Denmark has traditionally been an agrarian country. Since the end of World War II (1939-1945), however, manufacturing and services have gained in importance. The proportion of the labor force in agriculture declined from an estimated 14 percent in 1965 to 4 percent in 1998. Danish ships, which operate in foreign waters, contribute substantially to the economy. The country is also profitably involved in foreign investments, shipbuilding, and foreign construction. The national budget in 1998 included $66.91 billion in revenues and $65 billion in expenditures. Denmark’s gross domestic product (GDP) in 1999 was $174.3 billion.
The only Nordic country to do so, Denmark joined the European Economic Community in 1973, at the same time as the United Kingdom, then its most important trading partner. At the same time, economic collaboration among the Nordic countries continues. No passports are required for travel by Scandinavians within the region, and communication among the various agencies of government is direct and need not be channeled through their respective embassies. Scandinavians enjoy a common labour market that includes reciprocal social welfare benefits and the right to vote in local elections in the neighbouring country of residence. There is capital mobility, supported by the Nordic Investment Bank. Uniform legislation, particularly with regard to commercial law, dates to the 19th century.
This thoroughly modern market economy features high-tech agriculture, up-to-date small-scale and corporate industry, extensive government welfare measures, comfortable living standards, and high dependence on foreign trade. Denmark is a net exporter of food and energy and has a comfortable balance of payments surplus. The center-left coalition government has reduced the formerly high unemployment rate and attained a budget surplus as well as followed the previous government's policies of maintaining low inflation and a stable currency. The coalition has lowered marginal income tax rates and raised environmental taxes thus maintaining overall tax revenues. Problems of bottlenecks, and longer term demographic changes reducing the labor force, are being addressed through labor market reforms. The government has been successful in meeting, and even exceeding, the economic convergence criteria for participating in the third phase (a common European currency) of the European Monetary Union (EMU), but Denmark, in a September 2000 referendum, reconfirmed its decision not to join the 11 other EU members in the euro. Even so, the Danish currency remains pegged to the euro.
