Microeconomics of competitiveness

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ezes. The country has easy access to large and rich markets in Europe: Germany, the United Kingdom and the other Scandinavian countries. The Norwegian oil and gas reserves are the 19th largest in the world. Norway has 1.1% of gas reserves globally (BP, 2011) and provides around one third of the EU’s gas imports (Eurostat, 2011). The reserve to production ratio for gas is 19.2 years and for oil 8.5 years (BP, 2011), though Norwegian authorities expect an expansion of known reserves and continued oil production well beyond 2020 (Norwegian Petroleum Directorate, 2012). Competitiveness Profile and the National Diamond Norway ranks 9th out of 136 countries on the global competitiveness index. It is 7th on the macroeconomic scorecard and 22nd on the microeconomic ranking (ISC, 2012). Macroeconomic Fundamentals: Norway has sound fiscal and monetary policies, low inflation, 1 and a stable currency (the Norwegian Krone), as can be seen in Figure 1 Inflation was 0.8% from March 2011 to March 2012 (Statistics Norway, 2012). The oil & gas cluster in Norway 6 5. The country invests its petroleum revenues abroad in the “Government Pension Fund” and has committed to only harvesting 4% of the fund annually to plug a structural deficit in the state budget. This policy has helped Norway avoid the “Dutch disease,” which refers to increased cost and loss of competitiveness in an economy resulting from petroleum revenue inflows. Furthermore, national debt is only 26% of GDP; the average government surplus from 2006 to 2010 was 15%. Despite high tax rates, the impact of taxation on the incentives to work and invest is less negative than in many advanced economies, since the administration of the tax system is less burdensome (H...
View Full Document

This document was uploaded on 03/30/2014.

Ask a homework question - tutors are online