Why is the current account of Greenland a topical issue, while those of Denmark and of the island of Bornholm in the Baltic Sea are not? Has the current account anything to do with future inde­pendence? It is ar­gued that balance of payments and foreign debt are closely connected to political and eco­nomic national identi­ty. Until recently Greenland's current account was positive by large amounts, which were unex­plained, as it proved impos­sible to uncover corresponding capital account defi­cits. However, im­proved balance of payments statistics together with sim­ple compu­tations demonstrate that sur­pluses partly disap­pear as an arti­fact if contents of imports of the various types of final demand are in­creased in accordance with the recent input output-table of Greenland. It is illustrated that discontinuation of transfer payments from Denmark would entail dramatic downfalls of produc­tion and living standards and large current account deficits. It is possible to remove the trade balance deficit and the need for Danish transfers simultaneously, but this would require higher tax rates and huge increases of exports.
Original languageEnglish
Publication date2010
Number of pages30
StatePublished - 2010
Event - Oslo, Norway

Conference

ConferenceInternational Polar Year Oslo Science Conference
CountryNorway
CityOslo
Period07/06/201012/06/2010

ID: 4339624