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Adapting business framework conditions to deal with disruptive technologies in Denmark

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  • Mikkel Hermansen
  • Valentine Millot

Abstract

Danish firms are close to the technological frontier compared to other OECD countries,making the introduction of new – potentially disruptive – technologies key to boostproductivity growth. Despite a high level of digitalisation and good framework conditions,aggregate productivity growth in Denmark has been only average compared to otheradvanced OECD countries and lags behind in less knowledge-intensive service industries.Policy needs to embrace innovative technologies by leaning against attempts to discourageor exclude them and by tackling unintended or outmoded obstacles in legislation andregulation. Analysis based on Danish firm-level data suggests that digital adoption throughinvestment in ICT capital increases firm productivity and contributes to business dynamicsand firm growth. Improving economic incentives for such investment as well as facilitatingadoption of new business models require a shift of taxation away from capital and labourincome. Ensuring supply of the right skills and maintaining effective upskilling will helpworkers cope with disruptive changes and ensure that economic growth benefits all.

Suggested Citation

  • Mikkel Hermansen & Valentine Millot, 2019. "Adapting business framework conditions to deal with disruptive technologies in Denmark," OECD Economics Department Working Papers 1545, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1545-en
    DOI: 10.1787/f7a1fe23-en
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    File URL: https://doi.org/10.1787/f7a1fe23-en
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    More about this item

    Keywords

    competition; digitalisation; disruption; innovation; productivity; skills; taxation;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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