Kingdom of Norway Business Guide

Introduction

The Kingdom of Norway [Norwegian: Kongeriket Norge (bokmål); Kongeriket Noreg (nynorsk)] is a Nordic country occupying the western portion of the Scandinavian Peninsula in Europe, bordered by Sweden, Finland, and Russia.  Norway has a very elongated shape; the country's extensive coastline along the North Atlantic Ocean is home to its famous fjords.  The Kingdom of Norway also includes the Arctic island territories of Svalbard and Jan Mayen: Norwegian sovereignty of Svalbard is based upon the Svalbard Treaty, but this does not apply to Jan Mayen.  Bouvet Island in the South Atlantic Ocean and a claim for Peter I Island in the South Pacific Ocean are also external dependencies, but these are not part of the Kingdom.  Norway also claims Queen Maud Land in Antarctica where it has established the Troll permanent research station.

Economy

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, with oil and gas accounting for one-third of exports. Only Saudi Arabia and Russia export more oil than Norway. Norway opted to stay out of the EU during a referendum in November 1994; nonetheless, as a member of the European Economic Area, it contributes sizably to the EU budget. The government has moved ahead with privatization. Although Norwegian oil production peaked in 2000, natural gas production is still rising. Norwegians realize that once their gas production peaks they will eventually face declining oil and gas revenues; accordingly, Norway has been saving its oil-and-gas-boosted budget surpluses in a Government Petroleum Fund, which is invested abroad and now is valued at more than $250 billion. After lackluster growth of less than 1% in 2002-03, GDP growth picked up to 3-4% in 2004-06. Norway's economy remains buoyant. Domestic economic activity is, and will continue to be, the main driver of growth, supported by high consumer confidence and strong investment spending in the offshore oil and gas sector.

Market Overview

• Norway is a modern, oil-rich country with 4.6 million people living in a 1,100 mile long, narrow, and mountainous country with a coastline three times its length and strong traditions of fishing and shipping.
• Norway shares borders with Sweden, Finland and Russia.
• Norway is a vibrant, stable democracy.
• The three Scandinavian countries - Denmark, Norway and Sweden - are closely related in terms of language, ethnic roots, religion, history and a host of other ways, but they also differ in many ways.
• Norway has one of the most financially healthy economies in the world, thanks in part to its status as the world’s third largest exporter of crude oil and the eighth largest oil producer. Norway is also the third largest exporter of natural gas, with significant long-term supply contracts to the European continent. The petroleum sector is Norway's single largest industry, accounting for 25% of Norway's GDP.
• Norway's per capita GDP, estimated at more than USD 47,000 based on purchasing power parities in 2006, exceeds that of the United States. Incomes are also more evenly distributed, making every person a consumer.
• Norway’s unemployment rate is near a historical low at about 3.5%.
• Inflation has been held below the Central Bank's inflation target of 2.5% in recent years, and adjusted for tax changes and excluding energy products was estimated at 0.8% in 2006.
• In 2005 the United States imported goods for about USD 6.8 billion from Norway and exported for about USD 2.7 billion. This trade deficit was largely a result of Norwegian petroleum exports to the United States valued at more than USD 4 billion.
• The majority of Norwegians are fluent in English and many have very close cultural and family ties to the United States.
• Norwegian business ethics are similar to those of the United States.
• Norway is not a member of the European Union (EU), but is linked to the EU through the European Economic Area (EEA) agreement. By virtue of the EEA, Norway is practically part of the EU’s single market, except in fisheries and agriculture.

Market Challenges

• Norway’s import climate is generally open and receptive to U.S. products and investments. There are no significant trade barriers (except for agriculture). 
• The domestic market is small, but the country can serve as an attractive base for business operations in the Nordic, Baltic, and/or Western Russian markets.

Market Opportunities

• U.S. companies have excellent opportunities to capture a significant share of new contract awards in Norway's oil and gas, information technologies, and defense sectors.
• Other sectors with significant opportunities are telecommunications equipment and services, healthcare technologies, shipbuilding and maritime equipment, safety and security, tourism and consumer goods.