1 The Department of Society and Globalisation, Roskilde University2 Department of Social Sciences and Business, Roskilde University
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.
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International Polar Year Oslo Science Conference, 2010