How Did Norway Become Rich?
Story of Success
Norway is the world’s 5th richest country that shares border with Sweden, Finland and Russia. 25% of its population is millionaire. Besides that, it’s the most democratic country in the world. It tops all the indicators that measure the scale of happiness of a country.
But, Norway was not always like that.
When Thomas Malthus, the famous economist of the 18th Century, visited snow-covered Norway, he found a country whose people used to live by farming. Such a hilly country where travelling was almost impossible. Where the citizens were least educated. Agricultural activities were very difficult to be carried out due to consecutive 6-months winters. Famine was there. Its economy was totally destroyed.
But how did a major change come there? How did Norway become a developed country?
Saudi Arabia, Iran, Iraq, Kuwait, the UAE, Libya, Russia and Venezuela hold almost 85% of oil reserves in the world, but their combined GDP is a mere 8% of the whole world’s. None of these countries comes in the list of top 10 richest countries.
On contrary, Norway is the world’s 13th largest oil producing country, but 4th best country in terms of ‘quality of life’.
So what is the reason that these countries, despite producing such a great amount of oil, do not fall near Norway in terms of living standards?
The reason for this is a phenomenon; the problem with oil is that it is just like winning the lottery. After oil is discovered, money starts pouring on the nations overnight. But the rulers of the country use this money to reduce taxes and maintain expenses.
As these countries export oil, the demand for their local currency increases, which makes it easier for the citizens of that country to buy imported goods. As a result, the local industries of that country suffer.
In fact, the entire economy of 19th Century Norway was driven by sea trade. Due to its great location, timber fish and various minerals from Norway went to Europe and Asian countries through ships.
In the start of 1900, Norway had become the largest merchant fleet in the world. 30% of sea trade in north was being controlled by Norway.
Along with, it introduced parliamentary form of government to ensure no concentration of power in a single hand or party.
It introduced hydro power generation. But at that time, around 75% of hydro electricity generation was being controlled by foreign companies. The Norway Government did not digest that thing.
And at last, they decided that the natural resources of Norway would only be owned by the citizens of the country. For this purpose, the Norway’s Government passed a bill in 1940, that prohibited ownership of hydro power projects by foreign companies. During this period, owing to the modern system of rail, roads and transportation, the local industries of the country got boosted.
Phillips Petroleum Company started drilling in search of oil. At last in 1969, major oil reserves were discovered under the North Sea. Oil production in Norway increased in the next 10 years. It started creating jobs. Fish catching cities had now become petroleum power houses.
Above all Norway’s fate had completely changed. But all this happened with the Middle Eastern countries as well. So what did Norway do different?
The Norwegian government had already passed the bill that its natural resources would not be owned by a single person or party. Rather, the whole income generated from it would be spent only on public welfare.
Norway could decrease taxes, but it did not do this. Rather it collected taxes and spent back on the people. Eventually it came at the top of the list of the developed countries.
