Norwegian Economic History A Brief Outline

1
Norwegian Economic HistoryA Brief Outline

• Bjørn L. Basberg
• Economic History Section,
• Department of Economics, NHH
• MiB/ENE Seminar,11 August 2008

2
Some milestones and guideposts

• Independence from Denmark in 1814
• Union with Sweden 1814-1905
• A small nation in the European periphery
• Population in 1815 885000
• Population in 1910 2.390000

3
The Norwegian way to industrialization

• Comparative advantages Natural resources
• Technology import, catching-up
• Export-led growth
• A Norwegian System?

4
Pre-industrial Norway( -1840s)

• An agricultural, rural economy
• Proto-industries
• Sawmills
• Mines (copper, silver, iron-ore)
• Iron-works
• Export industries
• Forestry (timber)
• Fisheries
• Shipping

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A first wave of industrialization(1840s
1870s)

• New industries
• Textiles
• Mechanical engineering
• Important preconditions / explanations
• Population increase
• Urbanization
• Liberal economic policy
• Technology import

6
A second wave of industrialization(1870s
1900) Timber

• Saw mills
• Mechanical pulp
• Cellulose / chemical pulp
• Paper
• An industrial breakthrough?

7
Industrial production in 1900 (per capita,
Europe 100)

• Great Britain 254
• Belgium 230
• Germany 177
• Switzerland 150
• France 140
• Sweden 104
• Holland 97
• Norway 93
• Denmark 85
• Austria-Hung. 82

• Italy 71
• Spain 52
• Greece 48
• Portugal 46
• Serbia 39
• Russia 34
• Bulgaria 33
• Romania 33
• Finland 31

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An industrial nation(1900 1914) Electricity

• New growth industries
• Electro chemicals (Norsk Hydro 1905)
• Electro metals (aluminium, zink, nickel,
  carbid..)
• Electro technical (turbines, dynamos)
• Preconditions / explanations
• Hydro electric power
• Technological advances
• Foreign capital / investments

9
Interwar growth and stagnation(1918 1939)

• Economic crises in the 1920s and 30s,
  unemployment.
• The first socialist government (1935)
• The 1920s Growth in export industries
• Shipping
• Whaling
• The 1930s Growth in the home-market
• Textiles
• Furniture
• Household goods

10
Post WWII reconstruction and international
co-operation Turning westwards

• Monetary policy (Bretton Woods Agreement, 1944)
• The Marshall Aid / European Recovery Programme
  (1947 1951)
• NATO (1949)
• but not the EU

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The post WWII period(1950 1973) (I)

• High growth in the OECD-area
• Norwegian growth below OECD-average
• Large investments moderate growth
• Industrial growth sectors Shipping, shipyards,
  energy-intensive industries (electro)

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The post WWII period (1950 1973) (II)

• Agriculture and fisheries Increased productivity
• Gradual structural changes continued From
  primary products to service sector
• State industries
• Catching-up closing the gap
• Development of the Welfare State

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The Norwegian economy from the 1970s The Oil
Nation

• Higher growth than the OECD-average
• Low unemployment
• Growth in the public sector
• Positive balance of trade (export/import)
• Reduced competitiveness in traditional industries
  deindustrialization trend
• Selective industry subsidies (1970s)

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Rates of growth in GDP per Capita
Source Maddison, OECD 2001
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A summary(In a 200 years perspective)

• Economic growth in the long run
• A small open economy the importance of the
  international business cycles
• The main comparative advantage Natural resources
• Economic policy Between plan and market (A
  Norwegian System?)
• Democratic capitalism