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The Danish Growth Miracle Carl-Johan Dalgaard Inaugural lecture November 5, 2010.

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Presentation on theme: "The Danish Growth Miracle Carl-Johan Dalgaard Inaugural lecture November 5, 2010."— Presentation transcript:

1 The Danish Growth Miracle Carl-Johan Dalgaard Inaugural lecture November 5, 2010

2 RankCountryGDP per capita Qatar88320,78 2Luxembourg77766,19 3United Arab Em.51342,68 4Brunei50568,99 5Bermuda48867,42 6Norway48391,18 7Singapore44598,62 8USA42897,42 9Kuwait42061,18 10Ireland41635,31 11Iceand38196,59 12Switzerland37308,82 13Australia36302,66 14Canada36166,12 15Austria36026,75 16Netherlands34391,35 17Denmark34287,45 18Belgium33794,14 19Sweden32952,04 20Finland32481,02

3 RankCountryGDP per capita Qatar88320,78 2Luxembourg77766,19 3United Arab Em.51342,68 4Brunei50568,99 5Bermuda48867,42 6Norway48391,18 7Singapore44598,62 8USA42897,42 9Kuwait42061,18 10Ireland41635,31 11Iceand38196,59 12Switzerland37308,82 13Australia36302,66 14Canada36166,12 15Austria36026,75 16Netherlands34391,35 17 Denmark 34287,45 18Belgium33794,14 19Sweden32952,04 20Finland32481,02 Denmark: Limited natural ressources of historical importance; geographically small; surrounded by powerful nations... Prosperity a small miracle?

4 Why are European countries comparatively rich today? Proximate reason: Started growing earlier than all other countries on the planet; Denmark (DNK) late 19th century How was that possible? DNK adopted the Industrial revolution. How..? Universal education (early 19th century) was the facilitator Why then did DNK adopt education early on? The question.

5 OUTLINE The Danish Growth Miracle: A Theory Remarks on external validity of the theory Implications for the current political-economic debate

6 THE DANISH GROWTH MIRACLE: A THEORY

7 Historical Denmark todayHistorical Denmark 5000 BCE

8 CountryCoast/areaPopulation in 2000 (1000s) 1Singapore Danmark Philippines Kroatia Greece Jamaica Estonia Mauritius Norway Japan Tabel 2. Top 10: Coast/Area Sources: CIA factbook, World Development Indicators

9 Initial condition: (Uncommonly) coastal Travel by sea; hunting and gathering (Tauber, 1981; Enghoff, 1994) Incremental innovation process: boat building, navigation (e.g., Hale, 1998) Result: Potential to become a nation propelled by international interaction – trade. This potential was realized …

10 Why was the trade potential realized? 1.Limited ressources (need is the mother of nessesity) 2.Limited market (small country) 3.Fortunate location: Europe (e.g., Diamond, 1997) End result: 1.Geography (Coast/Area) International Interaction and Trade

11 Implications of being a nation propelled by trade? A need to be open to new ideas (affects the percieved return to knowledge accumulation) Evidence? Archaeology, Anthropology (religion, pre Christianity), Technology adoption prior to formal schooling (i.e., before 1500) End result: Trade Cultural Opennes to new ideas (/high inherent return to knowledge accumulation)

12 Universal education; great idea, but not of Danish origin Key events: Protestant reformation (e.g., Landes, 1999; Becker/Woessmann, 2009) – 1530 in DNK; Enlightenment (e.g., Easterlin, 1981; Mokyr, 2005) E.g. Kirkeordinansen (1537); Forordningen om undervisningspligt på landet (1739); undervisningspligt såvel på land som i by (1814) Pre-existing high inherent return to knowledge accumulation in DNK Early adoption of universal education in DNK

13 Theory: Coastal (limited natural resources, location) Trade High inherent return to knowledge accumulation Early adoption of universal education Technology adoption and take-off

14 REMARKS ON EXTERNAL VALIDITY

15 In 1910: Services (in total) make out 45% of GDP. Denmark was always a service economy. Today: 70% (New: Public sector)

16 CountryCoast/areaPopulation in 2000 (1000s) 1Singapore Danmark Philippines Kroatia Greece Jamaica Estonia Mauritius Norway Japan

17 CountryCoast/areaPopulation in 2000 (1000s) 1Singapore Danmark Philippines Kroatia Greece Jamaica Estonia Mauritius Norway Japan

18 CountryCoast/areaPopulation in 2000 (1000s) 1Singapore Danmark Philippines Kroatia Greece Jamaica Estonia Mauritius Norway Japan

19 Cross country data: 1.Coast/area predicts cultural valuation of new ideas (and patents pr capita) 2.Coast/area predicts early (1910) school enrolment rates 3.Coast/area predicts GDP per capita in 21st area (via HC) 4.Coast/area predicts the size of the service sector CountryCoast/areaPopulation in 2000 (1000s) 1Singapore Danmark Philippines Kroatia Greece Jamaica Estonia Mauritius Norway Japan

20 IMPLICATIONS FOR THE CURRENT POLITICAL-ECONOMIC DEBATE

21 Human capital seems to have been critical. Quantity in focus in the economic political economic debate. Perhaps time to consider educational institutions though (generalists vs specialists) Technology adoption has always been critical; not invention per se. In the economic-policial debate all focus seems to be on the latter however Services: historically critical, contemporarily critical. Not in focus in economic-political debate, which focuses on Industry


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