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. Norwegians enjoy the second highest GDP per-capita (after Luxembourg) and fourth highest GDP (PPP) per-capita in the world, with the IMF estimating it at $84,443 in 2010. Norway has an aggregate Nominal GDP of $255.285 billion, as estimated by the IMF in 2010. Due to the extraordinarily high GDP per capita, 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. However, with higher GDP per capita also comes higher living costs. Cost of living is about 90% higher in Norway than in the United States and 50% higher than the United Kingdom.The standard of living in Norway is among the highest in the world. Norway’s relatively small population of 4,990,900, as estimated in 2011 by the Norwegian government; is also one of the reasons that allow it to maintain a very high standard of living.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, according to the US State Department. The emergence of Norway as an oil-exporting country has raised a number of issues for Norwegian economic policy. There has been concern that much of Norway’s human capital investment has been concentrated in petroleum-related industries. Critics have pointed out that Norway’s economic structure is highly dependent on natural resources that do not require skilled labor, making economic growth highly vulnerable to fluctuations in the demand and pricing for these natural resources. The Government Pension Fund of Norway is part of several efforts to hedge against dependence on petroleum revenue, essentially the fund is a rainy-day fund for when Norway eventually runs out of oil. Because of the oil boom since the 1970s, there has been little extensive government incentive to help develop and encourage new industries in the private sector, in contrast to other Nordic countries like Sweden and particularly Finland. However the last decades have started to see some incentive on national and local government levels to encourage formation of new “mainland” industries that are competitive internationally.Shipping has long been a support of Norway’s export sector, Agriculture and traditional heavy manufacturing have suffered relative decline compared to services and oil-related industries, and the public sector is among the largest in the world as a percentage of the overall gross domestic product. In addition to interest in information technology, a number of small- to medium-sized companies have been formed to develop and market highly specialized technology solutions. Norway’s export sector is also quite strong, with an estimated exports of $122 billion in 2009. Norway’s main exports are petroleum and petroleum products, machinery and equipment, metals, chemicals, ships, fish; while its main export partners in 2008 were United Kingdom 27%, Germany 12.8%, Netherlands 10.4%, France 9.4%, Sweden 6.5%, United States 4.5%. Norway also ranks in the upper echelons of countries to do business in, according to the annual survey by the World Bank. For example, Norway was ranked in 6th place worldwide for ease of doing business in 2012, according to the World Bank. The same survey also placed Norway in 4th place for ease of enforcing contracts, 24th place for the government’s willingness to protect investors, and 9th place for trading across borders.
Overall, Norway seems like a promising market for the future. Since, the Norwegian market is still growing albeit slowly, mainly due to immigration. The Norwegian economy still continues to post healthy levels of growth, even with its highly developed industrial base. The few problems that Norway faces though, are a heavy reliance on natural resources for economic growth. However, the Norwegian government has shown itself to be an efficient model for good governance as evidenced by the creation of the national pension fund for the situation when Norway runs out of its precious resources. By staying out of the Eurozone, Norway also also limited the impact of the Eurozone crises on its economy. As a result, it should be able to weather the crises fairly well, especially considering that its biggest export market the UK is also not a part of the Eurozone. 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.