Economy of Delkora
 Flag of Delkora | |
| Currency | Veld (⊻) |
|---|---|
| Common Monetary System | |
| Calendar year | |
Trade organisations | Common Sphere |
| Statistics | |
| GDP | NSD 2.82 trillion (2020) |
GDP growth | 2.4% (2020) |
GDP per capita | NSD 29,300 (2020) |
GDP by sector | Services: 72.5% Industry: 26% Agriculture: 1.5% |
Population below poverty line | 2.6% (2020) |
| 24.7 (2020) | |
Labour force | 53 million (2020) |
Labour force by occupation | Services: 71.4% Industry: 25.4% Agriculture: 3.2% |
| Unemployment | 4.3% (2018) |
| External | |
| Exports | NSD 237 billion (2020) |
Export goods | List
|
| Imports | NSD 195 billion (2020) |
Import goods | List
|
| Public finances | |
| 68% of GDP (2020) | |
| Revenues | NSD 1.44 trillion (2020) |
| Expenses | NSD 1.47 trillion (2020) |
The economy of Delkora is a market socialist economy. It is characterised by the predominance of social ownership, highly regulated markets, low levels of income inequality, and an expansive welfare state. It consistently scores high on most quality of life indicators, particularly of general happiness and subjective well-being.
Delkora's economic performance has historically been very uneven. It was among the first countries in Eracura to fully industrialise, but it was hampered by income maldistribution and poverty. The severity and duration of the 1950s depression was followed by the New Kingdom program, which brought high levels of economic growth in the 1960s and 1970s. It has maintained relative macroeconomic stability since, but growth rates have declined on average, a feature attributed to the strongly interventionist and redistributive policies pursued by several governments.
The country has evolved from an industrial economy to one based more on services. Features of its economic model include high tax levels and government spending, exceptionally high union density, and use of indicative planning mechanisms through the Hermes Programme. Persistent unresolved issues include lagging rates of reinvestment, capital flight risks, and fiscal sustainability, particularly a relatively high public debt level incurred by past economic strategies. Delkora is a member of the Common Sphere, within which the majority of its international trade takes place.
History
Early history
Delkoran society began transitioning away from its nomadic roots around 1500 CE with the formation of rural communes, which would be the primary social and economic institutions of Delkoran society for several centuries. They were characterized by communal ownership of property and egalitarian social roles. Historians often cite them as contributing to the early development of attitudes favoring economic democracy and decentralization.
The most successful communes eventually developed into large cities that began to abandon their egalitarian founding principles. This transition resulted in the development of private property rights and the subsequent rise of an urban merchant class, although the communes would continue to be important in Delkoran culture and economics going forward.
Industrialization
Industrialization began in Delkora around the mid-1700s. The introduction of the steam engine and innovations in iron making facilitated a rapid increase in worker productivity. Meanwhile, improvements in agricultural equipment helped contribute to major population growth.
As a result of industrialization, the cities began to eclipse the rural communes as the primary drivers of the economy, prompting a transition of Delkoran society away from its agrarian roots. Attracted by the prospect of urban jobs, young people began relocating from the communes in large numbers starting around 1780, and by the turn of the century, most of the population lived in cities and towns.
Aside from the economic consequences of this shift, there were a number of political consequences that would impact Delkoran politics going forward. In particular, as the egalitarian culture of the communes declined as a political force, the country’s aristocracy, whose power and influence had been mostly limited to the cities, accrued a great deal more political power. Throughout the early 1800s, the aristocracy increasingly sought to extend its influence over the communes, creating a tension in Delkoran society between its urban and rural elements.
The industrial revolution also caused significant unrest as it exacerbated inequality and harsh working conditions. A series of popular uprisings and riots against mechanisation's role in immiseration, symbolised by destruction of machinery as a form of protest, took place in the 19th century, pushing governments of the day to begin undertaking reforms.
The Brom program and Liberal reforms
By 1850, the negative consequences of the rapid population growth enabled by the industrial revolution began to be felt as cities and towns became increasingly overpopulated, leading to poor living conditions and widespread poverty. This phenomenon was further exacerbated by the large influx of people into the cities in the aftermath of the Delkoran Civil War, which had ravaged much of the countryside. Additionally, lax workplace regulations permitted by Conservative governments throughout the 1850s and 1860s led to horrific abuses as factory workers were subject to seven day workweeks, dangerous working conditions, starvation wages, and a proliferation of child labor.
Beginning in the 1860s, urban industrial workers began organizing to demand reform, but were stymied by laws prohibiting the formation of unions. Nonetheless, various labor groups were formed during the decade, eventually uniting under an umbrella organization known as the United Workers’ Congress of Delkora, the predecessor of the National Labor party. Throughout the 1870’s, the UWCD organized general strikes throughout the country, which were often met with violent suppression. Still, the labor movement was able to secure widespread support, resulting in National Labor winning a majority in the Federal Parliament in the 1880 federal election.
Chancellor Magnus Brom implemented a sweeping reform agenda posthumously termed the “Brom Program”, which explicitly protected the right of workers to organize and collectively bargain, implemented workplace reforms, and laid the foundation of the Delkoran welfare state by establishing unemployment insurance and a national pension program. The General Labor Confederation of Delkora (LO) was established in 1892.
The outbreak of the Siduri War and Eracura War in the 1930s benefited the Delkoran economy, as the neutral country was able to significantly increase trade, particularly for industrial products and matériel now in high demand. The Sofia Westergaard government took important steps towards social democracy, expanding the welfare state and undertaking public works to reduce unemployment and improve infrastructure.
Economic liberalization and depression
Throughout the 1940s, the Conservative government of Veidnar Albendor implemented a sweeping agenda of economic liberalization which included tax cuts, a reduction in social security spending, and a weakening of competition laws that enabled the rise of oligopolies in a number of important industries. The cumulative effect of these reforms was a major transfer of wealth to the rich. The worsening inequality affected the economy, particularly after the wartime boom ended and the 1946 Steel Strikes.
Additionally, the rise of oligopolies proved to be disastrous to economy. A severe recession struck in the 1950s, which the Banking Crisis of 1953 turned into a major depression. Unemployment reached a peak of 25% in 1957 and poverty increased significantly. The depression coincided with a period of severe unrest, which included violent riots, a far-left insurgency spearheaded by the Labor Underground, and massive strikes organised by the LO under Mireli Sørensen's leadership. Fears of state collapse or a new civil war became widespread.
New Kingdom program
National Labor's landslide victory in the 1959 federal election ushered in a period of prosperity and fundamental economic transformations under the New Kingdom program.
In its first phase, the program focused on recovery and immediate relief. This was achieved through a massive expansion of social security, nationwide public works programs, and aggressive nationalisation, significantly increasing the number of government enterprises and administrative agencies.
With the economic collapse halted and recovery underway, the second phase brought in long-term structural changes. Progressive tax rates were significantly hiked, and company law reformed to favour cooperatives and co-determination. The National Industrial Administration was set up to administer economic planning and wage and price controls. The Cooperative Economy Act of 1965 created employee funds and obligated companies to issue new shares to their employees, to achieve a gradual transfer of economic ownership from private shareholders to workers.
The 1960s and 1970s marked the height of the New Kingdom program, and brought a period of unprecedented prosperity. High economic growth rates were sustained, averaging nearly 8% over the two decades. The expanded welfare state and powerful LO ushered in an era of extraordinary wage compression and redistribution of wealth. Poverty, inequality, and unemployment all declined dramatically. Delkora voted in 1965 to join the Common Sphere, which became its main trading partner and brought benefits such as implementation of the Hermes Programme for planning purposes.
By the 1970s, the Delkoran workforce was among the best paid, most protected, and best treated on Eracura. It benefited from policies such as the social dividend, the sliding wage scale, and the replacement of minimum wages with income policy agreements. Many of the core reforms embodied in the New Kingdom program were embedded in the federal constitution by the Economic Rights Amendment of 1976.
Most economists see the era as the Delkoran government choosing to prioritise redistribution of wealth over growth. Structural weaknesses remained evident: industrial unrest simmered beneath the surface, as the militant LO under Sørensen pushed for productivity gains to go to workers through wage increases, dampening private reinvestment. The ongoing far-left insurgency, sustained deficit spending and a growing current account deficit further worried investors.
Delkora's heavy reliance on the CS for trade and economic partnership came under fire; Conservative Party leader Archibald Bødker famously accused Geirbjørn Feldengaard of "cutting off Delkora from the rest of Tyran".
The high growth rates brought about by economic recovery and reconstruction abated by the late 1970s, and faced the country with a dilemma as its international competitiveness began to decline. Feldengaard's latter National Labor–Liberal Party cabinets tried to respond with the Tænk stort ("Think Big") strategy, which entailed borrowing funds to undertake large-scale industrial projects in order to reduce imports and improve balance of payments.
The impact of Tænk stort is hotly debated — several projects were abandoned due to environmentalist opposition. The heavy borrowing significantly increased Delkora's national debt.
1983–present
The fracturing of the New Kingdom coalition brought a Conservative–Agrarian coalition to office in 1983 under Lars af Vellarand. Vellarand sought to curtail much of the New Kingdom program, criticising it as wasteful, unsustainable, and responsible for Delkora's economic stagnation.
The government failed to fully dismantle the program as intended, but did pursue policies of fiscal conservatism, privatisation, and a degree of deregulation. It sought to reorient Delkora away from the CS and towards closer economic relations with Acrea, but its centrepiece effort to withdraw from the CS was defeated in a 1984 referendum.
The Vellarand government's reforms produced the phenomenon of a "casino economy", marked by heightened speculative activity and a boom in leveraged buyouts and corporate raids in the private sector. The economy overheated and collapsed, leading to a protracted depression in 1991–1994, the most severe since the 1950s.
The depression and the exposure of the neoliberal conspiracy outraged the electorate and destroyed Ulrik Andersen's government, leading to a left-wing victory in the 1994 federal election. The governments of Emma Jørgensen and Kol Vossgaard introduced policies to strengthen the cooperative sector, increase environmental sustainability, and address the economy's middling performance through structural adjustments and active labor market policies in the context of the digital revolution, with the aim of incentivising long-term investments and productivity gains.
The ascent of the moderate New Conservative faction under Harald Møller and the consolidation of a traffic light coalition under Adric Azengaard is considered by political scientists to reflect the acceptance of the New Kingdom program as a cross-party consensus, with major debates now centred around adapting its tenets to contemporary realities.
Sectors
Primary
Agriculture, forestry, and mineral extraction collectively account for only about 1.5% of the Delkoran economy and employ about 3.2% of the workforce. A significant portion of agricultural output comes from rural communes, whose production meets most of the country’s domestic food needs.
Forestry is a major industry in the country, although it is subject to extensive environmental regulations that require replanting at replacement levels for all felling operations and prohibit felling in protected wilderness areas. As a result, Delkora is a net importer of wood products. Mineral extraction is similarly limited by environmental regulations and as a result, the country is a net importer of many raw materials. Coal mining has been banned in Delkora since 2003.
Secondary
Industry accounts for about 26% of the economy and employs about 25.4% of the workforce. Scholars typically cite the late 1990s as the period in which the Delkoran economy began a trend toward deindustrialization as advancements in automation began rendering older, labor-intensive forms of manufacturing obsolete, prompting layoffs of many industrial workers. Nonetheless, the country continues to maintain a strong industrial base in the present day. The coastal region of Førelskov is one of the most important industrial areas of the country and is home to sprawling steel mills in cities like Fjødonor and Halmodryn.
Tertiary
Services account for about 72.5% of the economy and employ about 71.4% of the workforce. The largest categories within the service sector are financial services, retail, entertainment, and logistics. Tourism, especially environmental tourism, has also become a significant contributor to the economy, with Delkora being a popular destination for tourists from throughout Tyran.
Economic organization
Economic ownership in Delkora (2018)
Labor
Delkora has one of the highest union densities in Tyran, with over 87% of Delkoran workers registered as members of a labor union and 92% of workers covered by a collective bargaining agreement. Federal law mandates closed shop or union shop union security agreements. Labor unions across different industries are united under the General Labor Confederation of Delkora, which helps to coordinate collective bargaining and activism.
All public and private sector workers have a right to strike, although strike action on the part of certain categories of public workers deemed essential to public safety is subject to restrictions. Most forms of anti-strike action on the part employers, such as lockouts and hiring strikebreakers, are illegal. Additionally, federal law mandates co-determination for publicly traded companies, starting at 25% of seats on the board of supervisors for companies employing over 500 people, 50% for those employing over 5,000 people, and 75% for those employing over 10,000.
Collectives and communal ownership
Various forms of collective ownership, including worker cooperatives, consumer cooperatives, and hybrid cooperatives constitute about 37% of the economy. Under Delkoran corporation law, all members of a cooperative each own a single nontransferable share of the cooperative, and shares can only be held by members of the cooperative. Cooperatives are governed by a board of instantly-revocable delegates comprised of members elected by a vote of all members of the cooperative. Communal ownership constitutes 3.8% of the economy, with the largest subset of this category being property owned by the communes.
Planning
Indicative planning is a cornerstone of economic policy, carried out through the Hermes Programme. The mixture of planning mechanisms and market economy created by the New Kingdom's strategy of long-term change is a distinctive feature of the economy, and has occasioned criticism for its negative effect on growth rates.
Fiscal policy
The largest categories of government spending include healthcare and education, followed by social security programs. A primary goal of government fiscal policy is large scale income redistribution to ensure low levels of income inequality. In 2020, Delkoran government expenditures amounted to 52% of GDP, while revenue amounted to 51%.
Accordingly, the Delkoran tax system is highly progressive, with personal rates ranging from 5% to 85%. The corporate tax rate ranges from 15% to 40%, with individual dividends and capital gains taxed at higher rates. Various redistributive taxes are levied by the federal government, including a wealth tax, an inheritance tax, and a financial transaction tax. A federal carbon tax is applied to greenhouse gas emissions by corporations.
Other taxes include VAT, excise taxes, and stamp duties for states, and land value tax and property taxes for municipalities. Both state and local governments receive transfer payments from the Federal Equalization Fund Administration intended to offset disparities in fiscal capacity and ensure that social services are equitably funded in all parts of the country.
The taxation system has been a key factor in maintaining Delkora's quality of life indicators, but also forces the public sector to take a greater role in reinvestment due to its effect on the private sector.
Delkora operates within the framework of the Common Tax Compliance System, which requires all Delkoran citizens to file tax returns even if they are not resident, and all foreign financial institutions to report the assets and identities of persons connected to Delkora to the authorities.
Delkora's public debt, at 68% of the GDP in 2020, remains high for Eracura, a legacy of the Tænk stort projects and governments refusing to turn to austerity policies to reduce it, instead favouring financial repression policies to reduce it.
Banking and monetary policy
The financial industry is heavily socialized, characterized by the predominance of state ownership and credit unions. The national currency of Delkora is the veld, which operates a crawling peg as part of the Common Monetary System.
The Central Bank of Delkora is responsible for conducting monetary policy and has a statutory responsibility to ensure price stability and keep unemployment low. The Central Bank is an independent federal agency, but is subject to oversight from the Ministry of Finance.
Welfare state
Delkora has long maintained an expansive and comprehensive welfare state that guarantees a minimum standard of living to all citizens. Key elements of this system include single-payer healthcare that is free for all at the point of use, free public education from preschool through university, well-funded state pensions, and a social dividend program.
Trade
Delkora maintains a small trade surplus, with its main trading partners being the other Common Sphere countries. Its economy is characterized by a high degree of technological innovation, contributing to highly-profitable export industries include automobiles, pharmaceuticals, renewable energy, and steel. Major import commodities include raw materials, foodstuffs, and textiles. Hefty tariffs are imposed on countries with lax environmental and labor standards, as well as those that engage in dumping.
Outside the CS, one of Delkora's significant trading partners is neighbouring Acrea. Economic ties between the two countries have been historically affected by Delkora's entrance to the CS and subsequent turn towards protectionism, but have begun a revival in recent decades.