Denmark Finance Minis­ter’s Statement

Author: | Published: 5 Sep 2017
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Global trade growth has slowed and headwinds of populism, protectionism and reform resistance are blowing from many countries. Many want to go back to 'the good old days' – whatever they were.

Worries about lost jobs and stagnating incomes must be taken seriously, but nothing is gained by turning our backs on the rest of the world. Globalisation has brought new opportunities: we have access to more products and better technology, products are cheaper, we are able to produce more, and we can go abroad to work, learn and seek new experiences.

Free trade and reforms that open up to the world along with international cooperation are not the problem, but a key part of the solution. Openness ensures competition and the spread of technology. This leads to better division of labour, higher productivity, higher incomes and better living standards.

But we cannot lean back and do nothing – on the contrary. There is more need than ever for reforms that ensure adaptable economies and that everyone gets a share of the new opportunities.

I like to think of Denmark as one good example: a small and highly open economy that depends crucially on trade and international cooperation. We are subject to constant competition from abroad, which means that we need to stay in shape and keep doing things better. While this can be challenging, it has helped us strengthen productivity, boost innovation, provide a much more diverse supply and create new well-paid jobs. This means higher growth and better living standards.

The key is to provide opportunities to adapt for individuals in vulnerable sectors and ensure that globalisation works for everyone. We have created a flexible labour market, a welfare system that seeks a balance between a solid safety net and incentives to work, and provided high quality education throughout working lives. This has been dubbed 'flexicurity' – there is no guarantee to keep a specific job, but a strong focus on social safety and quick transition into new jobs.

However, no model fits all countries and no model is without challenges. Progress never stops and there is persistent need for reform, also in Denmark. We need to stay competitive and ensure sustained growth, including by increasing labour supply and skills, raising productivity and improving the business environment.

At the international level, the importance of cooperation and institutions such as the IMF, EU, OECD and WTO is increasing. They play an important role in promoting open markets and reforms and ensuring an equal playing field. We must fight for renewed global commitments to openness and cooperation combined with the right policies and better communicating the benefits.

Globalisation is a convenient scapegoat for populists and pessimists. But the truth is that the world is better than ever and globalisation plays a big part in this. Globalisation and trade has made us better off throughout history and has belied previous pessimism over and over. We must recognise that some feel left behind, but making it possible for all to be winners is the solution – not protectionism or resistance to progress.

 


 

 

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