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Yes, that's pretty much what a lot of Middle Eastern countries do, and it's a terrible long-term economic strategy. Oil wealth is notoriously volatile, and it
by jonnathanson 13y ago
Yes, that's pretty much what a lot of Middle Eastern countries do, and it's a terrible long-term economic strategy.
Oil wealth is notoriously volatile, and it creates all manner of bad habits (for instance, scaling a services economy to match the scale of the oil wealth; the latter is a finite commodity, and the former is extremely hard to scale down once built up).
Norway has been relatively smart in managing its resource boom. It hasn't completely subsidized the cost of living, spent its oil wealth on giant, shiny objects, hoarded the wealth amongst a corrupt and tiny class of elites, or built an enormous social-services machine that won't survive an oil bust or pricing collapse. It's not spending above its means, presumably under the realization that its means came from a geological lottery ticket.
When your country hits the oil jackpot, your job is to convert the oil money to real industry. You don't splurge on mega-hotels, distribute the money frivolously, etc. You need to use it to create the basis for a non-oil-dependent economy.
- chii 13y agowhat other industry does norway have that is created with oil wealth?
- aaronblohowiak 13y agoShipping
- ljosa 13y agoThe shipping was there first; it has been one of the most important industries in Norway since the late 1700s.
- LanceH 13y agoThey purchased other industry at least, through stocks.
- daliusd 13y agohttp://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(2009).pdf http://en.wikipedia.org/wiki/File:Norwar_Exports_Tree_Map_(2... From http://en.wikipedia.org/wiki/Economy_of_Norway#Economic_structure_and_sustained_growth http://en.wikipedia.org/wiki/Economy_of_Norway#Economic_stru...
- e12e 13y agoWe do export some oil related technology.
- morgante 13y ago> When your country hits the oil jackpot, your job is to convert the oil money to real industry. You don't splurge on mega-hotels, distribute the money frivolously, etc. You need to use it to create the basis for a non-oil-dependent economy. In many cases, building mega-hotels is preparing for a post-oil future by establishing yourself as a tourism center. Witness Dubai, which basically has run out of oil but sustains its economy nonetheless. Abu Dhabi, also in the Emirates, has followed the Norwegian model by building up a massive sovereign wealth fund which can replace/stabilize oil revenue indefinitely. Their fund is the second largest in the world, despite having a substantially smaller population (it works out to about $1.4 million per citizen).
- seanmcdirmid 13y agoDid Dubai ever have much oil wealth on its own? Dubai is also an overbuilt mess right now, a city can only support so many 7 star hotels (whose guests are mostly rich from oil anyways coming to Dubai to play). Is Abu Dhabi oil owned by the citizens, or by the royal family like in Saudi? Later down the line, that will be quite an important distinction.
- morgante 13y ago> Did Dubai ever have much oil wealth on its own? Dubai is also an overbuilt mess right now, a city can only support so many 7 star hotels (whose guests are mostly rich from oil anyways coming to Dubai to play). Dubai certainly had a lot less oil to start with, which is why it expanded so aggressively. Definitely overshot the mark there, but the issue isn't catastrophic (they do have a strong tourism base). > Is Abu Dhabi oil owned by the citizens, or by the royal family like in Saudi? Later down the line, that will be quite an important distinction. It's owned by the national oil company which manages it for the government. Part of the revenue is diverted into expansion, part into the sovereign wealth fund, and a lot into subsidies and benefits for citizens. Generally speaking the UAE is managed much more equitably than Saudi, with the benefits of oil money used to aid all citizens (for example, universal healthcare).