The economy of Norway is a highly developed mixed economy with state-ownership in strategic areas. The government controls key areas, such as the vital petroleum sector, and the government maintains control over a number of large-scale state enterprises – some of them fully owned, and some publicly traded, but where the government has controlling interests.
Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era.
Norway is a modern, energy-rich country, and is considered one of the world’s wealthiest countries with a GDP per capita based on purchasing power parities (PPP) exceeding USD 63,500. Incomes are also more evenly distributed, making every person a consumer.
The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system.
Norway’s modern manufacturing and welfare system rely on a financial reserve produced by exploitation of natural resources, particularly North Sea oil. The country is richly endowed with a number of natural resources – petroleum, hydropower, fish, forests, and minerals – but is highly dependent on the petroleum sector.
The oil and gas industries play a dominant role in the Norwegian economy, providing a source of finance for the Norwegian welfare state through direct ownership of oil fields, dividends from its shares in Equinor, and licensure fees and taxes.
Norway is the world’s 3rd largest exporter of natural gas and 15th largest exporter of crude oil. Its large merchant shipping fleet is one of the most modern among maritime nations and ranked the 4th largest by value. Other major industries, such as offshore shipping, shipbuilding, fishing and fish farming, information technology, pulp and paper products, and light metals processing have prospered as well.
Norway is located in Northern Europe and is a part of the Scandinavian Peninsula. Jan Mayen and the Arctic archipelago of Svalbard are also part of Norwegian territory.
Most of the country shares a border to the east with Sweden; its northernmost region is bordered by Finland to the south and Russia to the east; and Denmark lies south of its southern tip across the Skagerrak Strait. Norway’s extensive coastline is facing the North Atlantic Ocean and the Barents Sea.
Norway is not a member of the European Union (EU) but is linked to the EU through the European Economic Area (EEA) agreement. By virtue of the EEA, Norway is practically part of the EU’s single market, except in fisheries and agriculture.
Norway is also part of the Schengen Agreement, which guarantees free movement of persons and the absence of internal border control between 22 of the 27 EU Member States, as well as Norway, Iceland, Switzerland, and Liechtenstein.
97% of all firms in Norway employ less than 50 people. The SME definition in Norway differs from the definition in use in most EU countries.
The structure of the Norwegian business economy is significantly different from the European average. While in the European Union about 58% of the value added is generated by SMEs, the equivalent share in Norway is about 71%.
At the same time Norwegian SMEs account for about 68% of all persons employed in the Norwegian business economy, which is only 1 percentage point higher than the EU average. This large disparity is mainly caused by micro- firms which generate 40% of total value added in Norway, almost twice as much as the EU average.
However, Norway’s share in employment is lower than in the EU. This indicates that Norwegian micro-firms are highly productive.