The global organisation of industrial groups has an impact on the measurement of Danish production and income

The way in which Danish enterprises choose to organise their production and sales in the global economy impacts whether it is reflected as domestic production and value added (GDP) or only as income (GNI) in the national accounts. When Danish enterprises sell products abroad, the activities are included in Danish GDP, whereas income based on sales via subsidiaries abroad is only included in GNI. In this way, the choice of sales channel impacts the statistics on Danish production and income.

This analysis describes the global set-up of Danish industrial groups and their impact on the Danish economy. Focus is on the close correlation between Danish exports and in-come from subsidiaries abroad. The analysis is an extension of a Statistics Denmark analysis from 2016 dealing with goods exports outside Denmark by Danish manufactu¬ring enterprises. Income data from the central bank of Denmark, Nationalbanken, has allowed us to further document the importance of the industrial groups to the Danish economy.

Main conclusions:

• The industrial groups are important to the Danish economy; they export goods and services produced in Denmark or abroad and receive income from subsidiaries abroad. 
• In 2016, Danish industrial groups’ sale abroad of goods not crossing the Danish border accounted for almost a third of their total sale of goods abroad of DKK 524 billion.
• The income from subsidiaries of DKK 42.1 billion accounts for approximately one third of total earnings from Danish industrial groups’ manufacturing activities abroad. These ear-nings could have been counted as exports had the group chosen a different role for the production taking place in subsidiaries abroad.
• In 2016, the industrial groups’ activities abroad accounted for approximately 6 per cent of the Danish gross national income (GNI) and approximately 4 per cent of the gross domestic product (GDP).

This is a translation of an analysis previously published in Danish 1 October 2018. See the analysis here.