Norway: Unraveling The Norwegian Economy - YouTube

Norway!!! the country known for  fjords, aurora lights, skiing,  

outdoorsy people, and the history of Vikings! 

World Happiness Report shows Norway has  one of the happiest people in the world.  

The country also has one of the highest  life-expectancy-index of around 81.  

The country tops many international  rankings, including human development index,  

prosperity index, ease of doing business index,  freedom of press index, democracy index, etc etc.


Some declared it as a ‘socialist heaven and  others called it ‘capitalism with a conscience’.  

The country has one of the highest GDP per  capita in the world following just behind  

Switzerland if we ignore the micro-nations. But  the country wasn’t always rich like it is now.

But how did a small fishing nation became  one of the richest countries in the world???

Imagine a person digging the ground  in his backyard, and he happened to  

have found a box of treasure. Some gold and  jewels or whatever! Norway is that person!  

I mean, Norway is a country,  but you know what I am saying. 

Back in the 1950s, no one would have believed  that Norwegian Continental Shelf (NCS) contained  

any Black Gold, also known as, well, OIL! This  all changed in 1959, when gas in Groningen,  

Netherlands, was discovered, leading to the  belief that it could also be explored for oil.  

In 1962, a company named Phillips  Petroleum applied for exploration in  

Norway Continental Shelf. The Norwegian  government rejected the application,  

as it was interested in opening up  the resources to multiple firms.

In 1963, the Norwegian government went on even  further by claiming sovereignty in an area in  

the North Sea and started to issue licenses for  oil exploration. The drilling licenses were given  

in 1965 after the matters of division of shelf  with Norway and Great Britain were resolved.

The first drilling in 1966 was fruitless. 200  more exploratory drills for the next few years  

showed no signs of oil, and, the whole  thing started to become hopeless, until,  

Philips Petroleum in 1969, drilled in  Ekofisk, resulted in one of the most  

lucrative oilfields, that will later  change the fate of the whole country. 

In 1972, the Norwegian government established  a new company named Statoil that declared 50%  

of oil license money should be state-owned.  More policies were introduced that gave  

Statoil more power. The company was later  partially privatized in 2001 and listed  

on the Oslo and New York Stock exchanges  with the Norwegian government owning 81.7%  

of the shares. Statoil became StateOilHydro  in 2007 after merging with Norsk Hydro,  

the country’s main producer of hydroelectric  power, followed by the company changing its  

name to Equinor in 2018. The government is  still the biggest shareholder in the company. 

Norway’s exploitation of natural  resources is the largest and most  

vital industry that contributed somewhere between  40 to 70% percent of exports over the years. 

Call it a helping hand from nature,  

Norway would not be the country it is today  without these natural resources. Norway’s  

economy without oil would be as incomplete  as Switzerland’s economy without its banks!

Remember that person we told you to  imagine who found the treasure???  

That person would have wasted  the treasure on booze, parties,  

and shiny stuff, and so would have anyone  else who finds overnight wealth from gambling,  

lotteries, and the fake treasure  stories like the one we just told you.  

Norway did not waste that money! Norway decided  to save and invest the newly found treasure.

In 1990, the Norwegian government created  Oljefondet, also known as the Government  

Pension Fund Global or GPF-G, a fund into which  the surplus money generated from the petroleum  

income is deposited and invested. This changed  the whole game. The fund was created to tackle  

the fluctuating global oil prices AND to counter  the effects of the expected decline in income. If  

the discovery and production of natural resources  could make any country rich, then Venezuela would  

have still been rich. Norway did not become  Venezuela. They made smart money decisions!

With investments in shares, bonds, and real  estate of 9000 companies around the world,  

including companies like Apple, Alphabet,  Microsoft, etc. the fund is managed by a  

division of the Norwegian Central Bank and  is the largest pension fund in the world  

currently having USD 1.2 Trillion.  The fund was created in the name of  

people. That means each Norwegian, on  paper owns around USD 220,000 each. 

But, you can’t just withdraw it out of the bank  and start spending on booze and stuff. The fund is  

supposed to be used in bad times. The government  is also not allowed to just go on a spending  

spree, except for a %3 percent allowance  of the fund’s inflation-adjusted return. 

Norway follows a strong ethical sense when  it comes to investing the fund’s money.  

It has a list of companies that it  would invest in and not invest in. It  

won’t invest in companies that contribute  significantly to environmental damage. 

In 2019, the fund managers decided to pull out  their investments in oil exploration companies,  

even though their fund is made up of oil-money.  

Would you call it having ethics  or would call it hypocrisy?

However, the fund will continue to invest  in petroleum companies that have significant  

investments in renewable energy. The  decision of selling its stake in 134  

companies knocked some big amounts off the  combined market value of those companies. 

Some have shown concerns about how such large  

sovereign wealth funds could impact the  investments without following the market. 

But for Norway, the script is simple!  We have exploited the natural resources,  

but they have passed their peak time  and our oil is going to end one day.  

So, we are not going to invest in something  that we won’t capitalize on in the future. 

The whole idea of having ethics and environmental  damage is not a concern for Norway. For Norway,  

it’s all about business and  watching their interests first. 

Oil and gas like any other natural  resources are going to run out one day.  

According to estimates, Norway’s current oil  resources have already reached close to %50  

and it is estimated to stay  operational until 2050.

Although there has been a push from  some politicians to spend the money  

on infrastructure and the welfare state, the  Norwegians are somewhat divided on the issue  

of spending the country’s pension fund on other  sectors. Some say that investing in other sectors  

is the way to save the declining economy while  others argue that it can’t be the only way out.

Norway is a constitutional monarchy. Population  density is low with 5.5 million people  

compared to a huge landmass. That makes  it easier for the government to manage. 
 

Norway is the second-largest exporter of seafood  after China. The long coastline, wide seabeds,  

and preferable climate conditions provide  Norway to capitalize on the seafood industry,  

which is the second biggest contributor to its  GDP. From Atlantic Salmon to trout, codfish,  

mackerel, prawns, and king crabs, the country’s  biggest seafood exports go to the European Union  

countries. The country introduced Salmon sushi  to Japan back in the 80s, who were keen on Sushi  

but Salmon sushi was a new thing back  then. Maritime goes hand in hand with  

the seafood industry and Norwegians have  been sea people entire their history. 

Despite being one of the biggest oil producers,  Norway is not powered by oil. The country’s  

98 percent of electricity comes from hydropower,  which is 65% of domestic energy use. and consumers  

are inclined towards electric vehicles in recent  years. The country plans to lead the world in  

renewable energy, and estimates to have 100%  renewable domestic energy by 2030. Inexpensive  

hydropower also makes it easier for the country  to export metals, papers, and chemicals.


Even though it’s an expensive country  to visit, tourism continues to play an  

important role. According to a report in 2018,  tourism contributed to around 5% of the GDP  

with every seven in hundred people throughout  the country working in the tourism industry.  

Beautiful landscapes, ski resorts, fjords,  Viking museums, tons of mountains for hiking  

and exploring, polar nights and midnight sun  makes Norway a complete package hard to resist. 

As the oil will deplete one day, economists  have even talked about Norway’s economic future  

as a tax haven by attracting foreign  investment similar to Switzerland.

While many countries proudly give  examples of Norway’s high corporate taxes,  

it drives away many entrepreneurs to the UK  and other European countries to find better  

financial conditions for business. Norway would  likely have to lower the taxes for business to  

attract a non-oil economy in the future.
 Norwegians say they are not nationalistic,  

but, that's highly arguable. They prefer to hire  Norwegians over others for many reasons including  

language proficiency. Oslo is different  from other cities as it has the largest  

number of immigrants. Just like many other  countries that claim to be open and diverse,  

it’s not hard to debate that the Norwegians  are closed off compared to other countries. 

Contrary to the popular belief, Norway  does not have a free health care system.  

It's partially true. Everyone pays for the  prescriptions and doctor’s appointments,  

but up to a limit of around 2200kr. After  that, it’s free. This is to ensure fairness  

as everyone pays but only up to a limit,  and if someone falls seriously ill or comes  

under a category where more medical budgets  are needed then they don’t have to worry. 

Norway has a very high cost of living and  it’s a big downside. Other than the house  

and rental prices, grocery prices are much higher  compared to around the world and even compared to  

its Scandinavian neighbors. The country known  for creating the world’s first cheese slicer,  

service-providing industries like restaurants and  bars, etc. is very expensive. Some new to country  

people can’t overcome this sticker-shock. The  country has put high taxes on alcohol, tobacco,  

and sugar. Alcohol is not cheap in the country.  Some people take trips to Sweden to bring some  

food-packed luggage including meat, alcohol,  and groceries. Addicted to Grandiosa Pizza,  

eating out in restaurants is less frequent  in Norway compared to other countries.


Contrary to popular opinion, the country  has no minimum wage set by the government.  

But salaries are high, even at the lower end of  the pay scales, but so is the cost of living.

Newcomers in the country are  often most outspoken about the  

expenses considering the relocation  expenses in the country are huge.

Divorce rates are very high in the country,  

and the unconfirmed reports of high promiscuity  rates also rank Norway high on the list.  

Norway voted no to inclusion in European  

Union through a referendum in  1994 by a very close margin. 

Norway is currently suffering from what is  referred to as the ‘Dutch Disease’ in economics.  

The Dutch Disease, simply put, indicates  a relationship between an increase in the  

economic development of one sector like oil,  compared to a decline in other sectors. But,  

on the bright side, the country has done so well  when it comes to the creation of the pension  

fund that can be used in bad times. Also, the  country has done very well to realize that the  

oil money would end one day and they would have  to start working on a post-oil-dependent economy. 

What can you learn from Norway’s economy? My  dear RAVENS! Save and Invest like Norway! It  

does not matter how much money you earn but what  you do with that money is what matters the most!  

There would be times in your life when  you will get more money than usual.  

At that moment, don’t just get excited and spend  it on the shiny things you don’t even need,  

instead, make smart money decisions, and save &  invest it for a better outcome in the future!