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Amazing Denmark: what is so interesting about it for investors?



Will the Danish “Vikings” bury the Schengen and the EU? Breaking news about another unexpected threat for the EU came from Denmark. The thing is that Denmark decided to restore the borders with Germany and Sweden. Even though that the Danish authorities say Denmark is not going to abandon the Schengen Agreement (supposedly the border control will be restored to check suspicious vehicles), the West-European Association of Traders and Investors under Masterforex-V Academy doesn’t deny that it may finish off the Schengen Agreement and the whole idea of Europe without internal borders with all the ensuing consequences for investors.
A natural question arises: “Why was Denmark the first Schengen member to come up with this idea?” On the one hand Denmark has enough to lose but on the other hand it doesn’t need any problems from outside.





Denmark’s strong sides and achievements
 Indeed, Denmark is a fine and amazing country and it really has a lot to protect and take care of. This small Scandinavian country (actually the smallest one in Scandinavia) can boast the following achievements:
·         For many times it has been recognized the safest country to live in.
·         It comes second after Norway in the rating of the world’s most successful countries ( by Legatum, Oxford Analytica and Gallup World Poll Service)
·         It has been recognized the most innovative country (by the Legatum Institute). It is common knowledge that a country is recognized innovative only if it contributes to the prosperity and well being of the humanity.
·         The GDP per capita is $37 000
·         Denmark is among the world’s top 7 countries in terms of science development.
What is the basis of Denmark’s wellbeing?
·         Considerable reserves of natural gas and crude oil in the Danish part of the North Sea. In terms of the production volume of crude oil Denmark comes 3rd in Western Europe after Norway and Scotland . Moreover, Denmark is going to join the USA, Canada and Russia in the Arctic race (the Arctic is believed to store 25% of all the global reserves of hydrocarbons, not to mention the deposits of gold, silver, ore and coal).
·         Favorable geographic location. Denmark is located at the crossroads of the trade routes between the Baltic and the North Sea, between Central Europe and Scandinavia. And Denmark benefits from it. It has one of the largest trade fleets in the world, making 12% of the global maritime traffic.
·         Well-developed industry. Metal working, machinery construction, as well as chemical, pharmaceutical, textile and other industries make up 40% of the national GDP.
·         Hi-tech industry. It is one of the EU’s frontrunners in terms of innovations, investments in research and development programs and cooperation between private businesses and universities. Here are some examples:
-          Denmark gets over 3% of the GDP from the technologies of using renewable energy sources (windmills etc).
-          Almost 20% of the electricity is “green”. There are no nuclear power plants in Denmark. Moreover, by 2050 the country is planning to stop using coal, gas and crude oil. The thing is to reduce the dependence on the constant price growth, which affects the country’s economic development.
-          Internet (first of all electronic trade) brings 5% of the GDP. Only the UK and Sweden earn more via internet. For the sake of comparison, the country’s construction industry makes only 4% of the GDP.  Denmark comes first in the rating included in the Global Information Technology Report 2008-2009.
·         Highly-developed agriculture, especially dairy and meat industry. Denmark is the world’s leader in the export of pork. Denmark is world-famous for its environmental-friendly agriculture and ecologically pure products.
·         Export-oriented economy. Almost in any country around the world you can find some products made in Denmark, including Carlsberg and Tuborg beer, Lego (constructor), furniture, fish, agricultural and medical products etc. Denmark’s export is mainly dependant on agriculture and pharmaceutical industry, which are known to be less sensitive about various crises. That is why during the crisis years Denmark didn’t see a considerable export decline as opposed to other export-oriented countries.
·         Stable financial situation. By the way, Copenhagen is in the top 10 currency trading centers of the world. According to The Bank for International Settlements, Copenhagen is the world’s 9th biggest currency marketplace. Even though Denmark is not a eurozone member, the Danish Krone is pegged to the common European currency.
·         Favorable business climate. It comes 6th in the global rating (The World Economic Forum, 26 March 2009. The Global Information Technology Report 2008-2009). Over 430.000 small and mid-scale businesses are registered in Denmark. They employ the majority of the country’s working population. Denmark is considered the state with the most developed small-scale business and middle class, which ensures the flexibility of the Danish economy. According to Transparency International, Denmark, New Zealand and Singapore are considered the less corrupted states.



The Danish socialism: Is it the ultimate stage of capitalism?





According to the West European Association of Traders and Investors under Masterforex-V Academy, it is universally recognized that Denmark is one of the perfect states. Moreover, Denmark’s social model is often referred to as “socialism”. According to the latest Gallup survey, 72% of the Danish citizens are content with their quality of life. This is the highest figure in the world. Sweden, Canada and Australia can boast only 65%.
What are the main components of the “Danish miracle”?
·         High living standards and social security.
-          Denmark can boast the highest earnings and pensions in Europe (the average earnings are €4400, the average pension is €2000). However, the housing and food prices and passenger fares are high as well.
-          Denmark is the EU’s leader in terms of hourly earnings (€37,6/h on average – 30% more than in other EU countries)
-          Unemployment benefits make up 90% of the previous earnings and can be paid within 4 years.
-          It is a good place to live for the retired people. All of them receive a pension regardless of their labor experience. Moreover they can enjoy other benefits like numerous discounts.
-          The secondary education is free. Each student receives scholarship irrespective of his/her achievements. Not so long ago Denmark was the world’s 12th country in terms of education spending (8.3% of the national GDP). The Danes are absolutely sure that their education is the best.
-          The Danes enjoy almost free healthcare. Moreover, everything that makes people healthier – fruit, vegetables, medicine, sports etc. – is state-subsidized and is cheaper.
-          They pay only for electricity and heating. Water is free.
-          Belgium comes 1st in terms of the shortest working hours 7 hours 7 minute a day. Denmark comes 2nd – 7 hours 21 minutes.
-          Denmark is probably the world’s leader in terms of the observance of human rights.
·         High taxes. Obviously with such a social model, the degree of income redistribution has to be high. That is why in Denmark it is impossible either to get fabulously rich or to starve. Direct and indirect taxes take more than 50% of the average Danish household’s income. By the way the minimal income tax is 38%! Of course the Danes don’t like it. But they treat it as a necessity. The think that if a person doesn’t want to work, nobody will force him or her to do it, but if such people are left without means of subsistence, they will start committing crimes. Moreover, 70% of the collected money stays in the budget.
The peculiarities of the Danish national character.





The Danes do not tend to stand out in a crowd (they tend to be like everyone). They are not used to boasting their income, children’s success, mansions and luxurious cars. Moreover, if they consider someone has earned his/her fortune illegally, they will definitely report to the local tax inspectorate office.
The Danes are patriots. They think that Denmark is the best country in the world and that to be a Dane is a great privilege. They respect their neighbors – Sweden and Germany.
The Danes can be called freedom-loving, faithful and persistent when it comes to upholding their ideals. Freedom is worshipped there. Denmark was the first country (1989) to allow marriage registration between homosexuals. In 1997 they issued a law forbidding parents the corporal punishment of their children.
The Danes are peaceful and cheerful. They are probably the liveliest Scandinavian people. They love comfort in everything – from clothes to relationships. Loneliness is probably one of the most urgent problems. That is why various clubs and societies are so popular in Denmark.
Some Danes lead a healthy life-style (or at least try to do it). They like cycling. Denmark is the world’s leader in terms of bicycles per capita. Paradoxical as it may seem but an average grown-up Dane drinks 270 bottles of beer a year. There are many alcoholics and smokers.
The Danes are fairly economical. Not many families have pets because it is considered costly. They are straightforward in speech, open-minded and punctual. They are never late and don’t like others to be late as well.
In other words, they are reliable in business.
Is something is rotten in the state of Denmark?






These days Denmark is not that prosperous as it may seem at first. According to the Association of Traders and Investors under Masterforex-V Academy, the Schengen issue in Denmark hasn’t emerged out of nothing.    It has emerged under the pressure of the Danish Nationalist Party (a member of the ruling coalition). The nationalists are well-known for their ability to speculate in difficulties and unsolved problems. Lars Rasmussen has recently defined the following weak spots of the Danish economy and the ways of soling them in order to turn Denmark into one of the world’s richest countries by 2020:
1.       The country’s dependence of fossil fuels. It is known that Denmark will stop exporting crude oil and natural gas in 2018 and 2020 correspondingly.  In order to switch to the so-called ‘green” economy Denmark will have to spend a lot of money. On the other hand, Denmark has an opportunity to become the world’s leader in terms of renewable energy sources.
2.       Weak economic growth. After a 4.3% decline in the national GDP in 2009, in 2010 the GDP grew only by 1.8%. However, the experts forecast that within the next 10 years Denmark’s economic growth won’t exceed 1% a year. The situation in the Danish housing market remains unstable. Banks keep going bankrupt.  All in all, 11 financial institutions went broke during the crisis.
3.       A lag in innovation activity. Over 60% of the Danish enterprises haven’t presented any new products in the last few years.
4.       Big public sector of economy. Most enterprises are state-owned but the management is ineffective.
5.       Heavy taxation. The income tax in Denmark is one of the highest. The heavy taxation scares off new investors and consequently prevents enterprises from creating new jobs. In the meantime the government keeps introducing new taxes and increasing the old ones. For example, if you want to buy a car you will have to pay a tax equal to 180% of its cost!
6.       Low consumption growth. It is mainly conditioned by the 4.2% unemployment growth seen in the country.  Obviously the figure doesn’t look so scary against the background of Spain ’s 21% unemployment. However, 3 years ago it was equal to 1.6%. Moreover, numerous exerts are sure that the unemployment rate will only grow.
7.       Social sphere. Denmark’s social expenses take 70% of the GDP. Such considerable social expenses, growing unemployment and economic slowdown have increased the budget deficit (up to 5.2%) and the public debt. Last year Denmark had to accept an austerity plan for the next 3 years: all the social benefits were frozen while the period of unemployment benefit payments was reduced to 2 years. By 2020 the pension age will have been increased from 65 to 67 years.
8.       Demographic problems. Denmark is one of the outsiders (184th) in terms of birth rate. The population ageing in Denmark has accelerated the inflow of migrant workers from Africa and Asia. Even though the Danish immigration law is one of the toughest in the EU, over the last 30 years the amount of migrants has septupled. Islam has become the 2nd largest religion in Denmark. Today migrants constitute 7% of the country’s entire population. Some experts say that by 2020 the amount will have doubled. These days Denmark spends €1,8B on social benefits for migrants. Moreover, some of them are not law-abiding citizens. In such situation the rightist forces just took the chance and benefited from the immigration problem in order to strengthen their positions in the Danish society. In fact they presented an ultimatum: either the Danish borders with Sweden and Germany are restored or the austerity budget and retirement age increase is not supported.
All these problems made Demark decline from the 5th to the 9th place in the global competitiveness rating (World Economic Forum). Of course, other countries have much more serious problems to solve. However, Denmark already starts considering its weak spots as the first wakeup call while being worried that it won’t be able to regain the lost positions and to be among the frontrunners again.
Market Leader and Masterforex-V Academy offer you to participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
Will Denmark repeat the destiny of Greece, Portugal and Ireland?
·         No, it won’t. The Danish politicians will do their best to prevent it.
·         Yes, it will. The latest economic data confirm it.




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