.7 trillion USD and 3.1 trillion USD, respectively, are way more than that of Denmark. [2] [3]
The answer lies in the per capita GDPs of the countries mentioned above.
To reiterate, per capita GDP is a standard measure that is used to compare the relative wealth of the nation.
It is calculated by dividing the GDP of a country by its population.
In addition to being two of the largest economies, China and India are also two of the most populated nations in the world.
Their per capita GDP (in nominal terms, i.e., without taking inflation into account) of 19,338.2 USD and 7,333.5 USD places them in the middle of the table of wealthiest countries by per capita GDP.
Denmark is regarded as one of the wealthiest countries in the world because it’s per capita GDP has traditionally been among the top few nations.
For instance, its nominal per capita GDP of 64,651.2 USD for 2021 is the 14th best in the world.
The table below shows the per capita GDP of some of the richest countries in the world:
| Country | GDP per capita (in USD) | Ranking |
| Luxembourg | 134,753.8 | 1 |
| Singapore | 116,486.5 | 2 |
| Ireland | 106,455.8 | 3 |
| Norway | 79,201.2 | 6 |
| United States | 69,287.5 | 10 |
| Denmark | 64,651.2 | 14 |
| Sweden | 59,324.0 | 17 |
| Germany | 57,927.6 | 20 |
| Iceland | 57,646.4 | 21 |
| Finland | 55,006.6 | 23 |
| Canada | 52,085.0 | 24 |
| France | 50,728.7 | 25 |
| United Kingdom | 49,675.3 | 26 |
Source: World Bank [4]
As the table above shows, Denmark is doing relatively better than all its Scandinavian neighbors, with the sole exception of Norway.
Also, it ranks comfortably higher than traditional superpowers like the United Kingdom, Germany, France, and Canada.
Also, see What is Denmark Known For? to learn more.
How Did Denmark Become So Rich?
Even though Denmark doesn’t have extensive reservoirs of natural resources to boast of like its neighbor Norway, the country has found ways to ensure that the economy thrives.
After World War II, Denmark made a strategic decision to increase international cooperation and joined organizations like the International Monetary Fund, World Trade Organization, European Union, etc.
This decision turned out to be a catalyst for growth and changed the fate of the country.
As a result of Denmark becoming a member of the above organizations, foreign trade flourished. Soon, industrial employment surpassed agricultural employment.
It led to significant growth in the overall economic condition of the country and its citizens.
Traditionally, the Danish government has been business-friendly and provides attractive incentives such as:
- Generous tax relaxation to attract investors
- A social contribution rate of less than one percent per employee per year (maxed out at Euro 1,350) [5]
Because of factors like this, Denmark ranks 10th on the Heritage Foundation’s 2022 Index of Economic Freedom and is home to many world-class companies. [6]
The Danish workforce is one of the most productive, skilled, and efficient human resources available anywhere in the world.
The government offers paid training programs to workers, which keeps them up to date with the new technologies and ready for the changing demand of industries.
It makes the nation a very lucrative option for investors.
Also, see Is Denmark Socialist? to learn more.
What Are the Major Industries in Denmark Today?
Currently, Denmark’s economy is mainly dependent on three sectors:
- Service industries
- Manufacturing
- Trade
Service Industries
The service industry is the biggest contributor to the Danish economy, and it accounted for 64.55% of the total wealth of the nation in 2020. [7]
Historically, the sector has provided employment to nearly 80% of the Danish workforce. [8]
Some of the biggest sub-industries in this category are:
- Public administration
- Transport services
- Health services
- Social services
- Education
Manufacturing
Manufacturing is the next most significant contributor to Denmark’s economy, making up 12.67% of the total GDP in 2021. The most prominent sub-industries are:
- Pharmaceutical industry
- Food-processing industry
- Machinery and transport
Most Danish enterprises are small and medium-sized and based in small cities.
It is in stark contrast with other developed economies where most industries are concentrated in metropolitan centers.
Trade
Trade is at the heart of the Danish economy. In 2021, the value of total exports of goods and services made up 59.57% of GDP, and the value of total imports was 52.86%. [9] [10]
In 2020, the most exported products were:
- Medicines: 16.23 billion USD
- Meat: 3.21 billion USD
- Electric Generating Sets: 2.4 billion USD
- Cheese: 1.71 billion USD
While the most imported products for the same year were:
- Cars: 5.24 billion USD
- Medicines: 3.74 billion USD
- Broadcasting equipment: 2.33 billion USD
- Computers: 2.25 billion USD
- Refined Petroleum: 2.14 billion USD [11]
Most of Denmark’s most important trading partners are countries that are members of the European Union, such as Norway, Germany, Sweden, and the Netherlands.
Besides, Denmark has a good trading relationship with the USA, the UK, and China.
Conclusion
Denmark is one of the wealthiest countries in the world, thanks to its human resources and foreign trade.
Also, see What Is There To Do In Denmark? to learn more.
References:
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