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The Norwegian economy is an example of mixed economy, featuring a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector. The control mechanisms over the petroleum resources is a combination of state ownership in major operators in the Norwegian fields (Statoil ca 70% in 2005, Norsk Hydro 43% in 2004) while specific taxes on oil-profits for all operators are set to 78%, finally the government controls licensing of exploration and production of fields. The country is richly endowed with natural resources: petroleum, hydropower, fish, forests, and minerals. Norway has obtained one of the highest standards of living in the world, partly from petroleum production but mainly from efficient economic policies, creating a good environment for doing business. Norway has a very high employment ratio. In 2004, oil and gas accounted for 50% of exports. Only Saudi Arabia and Russia export more oil than Norway, which is not a member of OPEC. The last 30 years, the Norwegian economy has shown various signs of the economic phenomenon called Dutch disease. In response to Dutch Disease, and to concerns about oil and gas reserve depletions, in 1995 the Norwegian state started to put away the annual surplus in a fund, now called Government Petroleum Fund. The fund is invested in developed financial markets outside Norway. The fiscal strategy is to spend the "normal interest" of the fund each year, set to 4 per cent. By January 2006, the Fund was at USD 200 billion, representing 70 per cent of GDP in Norway. Norway opted to stay out of the European Union during a referendum in 1972, and again in November 1994. However, Norway, together with Iceland and Liechtenstein, participates in the EU's single market via the European Economic Area (EEA) agreement. The EEA Treaty, between the EU nations and the EFTA nations, EØS-loven, is constituted as superior law in Norway, which makes Norway a full member of EU's free trade market. In 2000 the government sold one-third of the then 100% state-owned oil company Statoil. The economic growth was 0.8% in 1999, 2.7% in 2000, and 1.3% in 2001. After little growth in 2002 and 2003, the economy expanded more rapidly in 2004. Recent research shows early evidence of massive amounts of coal beneath the oil-reserves on the continental shelf of Norway. A rough estimate has been given at 3×1012 tonnes of coal of unknown quality in these reserves. In comparison, the currently known coal reserves for the entire world is estimated at 0.9×1012 tonnes. The coal is inaccessible today, but there are realistic hopes that it can be accessed in the future. Animal rights and anti-whaling groups have commented that given Norway's economic position it is paradoxical that this is one of a very small number of countries actively engaged in, and favoring the continuation of, commercial whaling. This is despite the argued negligible contribution that whaling makes to the economy, and despite opposition from around the world. Many supporters of whaling agree that its macroeconomic importance is negligible, but hold that the livelihood of individuals and small firms depend on it and that sustainable development depends on human harvesting of all non-endangered species, and that it is an important part of culture in costal areas. Norway's whaling today is limited to the non-endangered Minke Whale, whom are killed using explosive grenade harpoons, which also accounts for more than 90% of the catch in Norwegian waters since the 1920s |
Norway Information: Inside
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