Economic diversification: The Norwegian experience Olav Wicken Abu-Dhabi Oct 26, 2010
A rich oil economy The rich economy World s second highest GDP per capita The oil and gas economy World s third largest exporter of natural gas World s sixth largest exporter of oil Countries GDP/capita (USD) 2009 1 Luxembourg 106 000 2 Norway 78 000 3 Switzerland 63 000 4 Qatar 60 000 5 Denmark 56 000 6 Ireland 50 000 7 Netherlands 48 000 8 UAE 46 000 9 USA 46 000 4,8 mill inhabitants 10 Australia 45 000
A diverse oil economy Oil and gas 20 per cent of GDP 46 per cent of total export Without oil and gas GDP/capita higher than Denmark Limited trade deficit Oil and gas Fisk Chemicals Metals Machines Other goods Shipping Pipe transport Finance services Transport Tourism Oil services
The diverse economy: many strong export sectors Norway is today world s second largest exporter of seafood world s fourth largest shipping fleet 20% of gas and chemicals, 10% of crude oil tankers world s sixth largest exporter of primary aluminium and main exporter of solar cells (silicon) leading exporter oil related products and services World s second largest offshore service vessels supply Dominating in sub-sea production technologies (50% of world market)
Historical dynamics Norway s development characterised by continuous development of new resource based industries Period New resource based industries - 1850 Fisheries Timber 1850-1900 Mining (iron, copper) Wood processing 1900-1950 Electricity (from 1900) Basic metals (aluminium, ferro silicon) Fertilisers 1950-2000 Frozen fish (1950s) Fish oil/meal (1950s) Iron/steel and coal (1960s) Oil (1970s) Petrochemical industries (1980s) Fish farming, marine resources (1980s) Natural gas (1990s, 2000 LNG) Solar cells (silicon) (2000s)
The Norwegian path: Creating new resources
Transforming nature into a resource: A complex innovation process
Creating salmon fish farming
Creating new minerals
Developing complex production systems Modern NRBIs are integrated and complex technological systems Offshore oil production: Large platform constructions Drilling systems Flows and separation Control systems Security systems Electricity production Transport system Etc.
Enabling sectors
Enabling industries become export sectors Oil as driving force for Offshore production technology (subsea) Oil and gas business services Specialised shipping: supply, LNG Drilling technologies Environmental technologies Security and control systems
Resource based industries & enabling sectors NRBI are depending on knowledge and technologies in other parts of economy and society Capital goods industry Business ICT R&D sector Knowledge intensive business services Enabling sectors provide resource based industries with technologies and knowledge
Enabling sectors: innovation capabilities Importance of enabling sectors Knowledge intensive sectors distributed in many parts of the economy May be re-combined to develop improved production technology New production sectors Close contact with local and international knowledge institutions
Norway: diversification model Natural resource based industry Enabling sectors and industries New resource bases industries Fishery Electricity Oil and gas Shipping Engineering KIBS R&D/ICT New emerging resource sectors
Norwegian policy for resource based diversification Interaction between NRBI and enabling industries will not necessarily take place Need to establish institutions and regulations to promote interaction Norway has lacked sufficient domestic resources and competence to develop new NRBI Dependent on foreign companies (MNC) for the build-up Main policy: Make multi-national investors interact with Norwegian industry & support the build-up of domestic enabling sectors
Introducing national industrial strategy Objective from 1970s: involve wide parts of Norwegian economy in oil and gas sector Policy 1: Norwegian technological style Policy 2: Use international companies train or involve Norwegian oil companies use Norwegian supply and service industries give R&D contracts to local companies and universities Policy 3: Support national actors Public funding to create national competence (public and private R&D, technological companies, oil companies, procurement, )
Establishing policy framework Introduced with build-up of hydropower 1905-20 Concession laws: Regulating access to resources Political decision to grant permission to companies to exploit natural resources Regulating foreign ownership of natural resources Procurement policies: Regulating technology transfer and development Priority to domestic companies in construction of power stations and networks
Oil as industrial policy Phase 1: Norwegian technological style Public companies, regulatory agencies Goodwill Technology agreement: 50% of R&D linked to licence in Norway Procurement policy Phase 2: Technological transition to subsea New organisations and institutions Changing rules and norms
Using offshore competence to create renewable energy
Using fish farming to develop new industries New species for farming in Norway Fish species Other marine species Cod Mussels Hallibut Large scallops Catfish Flat oysters Char Crustaceans Turbot Lobster Eel Crabs
Resource based knowledge economies UN Human Quality Index 2009 Very High Human Development (1-39) 1 Norway 2 Australia 3 Iceland 4 Canada 5 Ireland 6 Netherlands 7 Sweden 8 France 9 Switzerland 10 Japan 11 Luxembourg 12 Finland 13 United States 14 Austria 15 Spain 35 United Arab Emirates
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