Norway has been seen as an ideal nation for a socialist, capitalist mixed economy done right. The country boasts one of the highest GDP per capita globally, falling behind only Switzerland and a group of micro-nations.
The country has a robust trade surplus and one of the highest national life expectancy. It has got a very skilled workforce with one of the highest proportion of university graduates of any country in the world. It is one of the lowest in unemployment. It also has got substantial international recognition as a place that is very easy to do business.
What is more remarkable is that Norway has reached it as one of the most economical countries in the world after taxes, a single individual from the bottom 20% of the income earner in Norway still earns, on average, a quarter of what their top 20% income earners. When it compares to the OECD nations average, the OECD nations have their top fifth earners making income ten times that of the nations’ bottom fifth earners.
When we talk about the working conditions, the country has exceptionally robust workers protection. The possibility that the people are working for long hours or looking for a second job to take care of their needs is scarce. According to OECD Better Life Index statistics, only 3% of the employees here work for long hours as compared to the OECD average of 11% and the US national average of 33%. All these contribute to Norway’s citizens being the happiest people in the world despite their country having extreme weather conditions for a large part of the year.
When it comes to healthcare, Norway stands ahead of most of the top nations in the world. It has got one of the best health infrastructures in the world. We can infer it from the fact that the life expectancy at birth in Norway is 83 years, three years higher than the OECD average of 80 years, and 78.5 years that of the USA.
What took Norway to this level of economic prosperity? Norway was not always developed like this. Its GDP in the 1960s was almost comparable to the developing nations like Bangladesh or Nigeria. It was much dependent on fishing. However, the country had a tiny population. It was far away from the economic powerhouse as it is today.
It all started when in 1969, a ship was able to find oil in Norway’s oceans. It was a vast reserve of oil, almost 1.6m barrels a day. They produced more oil per capita than any other country in the world. Today, it is only behind Kuwait, UAE, and Saudi Arabia in per capita oil production. However, the government decided not to depend on these finite resources for their development entirely.
The oil boom made the GDP grow about five times, but it was not managed by private companies like Shell Exxon or players like them. The government decided to manage to business through Statoil- a government-owned company. It made the government very rich, but instead of investing in building a lavish infra quickly and reducing the taxes, the government decided to invest that money as they thought that this oil wealth would not be forever. They put the money in a piggy bank- a colossal piggy bank called Sovereign Wealth Fund. They made the largest sovereign fund globally- the Norwegian Government Pension Fund, beating China and UAE. It is remarkable, considering that China has a population over 200 times that of Norway. It is over USD 1 trillion in assets. The government was dependent on the interest it received from these investments for the public works and developments. This fund is a very diverse portfolio of stocks, bonds, cash, and commodities, which comprises almost 1.4% of global stock and share. However, they avoided investing in companies that manufactured weapons like Boeing, Lockheed Martin, the companies that were doing severe damage to the environment, or the companies that were notorious for harassing workers. The government also ensured that the performance of the fund is independent of the economy of the country.
The point here is that after all this, is it an ideal economy? The major drawback of the Scandinavian nation is that it has got a very high cost of living. Also, the high taxes dwarf the take-home salary significantly, so, although not a perfect economy but they have done almost everything correct with the opportunities that they have got.
