Globalisation has created new business models. Although you can still find traditional manufacturing enterprises with factory production, development, sales and administration gathered within the Danish borders, it has become more common to spread across several countries. An increasing share of the Danish manufacturing enterprises produce their goods or some of their goods without factories in Denmark. In this way, the industrial processing does not take place in Denmark but in a factory abroa
Part of the value added from the processing in factories abroad is included in the Danish gross domestic product (GDP) because the factors of production of Danish enterprises – not least the intellectual capital – contribute to create the value of the foreign factories’ production. The intellectual capital of enterprises is based on research and development, and it is the basis for patents and other intellectual property rights that can be registered and traded. Tangible assets such as machinery and buildings are capital in the country in which they are located. Intangible assets are capital in the country in which their economic owner is registered. In this way, intangible assets are similar to aircraft or vessels, neither of which are geographically confined, but are included in the capital stock of the country in which the airline or shipping firm is registered. In this analysis, we discuss how using a foreign factory affects Danish production and value added.
Production abroad has an effect on Danish GDP
Subject group: Economy
Released: 7 June 2019 08:00
ISSN pdf: 2446-0354