GP-1 and Economies

Since 1969, major U.S. projects receiving federal funds must submit an Environmental Impact Statement  (ETS) under the National Environmental Policy Act. In 1985, the Chicago Transit Association’s Final EIS for the Orange Line ran 378 pages. The 2022 Final EIS for the Red Line Extension is 50 times longer, at 17,899 pages. That’s for a project that’s half as long.

The planned Red Line Extension is projected to cost seven times more per mile than the Orange Line, which we completed in 1993.

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In 1900, US income (GDP) was $4,096 per capita in 2023 dollars, while in 2023 it was $81,695. The US poverty rate fell from 56% to 11.1% over the same period. How was such a dramatic increase in our widely shared standard of living possible? The answer (without explaining how it came about) is increased labor productivity. Each worker has been able to produce more and more and hence earned a higher income.

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GP-1 and Economies

Ozympic and Wegovy, both GLP-1 agonists that contribute to weight loss, are made by Novo Nordisk from Denmark.

The GLP-1 boom has been such good news for Novo Nordisk that rising drug exports are currently driving the majority of Denmark’s GDP growth—since late 2021, Danish GDP has increased by 3.6%, but economic growth would have been 0% without the contribution of rapid increases in pharmaceutical manufacturing output. In fact, the pharmaceutical boom has been so strong that it has almost singlehandedly made Denmark one of the fastest-growing economies in the European Union.

Most of that pharmaceutical production boom has gone towards meeting foreign demand for GLP-1 drugs, especially in the United States. Real Danish goods exports have increased by roughly 37% over the last four years.

Interestingly, despite the country’s increase in economic output over the last two years, Denmark has struggled to fully translate the GLP-1 boom into rising personal spending or domestic investment. Real Danish household consumption and capital formation have both been stagnant for more than three years, mirroring many of the economic struggles seen in Germany and many other parts of the EU.

To some extent, that should not be particularly surprising—pharmaceutical manufacturing is not a labor-intensive industry and the returns to successful drug discovery usually come in the form of increased corporate profits. Yet Denmark is economically synonymous with the Nordic model that has long successfully converted innovative growth into broad-based welfare, and Novo Nordisk itself is unique for being majority-controlled by a charitable fund that is now the world’s largest. 

The task ahead for them is clear—to continue the current GLP-1 boom while more durably translating it into general economic prosperity.--Apricitas