How Denmark is losing its competitive advantage on knowledge & innovation

Politiken - one of Denmark's largest newspaper - published an interesting article about how in my eyes Denmark is losing its competitive edge on knowledge. The article is about a new decision that is made by the Danish tax office. This decision is about that it becomes only more expensive - thus more difficult - to buy magazines that are being published from outside the EU (such as The New Yorker and Foreign Policy).

The authors of the article argue that magazines from outside the EU will only become more expensive due to an extra tax. While reading the title that magazines become extremely expensive ('blade bliver ekstremt dyre') I was triggered, because non-EU magazines in Denmark are already expensive.

Six times a year I enjoy reading the magazine 'Foreign Policy'. When I should be buying a hard-copy version of the magazine, I should pay around €10 in the Netherlands and €15 in Denmark. This is already a bit more expensive than its original price of around €5, but that's something you take for granted if you think about shipping & admin costs. The reason why it is already more expensive in Denmark than in the Netherlands is because of the higher VAT rate of 25%. So, 'foreign' magazines are already expensive, but what makes it now extremely expensive?

If you for example buy a magazine for €5 you need to pay €1,25 extra for VAT. This is a relatively small extra amount that let's you absorb new information and knowledge from sources which are relatively non-Danish and non-European. However, it will look like that you need to pay €20 more for sending and receiving the magazine. The extra €20 is due to the fact that these magazines should be send through the post office who then can charge you for import rights.

So who is going to import a magazine that normally costs €5 but in Denmark around € 26,25? That's crazy! It is not only because it is so expensive, but also because this new decision will stop the flow of knowledge from outside Denmark.

Denmark sees itself as a knowledge economy. It is a small country with only 5,5 million people and without a very big asset of natural resources. Denmark earns money by selling knowledge. But looking at the future of each European country, it seems like that there will be only be fewer who carry knowledge - the people - due to for example an ageing workforce. This means that Denmark is in need of the latest knowledge that is necessarily not being produced in Denmark self. It therefore becomes crucial for countries such as Denmark to create a system through which it can easily absorb new knowledge.

I am sure that the rising of the costs on foreign magazines is not improving the process of absorbing new 'foreign' knowledge. It's a decision to try to earn money on the short term (which I don't believe will work, but perhaps the Danish tax does) but - on the other hand - will result in losing a competitive advantage in the long run!

Luckily I have an iPad through which I can subscribe to digital issues of Foreign Policy for only €4 per issue.