During the late 17th and 18th centuries, Denmark's economy remained heavily dependent on agriculture, with limited success in diversifying into other industries. Outside of Copenhagen, which had a population of around 30,000, little industry existed, and even there, industrial activity was minimal. A small amount of industry emerged to support the military, but Denmark's lack of natural resources limited its economic growth. The country had few exports beyond agricultural products, with the Netherlands purchasing the largest share of these goods.
Land ownership was highly concentrated, with around 300 landlords controlling 90% of the land in the country. These landholders also dominated rural administration, with only a few law enforcement officials sharing power. In response to falling crop prices in 1733, the landlords introduced the system of adscription, which effectively turned the free Danish peasantry into serfs. This system bound laborers to the place of their birth, compelling them to rent farms on large estates. Peasants were required to work the landlords' land as part of their rent, and they had no rights to negotiate contracts or receive payment for any improvements they made. Those who refused to rent land faced six years of mandatory military service.
The adscription system led to widespread inefficiency in Danish agriculture, as peasants, having little incentive, performed only the minimum amount of work required. Danish grain failed to compete with higher-quality grain from the Baltic region, particularly in Norway, further undermining agricultural profitability.
However, the late 18th century saw a wave of agricultural reforms. The outdated open-field system was abolished, and smaller farms were consolidated into larger, more efficient units. The adscription system was also eliminated, and the military transitioned to conscription for recruiting manpower. These changes were made possible by steadily rising agricultural prices, which provided the financial stability needed to support the reforms.
Throughout the 18th century, Denmark's economy flourished, primarily due to expanded agricultural production, which met the rising demand across Europe. Danish merchant ships played a significant role in this prosperity, trading across Europe, the North Atlantic, and with Danish colonies in the Caribbean and North Atlantic, contributing to the country’s economic growth. Denmark benefited economically from the American Revolution (1775–1783), as the conflict created a demand for neutral trading partners. Danish merchants seized this opportunity by expanding their trade networks, supplying goods to both European markets and the American colonies, which significantly boosted the Danish economy during this period.