Travellers are seen at Copenhagen Airport Kastrup in Copenhagen, Denmark, July 3, 2022.
Travellers are seen at Copenhagen Airport Kastrup in Copenhagen, Denmark, July 3, 2022. Reuters / ANDREW KELLY

Once the U.S. led the world in international competitiveness--no more.

A tiny European country, Denmark, has assumed that role.

In 2000, the U.S. topped IMD's World Competitiveness Ranking (WCR), while Denmark didn't make it to the list of the first ten.

IMD's WCR ranking is based on 336 criteria across four categories: economic performance, government efficiency, business efficiency, and infrastructure.

Ten years later, the U.S. slid to third in IMD's ranking, while Denmark was still off the list of the first ten.

By 2023, the U.S. has dropped to the 9th position, while Denmark made it to the top of the list.

What is Denmark doing right and the U.S. doing wrong? What can the U.S. learn from Denmark? Young Pham, a financial advisor and investment analyst affiliated with BizReport, attributes the decline in the U.S.'s economic competitiveness and the rise of Denmark in the U.S' growing income inequality.

"According to the World Bank, income inequality in the U.S. has consistently increased since the 1970s and was exacerbated by the COVID-19 pandemic," he told International Business Times. "The Gini coefficient, a measure of income inequality, has surged above 0.4, a massive red line in inequality. However, when you compare the coefficient with Denmark, you see how the U.S. is dropping the ball. Denmark has a Gini coefficient of around 0.27, nearly two times lower than that of the U.S.; income inequality creates many problems in the economy. It affects not only economic competitiveness but also the ability of the economy to withstand shocks and unprecedented events like the COVID-19 crisis."

Dr. Dennis Nsafoah, the professor of Economics at Niagara University, sees broader causes.

Denmark has demonstrated remarkable advancements in two critical areas of global competitiveness, namely business efficiency, and infrastructure, while the United States has experienced deterioration in these domains since 2019.

Then there's business efficiency, where streamlined practices and digitalization expedite the work process. "In terms of business efficiency, Denmark has earned a reputation for its streamlined practices, reduced bureaucracy, and promotion of digitalization and entrepreneurship," he told IBT. "Conversely, the United States has experienced challenges in maintaining business efficiency due to complex regulations and bureaucratic procedures."

Visit one of the local Copenhagen restaurants, Denmark's capital, and you will be surprised by the speed of services, which raises customer turnover. It's helping use business resources more efficiently.

And there's Denmark's well-developed infrastructure, including transportation, energy, and digital connectivity, receiving high marks. "The country has made substantial investments in sustainable infrastructure, such as reliable transportation networks, renewable energy sources, and advanced digital infrastructure," Nsafoah added. "In contrast, the United States has faced issues with aging infrastructure and insufficient investment in critical sectors."

Again, a visit to the streets of Copenhagen confirms Denmark's progress in the infrastructure domain. Well-designed bicycle lanes make it easier to go around the city by bicycle rather than a car, reducing environmental pollution and saving energy while promoting healthy living.

Meanwhile, Denmark promotes work-life balance through policies such as flexible working arrangements, paid family leave, and a cultural emphasis on leisure time. "The U.S. could consider similar policies to enhance work-life balance and support the well-being of its citizens," Justin Albertynas, CEO of RatePunk, told IBT.

Then there's Denmark's social welfare system that provides a safety net for the less fortunate population. "Denmark's comprehensive social welfare system provides affordable and accessible healthcare, education, and social safety nets," added Albertynas. "The U.S. could work towards implementing healthcare reforms, investing in education, and strengthening social safety nets to address inequalities and improve overall well-being."

And there's renewable energy. "Denmark is a global leader in renewable energy, with significant investments in wind, solar, and hydroelectric power," continued Albertynas. "The U.S. could increase its focus on renewable energy infrastructure and offer incentives to accelerate the transition to a sustainable energy future."

Meanwhile, Denmark's government has managed to maintain fiscal discipline. Over the last 20 years, its debt to GDP ratio dropped from around 50% to close to 30%, while the U.S' has risen from around 50% to close 130%!

"Given Denmark's successes in these areas, the United States can benefit from studying and adopting relevant experiences from Denmark to enhance its business efficiency and infrastructure," Professor Nsafoah added.