The Norwegian economy is dependent largely on the fortunes of its important petroleum industry. Thus, it experienced a decline in the late 1980s as oil prices fell but by the late 1990s had rebounded strongly, benefiting from increased production and higher prices. Norway reversed its negative balance of payments, and the growth of its gross national product (GNP)—which had slowed during the 1980s—accelerated. By the late 1990s Norway's per capita GNP was the highest in Scandinavia and among the highest in the world. In an effort to reduce economic downturns caused by drops in oil prices, the government in 1990 established the Government Petroleum Fund, into which budget surpluses were deposited for investment overseas.
Norwegian economy is based on free enterprise, the government exercises a considerable amount of supervision and control. Extraction of commercial quantities of offshore petroleum beginning in the early 1970s allowed Norway to expand its already extensive social welfare system. Norway’s economy has since grown highly dependent upon petroleum production and is subject to fluctuations in foreign oil prices. A sharp price drop in the mid-1980s resulted in a recession that lasted throughout the later part of the decade; the government responded by initiating measures to diversify the nation’s economy. Norway’s large merchant fleet remains of great importance to the economy. The 20th century was a period of great industrial expansion for Norway, based primarily on extensive and inexpensive waterpower resources, but also aided by the exploitation of offshore mineral resources. The country has one of the highest standards of living in the world; estimated gross domestic product (GDP) per capita in 1999 was $34,290.
The Norwegian economy is a prosperous bastion of welfare capitalism, featuring a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector (through large-scale state enterprises). The country is richly endowed with natural resources - petroleum, hydropower, fish, forests, and minerals - and is highly dependent on its oil production and international oil prices; in 1999, oil and gas accounted for 35% of exports. Only Saudi Arabia exports more oil than Norway. Oslo opted to stay out of the EU during a referendum in November 1994. Growth picked up in 2000 to 2.7%, compared to the meager 0.8% of 1999, but may fall back in 2001. The government moved ahead with privatization in 2000, even proposing the sale of up to one-third of the 100% state-owned oil company Statoil. Despite their high per capita income and generous welfare benefits, Norwegians worry about that time in the next two decades when the oil and gas begin to run out. Accordingly, Norway has been saving its oil-boosted budget surpluses in a Government Petroleum Fund, which is invested abroad and now is valued at more than $43 billion.
