The Japan Times WORLD EYE REPORTS NORWAY
©THE JAPAN TIMES	Thursday, November 15, 2001

21st century Vikings open new frontiers Pristine waters, clean fresh air and the abundance of natural resources make Norway a country unlike any other. Located in northern Europe, Norway shares a continental border with Sweden to the east and Russia in the far north. But a more important border, the one that gives Norway access to the rest of the world, and the world access to it, is its 21,925 kilometers of coastline.

YACHTS LINE A summer marina and a ski jump overlooks the scene, hinting at winter's snowy delights. Norwegians have turned their country's superb natural resources into a strong base for the new century's globalized economy.

This is the world's longest - stretching half the circumference of the equator. Land and sea gateways to and from Norway are the traditional trade routes that connect this geographically isolated and resource-rich country to the rest of the world.

A nation of only 4.5 million people, Norway is a small market with an abundance of export goods. Its GDP last year amounted to approximately 162 billion dollars, the majority of which is due to exports to the European Union (EU). In 2000, estimated export totals to the continental EU amounted to almost 25 billion dollars, while exports to the UK and the US amounted to approximately 7 billion dollars and 3.5 billion dollars respectively.

The first major industries of the region to be recorded in the 17th century were the extraction of iron and the milling of lumber and barrel staves. Since then, the number of the country's major industries has grown to include several of its leading export industries - with a 240 percent increase in exports of goods of over the past 20 years.

Norway's shipping industry has historically been one of its oldest industries, dating back to the Viking era. Today, it is one of the top shipping nations in the world, building on its tradition of producing high-quality technologically advanced vessels. While shipbuilding has already moved on for the most part to other lower cost areas of the globe, the shipping industry currently makes up 13 billion dollars of the total GDP.

There is an obvious bridge between this industry and the one most responsible for taking Norway into the global game of trade and commerce: the discovery of substantial oil reserves in 1969 in the North Sea off the country's coast.

The country currently relies heavily on oil. It is the world's second largest oil exporting nation, after Saudi Arabia, and oil sales make up 40 percent of the country's export income.

Over the past two years, there has been an increase in oil and gas prices, almost tripling those of three years ago. Investment in this sector is expected to increase through the end of 2001 and into the following year. This move follows a tendency to reduce the development of new fields and to increase inflows in those fields that are already on-stream, through improved use of the infrastructure and efficiencies already in place.

The country is also making contingency plans to lessen its reliance on its oil resources to sustain its favorable economic position. More than a decade ago, analysts pinpointed a key renewable resource that is plentiful alongside the oil rigs which dot the North Sea - namely, fish.

Although Norwegians have fished from the beginning of recorded history, it was not until the 1999 that its seafood industry finally became recognized as a core trading commodity.

This sector is currently responsible for 8 percent of the nation's total exports - with an unmistakable growth curve pointing to the future.

Unlikely partners are recognizing the growing potential of this industry. IBM, the company best known for building information technology (IT) infrastructure, is working closely with the fish-farming sector to help companies better monitor and trace their products. This is further reinforcing the Norwegian position in the global market.

Finn Bergesen is convinced a four part approach is the key to continuing Norway's economic drive.

Japan plays a significant role in this market. Currently 50 percent of all seafood harvested is Norway is exported to Japan. The growing importance of the Japanese sector is shown by the development of transportation services to the country. Once dependent on long sea voyages, one Norway's leading seafood companies, Leroy Seafood, charters a plane to Japan twice a week to supply the Japanese market with its specialty fresh products from the North Sea. Making the connection from Norway's abundance of natural resources to foreign markets is a link that the country's companies will continue to strengthen, even though establishing more far-reaching ties - specifically through membership in the EU - is a political step the country is not yet willing to take.

In 1972 and 1994, Norway voted against membership in the EU but the political climate surrounding this controversy may be shifting. A recent poll showed a large majority of Norwegians favored membership. A new poll will be unlikely to be on the agenda again until 2005.

The partial privatization of state-owned companies is another reflection of the country's changing political climate.

In the past, the Norwegian government has controlled key sectors of the business economy, such as the agricultural, fishing, telecommunications and oil industries. In the past several years, however, Norway has witnessed an easing of the government's hold on the three key areas of oil, finance and telecommunications.

Last year, the government sold its 33 percent stake in Norwegian sector giant Den Norske Bank. In June, it sold 33 percent of its shares in Telenor, the leading telecommunications company. In July of this year, the government relinquished 17 percent of its stake in Statoil, Norway's largest petrochemical company.

The main objectives of these moves have been to increase competition on a global level and to improve efficiencies.

Norway's prosperous natural resources and trend towards partial privatization has strengthened the overall economy of the nation.

Norway has always been a competitive nation. "The country must strengthen its position in four areas to maintain it's current economic level," says Finn Bergesen, director general of the Confederation of Norwegian Business and Industries, the country's leading business association. "These are: instituting tax cuts, increasing spending in research and development (R&D), improving the transportation infrastructure and modernizing the public sector."

"It is absolutely necessary to lower taxes in order to remain competitive," he continues. "We want to keep the safety net but we believe the public sector must become also competitive. We believe that private entrepreneurs should be able to serve in areas that before were exclusively for the public sector."

"A second very important issue is R&D. If you look at the OECD, we are below average when it comes to spending in this area. Sweden and Finland both spend more money than Norway," he adds. "The third area is infrastructure. In Norway, we are at the outer edge of the market and we have no transportation to the market. The road system must be modernized. Fourth, we need to modernize the public sector because in my view we have an antiquated system here. If you look at the efficiencies of the private sector in the last year, you see areas that can similarly improve in the public sector."

There is also growing concern that the Norwegian labor market could in for some tough times ahead. According to Grete Knudsen, Norway's Minister of Industry, the outlook on labor is a growing concern for many because of the growing elderly population and the need for more skilled labor.

"The forecast of population trends show that the increase in the labor force will gradually slow down, and that the proportion of elderly in the population will increase," she explains. "In order to avoid a further shortage of labor, there is a need for an efficient and mobile labor market to ensure that unemployed people can quickly cover both existing and new industrial needs," the minister says.

The United Nations Development Program (UNDP) index is used to measure quality of life based on longevity, educational levels and GNP. This year, Norway was rated the highest in the world in all of these areas.