The Danish Model and the Globalizing Learning Economy – Lessons for developing countries

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3. The learning economy as context

In order to explain the relative success of the Danish economy it is necessary to understand the global context within which it operates. In various contexts we have introduced an interpretation of what actually takes place in the economy under the term ‘the learning economy’ (Lundvall and Johnson 1994; Lundvall and Nielsen 1999; Archibugi and Lundvall 2001). The intention is to mark a distinction from the more generally used term ‘the knowledge-based economy’. The learning economy-concept signals that the most important change is not the more intensive use of knowledge in the economy but rather that knowledge becomes obsolete more rapidly than before; therefore it is imperative that firms engage in organizational learning and that workers constantly attain new competencies.

The wide use of information technology has become a prerequisite for competitiveness and in all parts of the economy including so-called low technology sectors the use of scientific knowledge offers new opportunities for firms. Especially in high income countries codified knowledge becomes more important than before. But these changes together with global competition increase the rate of transformation and change. As a result both individuals and companies are increasingly confronted with problems that can be solved only through forgetting old and obtaining new competencies. The rapid rate of change reflects that the intensified competition leads to a selection of organizations and individuals that are capable of rapid learning, thus further accelerating the rate of change.

The transition to a learning economy confronts individuals and companies as well as national institutions with new challenges. For the individual it becomes of critical importance to be able to upgrade skills or to get access to new ones over the life-cycle. Finding a workplace where there is ample opportunities to learn new skills may be more important than getting a high salary to start with. For the education system a strong emphasis on teaching basic subjects as language and mathematics needs to be combined with promoting what sometimes is referred to as ‘personal skills’ or ‘social skills’. The capacity to learn becomes the most important one in the learning economy – it is a problem that the national Pisa-tests do not give emphasis to such competencies.

At the level of the firm we may see the growing emphasis on new organization forms promoting functional flexibility and networking as responses to the challenges posed by the learning economy. In a rapidly changing environment it is not efficient to operate a hierarchical organization with many vertical layers and with departments and functions operating separately within the firm. It takes too long to respond when the information obtained at the lower levels has to be transmitted to the top and back down to the bottom of the pyramid. In many instances big vertically integrated companies are less effective than smaller units engaged in relational contracting and networking. An increasingly important dimension of competition becomes related to how attractive a firm is for labor and this will reflect the learning opportunities that it offers to its employees. This is correlated to the degree of participation and autonomy offered to workers. Therefore we should expect a trend toward a more participatory working life in the private sector.

For national economies the challenge is to combine a strong science base with establishing national institutions that promote individual, organizational and inter-organizational learning. Labor markets may combine high mobility with strong public investments in training or combine less mobility with strong investment in in house-training. In a recent paper (Jensen et al 2007) based upon Danish data we demonstrate that firms that combine a strong version of science-based learning with a strong version of experience-based (organizational) learning are the ones that are most innovative (se box 1).

3Box 1: Combining Science-based (STI) and Experience-based (DUI) modes of innovation promotes product innovation.

The table below taken from Jensen et al (2007) is based upon a clustering of 692 Danish firms. The odds ratio indicates compares the propensity to innovate using the low learning cluster (neither DUI nor STI) as benchmark). Also when sector, size and ownership are brought in as control variables we find that firms that combine the use of scientific knowledge with organizational learning are more than double as active in terms of introducing product innovations as are firms that are strong only in one of these two dimensions.

Odds ratio estimate

Coefficient estimate

Odds-ratio estimate with control variables

Coefficient estimate with control variables

STI Cluster





DUI Cluster





DUI/STI Cluster










In what follows we will argue that the strong performance of the Danish economy reflects that micro-relationships in the system that are supported by institutions (welfare states, gender relationships, education and labor markets) makes it especially effective in terms of DUI-learning while recent developments have strengthened the element of STI-learning in the economy. In a global context (the globalizing learning economy) where the rate of change is high and accelerating the resulting adaptive capacity has been a key to success.

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