Denmark is in many ways a paradoxical country. It has the world’s highest taxes and yet Danes are among the happiest people in the world according to the U.S. National Science Foundation. Denmark has generous social benefits, a large public sector and yet is quite innovative and entrepreneurial. The Global Competitiveness Report and the Index of Economic Freedom both rank Denmark 9th on their world lists, and the Legatum Prosperity Index ranks the country 6th in entrepreneurship and innovation. Denmark did not end in the top ten of these world lists by chance. What steps and policy initiatives made this possible?
Making fun of government is a popular sport among entrepreneurs around the globe, but one must never forget it is government that sets the rules and incentives. Government needs to be a partner even if it cannot always be the ideal partner that embraces messy, entrepreneurial capitalism. Unlike most other European countries, Denmark has limited public involvement in business affairs and has a very flexible labor market. The difficulties that employers face in hiring and firing workers are significantly lower than in most OECD countries, as shown by the World Bank’s Rigidity of Employment Index, which places Denmark 9th in the world in the ease of employing workers, and the Heritage Foundation´s high Index of Labor Freedom for the country, 93.7 on a 100 point scale. This is a result of major growth enhancing policy reforms in the late 1980s and the 90s. Most importantly, stimulating entrepreneurship moved to the main part of the growth agenda in 2005, when a Liberal-conservative government set the following four goals to place Denmark in the global economy...
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Author: Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.
