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How Norway has avoided the 'curse of oil'

• makmanalp 12y ago
  There is also the related concept of "Dutch Disease" (http://en.wikipedia.org/wiki/Dutch_disease http://en.wikipedia.org/wiki/Dutch_disease) which is what I expected this would be about. The idea is that once a country discovers it has reserves of a valuable natural resource, it tends to exploit and build its economy around that resource, at the expense of its more complex sectors like manufacturing. Norway seems to have handled that decently well so far, and part of the lack of spending probably comes from the fact that they realize their oil's a short term freebie boost not an economic strategy.
  • adventured 12y ago
    I know a lot of people talk up Norway, but I'm not aware of anything that Norway does economically that matters outside of energy production. What great technology, companies, etc. have they produced in the last 40 years? What big innovations come out of Norway? Do they have the top universities in the world? They've only won two nobel prizes since oil became the center of their economy, and they became rich. They won four in the 1920s, and four between 1968 and 1973. The oil wealth sure doesn't seem to have spurred great knowledge acquisition.
    • cgh 12y ago
      The country only has 4.5 million people. It's like saying that greater Phoenix doesn't matter because it's only produced two Nobel winners.
      • adventured 12y ago
        Norway has five million people, but I would assume outsized results given the claims about the quality of the country courtesy of the immaculate welfare state and the money available for education. Being entirely serious. My primary comparison is that, since the oil boom, their results have fallen off in nobel prizes, not significantly increased. And those two prizes they won in the last 40 years were for economics (they were winning them for chemistry and physics in the '60s / '70s). Ireland has won five since 1974, they only have 4.5 million people, and no grand oil boom, and have only recently become well-off. Denmark has 5.5 million people and have won four nobel prizes in those 40 years, for chemistry, physics, and physiology. My point is: where are the results outside of energy production? We should be seeing amazing innovations, great technology, and big technology exports, incredible global contributions to science and break-throughs in medicine. I should be using phones designed by Norway, and software designed in Norway. So where is it? There is absolutely no question Norway has created a high quality of life courtesy of the money from the oil boom, but what else have they done with it other than provide lots of money to live well (ie what do you have to show for it if the oil is gone in ten years)?
    • pi-rat 12y ago
      The Cheese Slicer and Black Metal ofc! :) On a more serious note, we're only like 5 mill people, and while we don't rock the nobel prices I think the oil has pushed us more towards engineering than theoretical research (for better or worse..). Agree our Universities should be better than they are - it's apparently hard to get funding for something that isn't directly applicable to oil, subsea or salmon. But you probably use lots of stuff designed/invented in Norway without knowing. Example: Do you use a GSM phone? GSM was invented at a Norwegian University. Lots of research for subsea-technology, oh, and we're pretty good at ship design stuff - dating back from the viking age until now (x-bow). Techy stuff: Energy Micro, Nordic Semiconductors, some parts of Atmel, Opera, FAST, etc. Most of the oil welfare fund is invested abroad - all over the world (reduces risk and avoids inflation), these days heavily geared towards green technologies / energy.
      • adventured 12y ago
        Definitely fair points. It's interesting to read about the debate on who deserves credit for inventing GSM, with Switzerland, Finland, and France all claiming various credit. And of course Norway re: http://www.ntnu.no/gemini/2005-01e/gsm.htm http://www.ntnu.no/gemini/2005-01e/gsm.htm
        • pi-rat 12y ago
          Didn't know GSM was controversial, that's very interesting, wonder what happened there. But still, I bet you interact with gadgets powered by tech from Norway on a daily basis, even if we remove GSM from the equation: the Atmel AVR micros, radios and micros from Nordic Semiconductor, Energy Micro and Chipcon, etc. Maybe you also touch a UI built on QT (Trolltech), even though the QT phones never became a success. :)
  • flurdy 12y ago
    Norway do suffer from a mild form of Dutch disease unfortunately. The oil industry dominate new investment. Although a lot of that is high tech solutions and can probably be used in other sectors, especially in related areas such as marine and shipping solutions, but they do not invest very well in any other area. Some new companies are successful (Fast,Trolltech,Kongsberg,etc) but it is more in spite of the investment available. The VC, general investment and interest is barren if you compare the buoyant start up market in Denmark, Sweden and Finland. I am worried about the state of affairs in 20-30 years if they not e.g. follow Finland's post Nokia incubation assistance etc. (IMHO as a Norwegian living in the UK).
• adamnemecek 12y ago
  The story of how Norway's oil industry started is pretty interesting http://www.ft.com/intl/cms/s/0/99680a04-92a0-11de-b63b-00144feabdc0.html#axzz3BTZjZWgz http://www.ft.com/intl/cms/s/0/99680a04-92a0-11de-b63b-00144...
  • zhte415 12y ago
    As is the movie Pioneer. Quite horrific experiences. In Norwegian and English, about former fishermen who laid the first North Sea oil pipe. https://en.wikipedia.org/wiki/Pioneer_%28film%29 https://en.wikipedia.org/wiki/Pioneer_%28film%29 60+ reported to have died, and diving at that depth has since been disallowed.
  • bgdam 12y ago
    Non paywalled link: https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBwQFjAA&url=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F99680a04-92a0-11de-b63b-00144feabdc0.html&ei=ZzD8U5-2PNKhugTgkIKABw&usg=AFQjCNGZKE8V3f8HTdRGPOV72rHCjwFMvg&sig2=QGH8Wwx3weGMwCVXMAXu5w https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web...
• elchief 12y ago
  C'mon man. Norway's the #1 importer of Teslas [1] Otherwise, man I wish Canada would manage our oil money like Norway. But we burned that bridge a long time ago. [1] look it up
  • seszett 12y ago
    Well, it's not really Canada that has oil, it's more like just Alberta isn't it? Norway is a unitary state while Canada is very federal.
    • fleitz 12y ago
      Alberta has almost as much oil as Saudi Arabia, but the rest of Canada has more moderate reserves similar to those in the US. There's also the Hibernia field with the largest oil platform in the world.
    • _delirium 12y ago
      Mostly Alberta, but also other places, especially given that many provinces have smallish populations, so it doesn't take a lot of oil to be a large part of the economy. British Columbia, for example, has 4.6 million people and produces 20k barrels/day of oil, which is more per capita than Texas (even after the recent jump in Texas's production). But it's not as economy-dominating as in Alaska, Norway, or Alberta.
  • Expez 12y ago
    The Tesla isn't priced as a luxury car in Norway. Electric vehicles are exempt from taxes and fees, which is mostly where the money goes when you buy a more traditional vehicle. They also don't pay anything when passing toll booths, IIRC. Where I grew up, people now pay ~$10 just to pass toll booths to and from work every day. There are other benefits as well, like free parking, Tesla's free charging station--and most importantly for many--you get to drive in the lane reserved for buses and taxis instead of dealing with traffic to and from work.
    • calibwam 12y ago
• BorisMelnik 12y ago
  relevant: http://en.wikipedia.org/wiki/Resource_curse http://en.wikipedia.org/wiki/Resource_curse
• prawn 12y ago
  Statoil and how Norway essentially protected its future is a lot like how Australia should have dealt with the so-called mining boom. Named and outlined better, our "mining tax" could have been this. It could have protected against capital flight and essentially built national strength for all at the expense of those (especially foreign interests) looking to dig up serious swathes of our ground. Instead, we had a predictable response from the mining magnates and Coalition, an easily duped and panicked public, and a flailing government at the time who named the concept terribly and defended it poorly. And when challenged on the whole "it's barely made any money" front, caved instead of noting that it'd been potentially hampered for political reasons. What's an easier sell to the public? "Mining tax" or "Future Fund; funded by giant, mostly foreign mining companies." Look at the Coalition's "$20b" medical research fund. So many people think that's a current $20b fund, rather than a far smaller fund to be built up to $20b over a number of years, and then to fund research only from the earnings of the fund and not from the fund's base value. Labor should have framed the MRRT much more like this and it would've made for a better sell. Avoid the word tax, outline the goal with a specific value range and target date, and name the beneficiaries of the earnings - technology research, medical research, etc. I can't see how this wasn't a big missed opportunity for Australia.
  • chii 12y ago
    as an australian, i m sadden by this. Why isn't there public outrage and change? =(
    • prawn 12y ago
      Because the mining industry is powerful (major share of our exports) and big business dominates the media. They get the public fearful about the loss of jobs. Further, Labor's infighting put off a lot of people while the Coalition were consistent with their message in opposition.
      • illumen 12y ago
        Mining companies own, or control much of the Australian media. There was only one newspaper who didn't go for the coalition in the last election. It was the Age, which was mostly critical of Labor, but not entirely. There were big legal battles for control of the Age, but the existing board one control in the end, but lost a lot of editorial power. Out an out corruption basically. The country began because of a miners revolution, and to this day they have more power than they earn. The large coal mine (by an Indian company) despite declining coal prices, and the state earning more money via tourism, is going ahead because of brilliant control by the mining companies. This company has a terrible record of keeping their mines clean as well. Not only that, but the carbon produced is similar to all planned carbon saving planned by the government proving they lied about reducing carbon themselves. Further more coal kills a million people per year through pollution, and China is reducing their spend on coal, like most other countries. Which means the price of coal is only going to fall.
• valgaze 12y ago
  The rise of these sovereign wealth funds has been pretty extraordinary- if corruption is kept under control those resources are politically "out of bounds" for spending. This list ranks SWFs by size- notice there are several US states on the list: www.swfinstitute.org/fund-rankings/
• phaemon 12y ago
  The steps of building infrastructure and investing outside the country, are pretty much exactly the same as was suggested for Scotland in the McCrone report in 1974. Unfortunately, that report was classified as "secret" at the time, as it was felt the conclusions would boost support for Scottish independence. It wasn't released until 2005. Link: http://www.oilofscotland.org/mccronereport.pdf http://www.oilofscotland.org/mccronereport.pdf
• praptak 12y ago
  I am jealous of Norway. Social relations in most other countries, even the "first world" ones, seem uncivilized by comparison. I always wonder how they arrived at this point - this looks like they have some magic ingredient that made their Prisoner's Dilemma converge on 'cooperate'. It must be the fjords.
  • bigpeopleareold 12y ago
    Simple. I grew up in the US, but am in Norway now. I have Norwegian ancestry that comes from my grandparents. Doesn't matter whether here or there. Mix Lutheran-piety (even if Norway is quite secular) and a bit of boredom does help in the cooperation department. I am not applying this to everyone, but that is how it is. None of this is a culture shock for me. Probably someone else has something deeper to say about it, but I knew what I was coming to when moving to Norway, in this regard.
    • jskonhovd 12y ago
      I have Norwegian ancestry as well. I would love to visit, but I don't think I could live there. Also, The language looks absolutely terrifying.
  • parsnips 12y ago
    Look at Norway's demographics and immigration policy for a clue or two.
• jokoon 12y ago
  i want to go there so bad :(
  • CalRobert 12y ago
    Well, make it happen. University is one option: http://www.studyinnorway.no/Tuition-Scholarships http://www.studyinnorway.no/Tuition-Scholarships I say this not to be glib, but as someone who yearned to move abroad and found out that it wasn't as hard as I thought.
    • jokoon 12y ago
      "However, you should take into consideration that living expenses in Norway are higher than in many other countries." I don't have a job right now, no savings, 29 years old, and paperwork bore me. There are dozens of those "programs", and I don't want to spend one entire week sorting it out to discover I can't afford to just live over there. I want to go there no question asked, to work, not to study.
      • alkonaut 12y ago
        Try Stockholm, it has a huge tech sector and you can go there to work as an EU citizen, no questions asked. You can't afford to live in stockholm either without a job of course, but programmers get jobs quite easily if they speak English, and salaries are decent.
        • aianus 12y ago
          How much is 'decent'? And how much is rent?
          • alkonaut 12y ago
            As everywhere salaries vary wildly (as they should), but an uneducated "scriptkid" without experience probably makes EUR2500/mo, a 5yr exp collage educated developer makes EUR3500-5500 and top devs of course make much more than that in some industries. It all depends. "Rent" is pretty much unheard of since getting an apartment to rent in central stockholm is impossible due to rent control, so if you move to stockholm to work in tech you most likely sublet someone's apartment at EUR750-2000/mo depending on size and location. A single bedroom apt in central Stockholm is ~1000.
• cel1ne 12y ago
  Since we're talking about how awesome Norway is, this [0] should be mentioned. [0] https://en.wikipedia.org/wiki/Freedom_to_roam#Norway https://en.wikipedia.org/wiki/Freedom_to_roam#Norway
  • arethuza 12y ago
    Scotland also has similar "right to roam" legislation (as listed on that page you linked to) - which given the ways that large landowners often acquired land here seems rather just to me.
  • sharpneli 12y ago
    It's an awesome right. As a Finn I always find it really weird when visiting places outside Nordic Countries that for them most of the country is unaccessible.
    • k__ 12y ago
      In Germany we don't got this right, but seldom I have been prohibited from "roaming" the landside. But we aren't allowed to put a tent anywhere and sleep in it, which is rather sad. A friend of mine went on a hiking holiday in Scotland and he told me, he just walked till he was tired, put his tent up on the next green spot and slept there.
      • arethuza 12y ago
        As an aside, here in Scotland you quite often don't even need to put up a tent - there are houses/huts in a lot of wild locations, known as bothies, that are completely free to use: http://www.mountainbothies.org.uk/ http://www.mountainbothies.org.uk/
      • sliverstorm 12y ago
        we aren't allowed to put a tent anywhere and sleep in it, which is rather sad Probably connected to the risk that squatter's rights poses to the land owner... not that pitching a tent for a night is a serious risk, but squatter's rights really encourages that kind of culture.
• netcan 12y ago
  The economics of mining are complicated, but there are some similarities to the startup/VC complex. A big part of developing mines is exploration. Finding minerals can be hard, especially in the north sea. The oceans are big. The difficulty is why there are still new deposits being discovered. Exploration usually happens when the company doing it can hope to make money off of a successful discovery. They might even pay for the privilege. Imagine a scenario where a company finds a motherload of oil after a low probability exploration. Their exploration contracts (being signed before the deposits were known) guarantees them a huge profit. Unseemly, even. They are earning that because they took a risk. Now they get their 100X. Try explaining that in an election year. New technologies are constantly being invented that improve exploration, surveying & mining. This means that there are new possibilities every year impacting which mine/well is profitable (minerals can be extracted at a profit. These all change underlying economic realities. A $1bn per year mine can only make a slim profit in years where commodity prices are high. It employs many people. The next year commodity prices change or some new mining or processing technique (fracking is a huge gamechanger) mean that some complicated contract is now worth a whole lot of money. The $1bn goes from a 2% margin ($20m) to a 30% margin ($300m) and everyone want a piece of it. Meanwhile government departments, unions, armies, etc are salivating over the prospect of this wealth. The National University's long impoverished Oceanography faculty has their eye on a fleet of research vessels. Academics are starting companies offering to do (mandated) environmental impact studies. There is a lot of pressure for money now, from industry, politicians, constituents. Politicians definitely don't want to be investing during their term for the benefit of politicians 10 years from now. The world can be cynical, but not always. Norway has done well. I'm not sure if any one thing can be learned from them. Have smart people running things. Meanwhile Norway have their own political traditions, values, and probably pathologies.
  • chii 12y ago
    > Politicians definitely don't want to be investing during their term for the benefit of politicians 10 years from now. you've hit the nail - short term gains vs long term losses. What you need is some mechanism to make it so that the long term benefits align with the benefits of the politician - for example, the project(s) you start stays with you, even after you're term is over.
• dharma1 12y ago
  Probably one of the best examples of how natural resource wealth has been preserved and invested for the whole nation, instead of being lost to the pockets of few through privatisation, corruption or mismanagement of funds. I think the magic ingredients (aside from being lucky with natural resources in the first place) are egalitarian society, high level of trust, very low level of corruption, a functioning democratic government and highly skilled fund managers.
  • thomasfl 12y ago
    Another Norwegian here. I think you are right. The high level of education also helps. But it was actually an Iraqian immigrant named Farouk al-Kasim that proposed the laws to protect Norways natural oil and gas resources. Further reading: http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabdc0.html#axzz3BUIU9zB6 http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabd...
    • dharma1 12y ago
      Finnish, not Norwegian - I think you guys have done great. Read the story of Farouk al-Kasim a few months ago, fascinating. It does seem like a stroke of luck that the right people were there in the beginning. His nationality is both ironic and sad considering where Iraq is today
      • touristtam 12y ago
        Could it be the same one: http://www.psmag.com/navigation/nature-and-technology/iraqi-vikings-farouk-al-kasim-norway-oil-72715/ http://www.psmag.com/navigation/nature-and-technology/iraqi-... ?
        • dharma1 12y ago
          Yep, same guy
          • gkanai 12y ago
• maaaats 12y ago
  Kinda ironic having the picture of the current finance minister, Siv Jensen, there, as she is so opposed to us saving this money. She is mainly elected on promises on lower immigration, cheaper alcohol, cheaper fuel and lower taxes. Planning to achieve that by using the fund's money.
  • varjag 12y ago
    Were she around in 60s/70s, she'd likely have banned al-Kasim, the geologist who discovered Norwegian oil, from moving in.
  • sleepyhead 12y ago
    Oh look at the socialist everybody. I don't vote for FrP (party of the finance minister) but these tabloid political personal views doesn't bring anything to this discussion. But yes she does want to increase spending from the "oil fund".
• jensen123 12y ago
  Bergen is not the center of Norway's oil and gas industries. Stavanger is. http://en.wikipedia.org/wiki/Stavanger http://en.wikipedia.org/wiki/Stavanger
  • Swannie 12y ago
    That's what I thought too... But I'm biased, because I've only been to Stavanger and not Bergen. The reason I assumed for not having super cars around there is because it gets too damn cold. Now the number of high end 4x4's I saw there... that's another story :-)
• noir_lord 12y ago
  I've often said the Nordic countries in general are as close to a Star Trek style civilisation as we've ever gotten. As someone who lives in America Lite (the UK) your policies on just about everything strike me as insanely reasonable. I pretty much feel shame whenever I think about our last two governments.
  • rmc 12y ago
    Who knows, Scotland might be able to follow that model soon?
  • varjag 12y ago
    If it's of any consolation, your healthcare is still better.
    • noir_lord 12y ago
      For now. The current government seems determined to paint the NHS as failing in a pretty blatant attempt to privatise large chunks of it, the bastards. I used to be pretty neutral towards the major parties, tending to look at what they did rather than what they said but quite frankly the conservatives can go and fuck themselves.
      • saraid216 12y ago
        The first step to understanding politics is understanding that speech is a type of action.
  • cylinder 12y ago
    Is there freedom of movement for UK citizens into Nordic countries? If not, is the migration process hard or easy? If it's simple, why not move there yourself?
    • surfmike 12y ago
      Yee, the proces is very simple. You can simply arrive and you have six months to look for work. Once you get a job you just need to register with the police (you make an appt a couple months in advance and then he visit takes 5 min) and get your tax card (same visit, takes another minute). AFAIK all EU citizens can do this, no special work visa required.
• gabriel34 12y ago
  Norway could have let its own citizens decide how to spend their share of the money. That would probably result in some spending more than others, resulting in inequality and an overall worse quality of life, even for the wealthier. Instead they decided on a mandatory saving of the money. This might have been good for them, but it creates a giant State which wouldn't fly in other cultures.
  • tormeh 12y ago
    Not really. It's a bunch of traders sitting in an office. They don't really make the state any bigger.
• Gravityloss 12y ago
  I think the key is that Norway was organized, coherent and educated before they discovered oil.
• timdierks 12y ago
  It seems to me that the high levels of trust necessary for this to work also imply a high level of social cohesion (possibly homogeneity). In a society with less internal agreement, I don't see how you could get this much alignment over what is the right management strategy, let alone trust that it's being followed.
  • larsiusprime 12y ago
    Don't forget SIZE. Norway is a tiny country, and so the distance between people and government is small. Norway's success is a strong case for localism.
    • zanny 12y ago
      Reading this, I realize that almost everything is a case for localism, since we now have nuclear weapons and international instantaneous communications that mean trying to invade a small country is much less reasonable (unless you are Russia). I mean, that is (in part) why the Greek model failed. Small countries are vulnerable to conquest. But today that is not much of a problem, so I hope the natural social pressure to minimize can overcome the entrenched imperialistic powers that hold a lot of the larger nations together. It just makes more sense to me to, say, have 50 countries and a EU in the US instead of one massively overbearing federal that has authority over a land area competing with continental Europe.
  • Millennium 12y ago
    They say as much in the article. This just plain wouldn't work for a society that cannot describe itself as homogeneous, as Norway can and does.
• known 12y ago
  And https://en.m.wikipedia.org/wiki/There_Will_Be_Blood https://en.m.wikipedia.org/wiki/There_Will_Be_Blood
• adventured 12y ago
  The oil curse is a silly notion. The US and Canada have both avoided any 'curse.' China is the world's 5th largest oil producer, it too is certainly not cursed by oil. Norway however has a huge problem coming, soon. Their oil production is running out rapidly: http://i.imgur.com/UlR1B0a.jpg http://i.imgur.com/UlR1B0a.jpg It has fallen about 40% in a decade +/-. Even with their large sovereign fund, they will exhaust that quickly if the oil production doesn't stop falling soon. At the rate it's falling, in another decade Norway is going to be in the midst of a crisis economically. I know some people in Norway are paying attention to this and trying to think ahead. Being conservative about the sovereign fund certainly seems like the very wise thing to do.
  • angersock 12y ago
    The US and Canada have both avoided any 'curse'. Erm, consider the massive amount of environmental and policy issues that we've had due specifically to oil. Had we not had so much of it in the early 20th century, we probably wouldn't have had the automobile boom of today and the long-term sabotage of public transportation. There's a curse, all right.
    • adventured 12y ago
      Perhaps, but then again America would not have participated very fully in the industrial revolution if not for oil, and would not have fielded a strong military during WW2 without oil. It's likely America would have not have been able to afford a vast, high quality public transportation system had the economic foundations not been built up in the first place. Especially considering the spread out population base, and geographic size of the country.
  • saryant 12y ago
    The US and Canada didn't fall prey to the oil curse because neither nation had an entire economy built on oil production. Both were well diversified long before Colonel Drake poked a straw in the ground in Pennsylvania.
• lepht 12y ago
  Fascinating contrast to this Backstory Podcast episode about America's relationship with oil: http://backstoryradio.org/shows/black-gold-2/ http://backstoryradio.org/shows/black-gold-2/
• jonifico 12y ago
  I'm from Latin America and many countries here have more-than-decent resources to make things happen, but the difference between us and Norwegians is trust, and that changes it all. Take a look at Brazil, for example. There were over 20 megaconstructions planned for the World Cup and one one of them was completed, the Maracana stadium. That's just an insane amount of corruption. So, what happens? Well, since everyone's stealing, I might as well try to get my piece of the cake, and that's when people start to become selfish A-holes for lack generation after generation. We need a new mindset, better governments and trust. Lots of trust.
  • adventured 12y ago
    Venezuela is the great example in South America. They're, in theory, sitting on the world's largest oil reserves. Meanwhile their production has been falling for 15 years because the government, under Chavez and now, has squandered the opportunity. They have somewhere between $10 trillion and $30 trillion in proven oil reserves, depending on who you believe (either way it's immense). They should be one of the wealthiest countries in history, right now. That's despite the challenges around extraction and the quality of their heavy oil.
    • jonifico 12y ago
      That's a great example, as well. Although it gets even worse when you realize what kind of government they're under. I mean, it's almost a dictatorship. It's all just a big pitty over another.
• nwah123 12y ago
  Common resources should be treated as public assets. There's multiple ways you could accomplish that, besides just nationalizing oil fields. Land value taxation and severance taxes can help recapture the value of our Commons, and allow us to reduce taxes on labor or investment.
• Kiro 12y ago
  So are they saving because they're afraid of overheating the economy or that they will run out of oil?
• suprgeek 12y ago
  TL;DR "Fairly homogenous country of 5 Million people total" coupled with some good decision making. For reference NY alone has a population of about 8 Million.