The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.
Topics include Openness to Investment, Legal and Regulatory Systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the ICS, visit the U.S. Department of State’s Investment Climate Statement website.
Executive Summary
Denmark is regarded by many independent observers as one of the world’s most attractive business environments and ranks highly in indices measuring political, economic, and regulatory stability. It is a member of the European Union (EU), and Danish legislation and regulations conform to EU standards on virtually all issues. It maintains a fixed exchange rate policy, with the Danish Krone linked closely to the Euro. Denmark is a social welfare state with a thoroughly modern market economy heavily driven by trade in goods and services. Given that exports account for about 60 percent of GDP, the economic conditions of its major trading partners – the United States, Germany, Sweden, and the United Kingdom – have a substantial impact on Danish national accounts.
Denmark is a world leader in “green technology” industries, such as offshore wind and energy efficiency, and in sectors such as shipping and life sciences. Denmark is a net exporter of food. Its manufacturing sector depends on raw material imports. Within the EU, Denmark is among the strongest supporters of liberal trade policy. Transparency International regularly ranks Denmark as perceived as the least corrupt country in the world. Denmark is strategically situated to link continental Europe with the Nordic and Baltic countries. Transport and communications infrastructures are efficient.
The Danish economy weathered the pandemic with among the lowest declines in GDP in the EU. Denmark’s economic activity and employment have surpassed their pre-pandemic levels and trends, but companies across sectors cite labor shortages as a key challenge. In May 2023, the Ministry of Economic Affairs revised its GDP growth projections, forecasting 0.6 percent GDP growth in 2023, decelerating from 3.8 percent annual GDP growth in 2022. The Ministry projects 1.4 percent growth in 2024. While inflation has come down from 10.1 percent annually in October 2022 to 6.7 percent in March 2023, the Ministry projects the Danish economy will slow due to higher interest rate costs and curtailed private consumption. Consumer and business confidence have also decreased significantly. Uncertainty stemming from Russia’s war in Ukraine, volatile energy prices, as well as still elevated levels of inflation, is further clouding the outlook. Denmark’s underlying macroeconomic conditions, however, are healthy, and the investment climate is sound. The entrepreneurial climate, including female-led entrepreneurship, is robust.
Legislation establishing a foreign investment screening mechanism to prevent threats to national security and public order came into effect on July 1, 2021. The mechanism requires mandatory notification for investments in the following five sectors: defense, IT security and processing of classified information, companies producing dual-use items, critical technology, and critical infrastructure. It allows for voluntary notification for all sectors. The legislation does not apply to Greenland or to the Faroe Islands, though both are looking into potential legislation.
In 2020, the Danish parliament passed the Danish Climate Act, which established a statutory target for reducing greenhouse gas emissions by 70 percent from 1990 levels in 2030 and achieving net zero by 2050. In December 2022 the government announced its intention to reach net zero by 2045 and 110 percent emissions reduction by 2050 while maintaining the 2030 target. In 2022, parliament passed several agreements, to quadruple the combined onshore wind and solar electricity production capacity by 2030; an expansion of offshore wind; an expansion of district heating; and contributing to European independence from Russian gas by also increasing production of biogas as well as natural gas from the North Sea. Parliament also passed a higher and more uniform CO2 tax covering more industries to reduce CO2 emissions by 3.7 million tons in 2030, to be implemented on top of the EU Emissions Trading System (EU ETS).
Note: Additional information on the investment climates of the Faroe Islands and Greenland can be found at the end of this report.