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OECD Territorial Reviews: Norway 2007

image of OECD Territorial Reviews: Norway 2007

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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Regional Performances and Underused Potentials

At the turn of the 20th century, Norway’s economy rested largely on the primary sector, whether fishing, agriculture or forestry. A small industrial base, located mostly in the south, and limitations imposed by nature on agricultural development limited job creation, thus leading to out-migration, in particular to North America. Prospects for the economy began to change at the end of the 19th century with the development of hydro-electric power, harnessed across the country by numerous waterfalls. Cheap electricity facilitated the expansion of metallurgical and chemical manufacturing, especially aluminium, iron alloys and fertilisers. Small cities by the fjords became central to Norwegian industry. At the same time big companies became crucial for employment and regional development in many parts of the country. In the depression after WW I, expansion in electricity production and metal industries slowed down, but became later more specialised. After WW II the state established a Norwegian Iron Works in Mo i Rana, based on regional electricity production and local iron ores. Iron from the Kiruna mines in Northern Sweden was exported from the ice free harbour of Narvik. The control of these strategic resources was a major challenge during World War II, as showed precisely by this famous battle. Their exploitation than sparked the growth of shipbuilding at the benefit of the southern part of the country.

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