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4. The Case of Denmark

Based on the many instruments available, a national strategy on EDI was proposed by the Danish government in 1996 (Ministry of Research and Information Technology, 1996).

4.1 The Importance of the Public Sector in Denmark

The public sector in Denmark redistributes about 70% of the GDP (at factor costs), covering a variety of expenditures (unemployment insurance, housing subsidies, health care, elder care) and income sources (income taxation, corporate tax, consumer tax, import tax, etc.). In addition, about 50% of the total public expenditures are allocated through the local government (Jørgensen and Pedersen, 1994). It is estimated that the total public sector procurement is about 90 billion Danish kroner (US$13 billion).

The transfer of income is a vital part of the Danish society and is the major reason for the relatively early introduction of electronic payment transfer from the government to unemployed persons. The generous welfare system created a need for an instant check on social security numbers (CPR number), household income, documentation from doctors on medical need, etc.

The three critical characteristics of the Danish public sector—a high degree of income redistribution, highly decentralized services, and a large collection of data from companies and citizens - have created a push for the government to informate itself for technical, economic and legitimization purposes. As such, EDI has been rendered a high priority area by the central and local authorities.

Local authorities in charge of the health, education, and transportation sectors view electronic commerce as vital in all areas of procurement, as well as a means of retrieving information from citizens and commercial clients. Central government and semi-governmental units, such as the postal service and train service, perceive electronic commerce as a means to achieve strategic advances, cost and time reductions, in addition to improved overall communication. As a consequence, the Danish public sector has become the primary locomotive for the diffusion of electronic commerce relative to the private sector. In the next section we will present the overall EC strategy formulated by the Danish national council on EDI.

Table 1. Government expenditures: Consumption, transfer, investment, other expenditures (1996)
 
Billion Danish Kroner
Percent of GDP
Consumption (salary, goods and services, etc.)
255.3
25.2
Transfer of income
342.6
33.8
Investments
22.3
2.2
Other expenditures
6.3
0.6
Total Government current expenditure
626.5
61.8
Source: (Statistics Denmark, 1998)

4.2 The National EDI Strategy

The EDI Council is the administrative unit responsible for the electronic commerce strategy. The Ministry of Research and Information Technology and the Ministry of Business and Industry grant about DKK 18 million over a 3-year period to finance the increased activities of the Danish EDI Council. Moreover, these ministries provide a pool of DKK 6.6 million over a 3-year period to subsidize standardization work, in particular, across industrial boundaries. These subsidies are distributed under the auspices of the Danish Agency for Development of Trade and Industry, as recommended by the Danish EDI Council.

The national electronic commerce strategy was formulated in 1996 in a joint effort between representatives for the public and private sector:

The strategy has seven key areas:
  1. Establishment of EDI standards in all sectors
  2. EDI to be used for public procurement contracts under EU tendering by 1998
  3. All public-sector financial systems should handle all commercial documents in EDI by the end of 1998
  4. EDIFACT-based interchange of administrative information with the public sector in fax, statistics, etc.
  5. Development of EDI software to facilitate the above
  6. Legislation on digital signatures and electronic documents by early 1998
  7. Danish EDI Council to act as initiator and coordinator
 The strategy is joined and supported by all major players in both the public and private sector:
Furthermore, the Headquarters Chief of Defense Denmark, the Danish State Railways, the Copenhagen Hospital Cooperation, the Danish Palaces and Properties Agency, as well as the Ciy of Copenhagen have used the adopted strategy by including their suppliers’ ability to partake in EDI as an integral condition for inviting tenders as of 1998. Finally, the Danish government has made it official policy that all public procurement in year 2000 should be done using EDI.
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@ Juul, Andersen & Bjørn-Andersen: Electronic Commerce in Denmark, Proceedings of the 3rd USENIX Workshop on Electronic Commerce, Boston, September 1998. idies, health care, elder care) and