OECD Territorial Reviews: Norway 2007

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Few other countries feature the combination of very low population densities and difficult topography that hinders communication, in addition to a variety of contrasting climates. But the “Nordic welfare model” strives, with a good degree of success, to offer equal living conditions to all citizens by providing proper access to quality public services across the country. This comes, however, at great cost. This publication asks whether such a model can be sustainable in the long run, when population ageing and the reduction of petroleum reserves will reduce the leeway that the rapidly growing economy offers.  It examines whether competitiveness and innovation could be further developed, given the high share of resource-based and traditional activities and whether urban policy could be better integrated into regional policy so as to better harness the energy of regional growth engines in different areas of the country, including the northern most parts. Lastly, it looks at whether impending regional reform could facilitate the necessary adaptations by transferring more power to regional councils.

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Assessment and Recommendations

Norway has successfully developed a resource based economy (hydroelectricity, petroleum, fisheries, agriculture) and is also competitive in specific sectors on the world market (light metals, automotive parts, maritime) thanks to improved productivity and innovation. Sound macroeconomic policies have kept inflation under control, with the fiscal earnings of petroleum and gas exploitation going into a Pension Fund contributing to reduce the impact of increased ageing. The country has enjoyed steady growth since the beginning of the nineties (3% per year between 1991 and 2003) and in terms of GDP per capita, it ranks third in the OECD, only behind Luxembourg and the United States. This favourable context has made it easier for successive governments to pursue regional development policies and programmes comprising a strong bias in favour of remote rural areas and the north of the country (district policy) where climate, distance and very low population densities bring forward issues of market access but also of public service delivery. Despite these proactive policies, around half of Norwegian municipalities experienced population decline in the decades following the mid-1980s, with inward migration towards Oslo and major cities in the south.

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