Having been ranked third last year, Denmark has been moved above the United States and Singapore and is now number 1 for the first time on the updated list, which contains 63 countries.
After steadily climbing the list from number 6 in 2018, Denmark received high marks for its resilient economy, law and order, social responsibility, stability, cohesion, absence of corruption, openness to trade, adaptability, ongoing education and motivated employees.
“This good result reflects that we, in many ways, have an incredibly well-functioning society and some very strong businesses,” Allan Sørensen, chief economist at the Confederation of Danish Industry (Dansk Industri, DI), told DI Business.
Denmark’s strong economic position became particularly clear during the Covid-19 pandemic when the country managed lockdowns and restrictions, Sørensen said. That was thanks in part to the readiness of businesses to make adaptations and a high level of digitisation.
There are still clear areas for improvement, notably capacity problems and labour shortages, the economist pointed out.
One possible solution, Sørensen said, is for Denmark to recruit more skilled foreign workers.
“Businesses are battling capacity problems, increasing costs and a large shortage of labour. It is therefore important that we reduce our high taxes and increase access to labour,” he told DI Business.
DI has advocated allowing more skilled foreign workers to enter the Danish jobs market.
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The Institute for Management Development list is based on a number of factors on which each country is rated, including surveys of thousands of business leaders and experts.
Although Denmark fared well on many parameters, it received a lower mark on areas including high taxes and salary costs for businesses.
Low working hours and a large public sector are also considered drawbacks in relation to Denmark’s competitiveness.
Denmark is also considered to be held back by its relative lack of attractiveness for foreign investors, the ranking states.