2013 Index of Economic Freedom

Denmark

overall score76.1
world rank9
Rule of Law

Property Rights90.0

Freedom From Corruption94.0

Limited Government

Government Spending5.9

Fiscal Freedom39.8

Regulatory Efficiency

Business Freedom98.4

Labor Freedom91.1

Monetary Freedom80.0

Open Markets

Trade Freedom86.8

Investment Freedom85.0

Financial Freedom90.0

Embed This Data

Create a Comparison Chart

See how Denmark compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 5.6 million
  • GDP (PPP):
    • $206.6 billion
    • 1.1% growth
    • -0.6% 5-year compound annual growth
    • $37,152 per capita
  • Unemployment:
    • 8.0%
  • Inflation (CPI):
    • 2.8%
  • FDI Inflow:
    • $14.8 billion
Embed This Data

Denmark’s economic freedom score is 76.1, making its economy the 9th freest in the 2013 Index. Its overall score is essentially the same as last year, with modest improvements in the management of public spending and freedom from corruption counterbalanced by declines in labor and investment freedoms. Trailing Switzerland, Denmark is ranked 2nd out of 43 countries in the Europe region.

The Danish economy performs remarkably well in regulatory efficiency, and open-market policies sustain flexibility, competitiveness, and large flows of trade and investment. The transparent and efficient regulatory and legal environment encourages robust entrepreneurial activity. Banking regulations are sensible, and lending practices have been relatively prudent. Inflationary pressures are under control. The judicial system provides strong protection for property rights, and anti-corruption measures are firmly institutionalized.

The European sovereign debt turmoil entails elevated risks for Denmark, particularly with regard to the soundness of the financial sector and long-term fiscal sustainability. Banking has been under increasing strain, and public spending continues to be over half the size of the economy. The overall tax regime needed to finance the large scope of government remains burdensome and complex, although institutional assets such as high degrees of business efficiency and regulatory flexibility have counterbalanced some of the shortcomings of heavy social spending.

Close

Background

Helle Thorning-Schmidt became prime minister after a center-left coalition led by Social Democrats defeated Prime Minister Lars Løkke Rasmussen in the September 2011 parliamentary elections. Denmark is not party to the euro, but it has been a member of the European Union since 1973. It held the presidency of the Council of the European Union from January–July 2012, a period dominated by the eurozone crisis. Denmark’s economy depends heavily on foreign trade, and the private sector is characterized by many small and medium-size companies. Increased immigration spurred by the 2011 uprisings in North Africa has caused the government to consider more restrictive immigration laws.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 94.0 Create a Graph using this measurement

Protections for property rights are strongly enforced, with an independent and fair judicial system institutionalized throughout the economy. Commercial and bankruptcy laws are applied consistently. Intellectual property rights are respected, and enforcement is consistent with world standards. Effective anti-corruption measures discourage bribery of public officials and uphold the integrity of government.

Limited GovernmentView Methodology

The top income tax rate is 56 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and intrusive measures such as the world’s first tax on fatty foods. The overall tax burden equals almost 50 percent of total domestic income. Government spending continues to be over 55 percent of GDP. The government has attempted fiscal stimulus, running a small deficit, and public debt is just under 50 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory environment remains one of the world’s most efficient. Minimum capital requirements for limited-liability companies have been reduced, and starting a business takes fewer procedures than the world averages. Relatively flexible hiring and dismissal regulations sustain an efficient labor market. Monetary stability remains well established. The government took small steps in 2012 to cut back on welfare state benefits and costs.

Open MarketsView Methodology

Denmark’s trade regime, similar to that of other EU members, is fairly competitive and promotes the dynamic growth of trade in most sectors. Applied tariffs average a low 1.6 percent. The economy is one of the world’s most open with respect to foreign investment, and the investment code is transparent and efficiently administered. The diversified financial sector has experienced a period of instability, with a number of banks performing poorly.

Country's Score Over Time

Bar Graph of Denmark Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Denmark to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
See Entire Region List ›

View all countries ›

Back to Top