Welfare as a competition parameter

Denmark’s generous welfare state and high competitiveness has had the world’s economists scratching their heads for years. How can a country be at the top in OECD rankings of equality between citizens, and at the same time be one of the world’s most competitive countries according to the World Economis Forum? Se figure 1. There is talk of a grand paradox, as equality is more often bound together with a lack of dynamism and inefficiency. Shouldn’t easy access to unemployment benefits, training and free medical care turn the Danes into welfare free-riders resulting in inefficiency and low competitiveness?

Quite the opposite, according to professor Ove K. Pedersen, of the International Center for Business and Politics at the Copenhagen Business School. Over many years he has researched the development of the welfare state and is about to put the finishing touches to a book about the connection between welfare and competitiveness. And the conclusion is clear: “The Danish welfare state has laid the foundation for a unique effectiveness.”