Norway - Economy

Economy

Norwegians enjoy the second highest GDP per-capita (after Luxembourg) and fourth highest GDP (PPP) per-capita in the world. Today, Norway ranks as the second wealthiest country in the world in monetary value, with the largest capital reserve per capita of any nation. According to the CIA World Factbook, Norway is a net external creditor of debt. Norway maintained first place in the world in the UNDP Human Development Index (HDI) for six consecutive years (2001–2006), and then reclaimed this position in 2009 and 2010. The standard of living in Norway is among the highest in the world. Foreign Policy Magazine ranks Norway last in its Failed States Index for 2009, judging Norway to be the world's most well-functioning and stable country. Continued oil and gas exports coupled with a healthy economy and substantial accumulated wealth lead to a conclusion that Norway will remain among the richest countries in the world in the foreseeable future.

The Norwegian economy is an example of a mixed economy, a prosperous capitalist welfare state featuring a combination of free market activity and large state ownership in certain key sectors. The Norwegian welfare state makes public health care free (above a certain level), and parents have 46 weeks paid parental leave. The income that the state receives from natural resources includes a significant contribution from petroleum production and the substantial and carefully managed income related to this sector. Norway has a very low unemployment rate, currently 2.6%. 30% of the labour force are employed by the government, the highest in the OECD. 22% are on welfare and 13% are too disabled to work, the highest proportions in the world. The hourly productivity levels, as well as average hourly wages in Norway are among the highest in the world. The egalitarian values of the Norwegian society ensure that the wage difference between the lowest paid worker and the CEO of most companies is much smaller than in comparable western economies. This is also evident in Norway's low Gini coefficient. The state has large ownership positions in key industrial sectors, such as the strategic petroleum sector (Statoil and Aker Solutions), hydroelectric energy production (Statkraft), aluminium production (Norsk Hydro), the largest Norwegian bank (DnB NOR), and telecommunication provider (Telenor). Through these big companies, the government controls approximately 30% of the stock values at the Oslo Stock Exchange. When non-listed companies are included, the state has even higher share in ownership (mainly from direct oil license ownership). Norway is a major shipping nation and has the world's 6th largest merchant fleet, with 1,412 Norwegian-owned merchant vessels.

Referendums in 1972 and 1994 indicated that the Norwegian people wished to remain outside the European Union (EU). However, Norway, together with Iceland and Liechtenstein, participates in the European Union's single market via the European Economic Area (EEA) agreement. The EEA Treaty between the European Union countries and the EFTA countries– transposed into Norwegian law via "EØS-loven"– describes the procedures for implementing European Union rules in Norway and the other EFTA countries. This makes Norway a highly integrated member of most sectors of the EU internal market. However, some sectors, such as agriculture, oil and fish, are not wholly covered by the EEA Treaty. Norway has also acceded to the Schengen Agreement and several other intergovernmental agreements between the EU member states.

The country is richly endowed with natural resources including petroleum, hydropower, fish, forests, and minerals. Large reserves of petroleum and natural gas were discovered in the 1960s, which led to a boom in the economy. Norway has obtained one of the highest standards of living in the world in part by having a large amount of natural resources compared to the size of the population. In 2011, 28% of state revenues were generated from the petroleum industry.