Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era. Shipping has long been a support of Norway's export sector, but much of Norway's economic growth has been fueled by an abundance of natural resources, including petroleum exploration and production, hydroelectric power, and fisheries. Agriculture and traditional heavy manufacturing have suffered relative decline compared to services and oil-related industries, and the public sector is among the largest in the world as a percentage of the overall gross domestic product. The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system.
In May of 1963, Norway asserted sovereign rights over natural resources in its sector of the North Sea. Exploration started on July 19, 1966, when Ocean Traveler drilled its first well. Initial exploration was fruitless, until Ocean Viking found oil on August 21, 1969. By the end of 1969, it was clear that there were large oil and gas reserves in the North Sea. The first oil field was Ekofisk, produced 427,442 barrels of crude in 1980. Since then, large natural gas reserves have also been discovered.
Against the backdrop of the Norwegian referendum to not join the European Union, the Norwegian Ministry of Industry, headed by Ola Skjåk Bræk moved quickly to establish a national energy policy. Norway decided to stay out of OPEC, keep its own energy prices in line with world markets, and spend the revenue - known as the "currency gift" - wisely. The Norwegian government established its own oil company, Statoil, and awarded drilling and production rights to Norsk Hydro and the newly formed Saga Petroleum.
The North Sea turned out to present many technological challenges for production and exploration, and Norwegian companies invested in building capabilities to meet these challenges. A number of engineering and construction companies emerged from the remnants of the largely lost shipbuilding industry, creating centers of competence in Stavanger and the western suburbs of Oslo. Stavanger also became the land-based staging area for the offshore drilling industry. Presently North Sea is past its peak oil production.
Economic structure and sustained growth
The emergence of Norway as an oil-exporting country has raised a number of issues for Norwegian economic policy. There has been concern that much of Norway's human capital investment has been concentrated in petroleum-related industries. Critics have pointed out that Norway's economic structure is highly dependent on natural resources that do not require skilled labor, making economic growth highly vulnerable to fluctuations in the demand and pricing for these natural resources. The Government Pension Fund of Norway is part of several efforts to hedge against dependence on petroleum revenue.
Because of the oil boom since the 70's, there has been little extensive government incentive to help develop and encourage new industries in the private sector, in contrast to other Nordic countries like Sweden and particularly Finland. However the last decade have started to see some incentive on national and local government levels to encourage formation of new "mainland" industries that are competitive internationally. In addition to aspirations for a high-tech industry, there is growing interest in encouraging small business growth as a source of employment for the future.
There is continuing debate over the role of the public sector in Norway's economic development. Although there is broad consensus that Norway should pursue a mixed economic model, there is a persistent ideological schism between those who favor free market forces vs. socialist mechanisms.
In 2007, Norway saw a massive 6% growth of its economy, outpacing any other western nation. However, the growth was mostly due to increased consumer demand, and is expected to slow down in 2008.