Axcelfuture commissioned Copenhagen Economics to carry out a study on the impact of sectoral shifts on productivity growth and investment in the Danish economy.

It is a standing ambition of the government (2014) to create 150,000 private jobs before 2020. To that effect, a number of labour supply reforms have been agreed, but to reach the goal it is also necessary with a high rate of productivity growth. However, the sectoral shifts in the Danish economy, especially from manufacturing to service, seem inconsistent with the required rate. Against this background, Axcelfuture desired a clear picture of the sectoral shifts, a scenario analysis of what it would take in terms of investment at the sector-level to turn the development around, and a final assessment of whether the required levels of investment were likely to be attained in practice.

Copenhagen Economics used national accounts data to project future levels of productivity, investment, capital, and employment at the sector-level. We validated these projections with a number of cross-checks, especially for the projected productivity growth which was found to be significantly inferior to the rate assumed by the Ministry of Finance. Then three scenarios for investment served as the basis for an assessment of future sectoral shifts, aggregate productivity growth, and employment.

Copenhagen Economics found a considerable investment gap and a projected growth rate of productivity that seemed inconsistent with Ministry of Finance projections. The analysis casted doubt on the attainability of the 2020-ambition of 150,000 private jobs.