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- GDP (PPP):
- $265.9 billion
- 1.7% growth
- 0.7% 5-year compound annual growth
- $53,471 per capita
- Inflation (CPI):
- FDI Inflow:
Norway’s economic freedom score is 70.5, making its economy the 31st freest in the 2013 Index. Its score has increased by 1.7 points since last year due to notable improvements in half of the 10 economic freedoms including the management of public spending, investment freedom, and freedom from corruption. Norway is ranked 16th out of 43 countries in the Europe region, and its overall score is well above the world and regional averages.
Norway’s impressive gains in economic freedom have moved it once again into the “mostly free” category. The government has focused on containing expensive welfare programs, with the accumulation of assets from hydrocarbon production in the National Wealth Fund providing a cushion for fiscal stimulus. With the budget deficit narrowing, public debt remains under control. However, state ownership in key industries continues to be substantial.
The strong competitiveness of the Norwegian economy is built on openness and transparency, with policies that support dynamic trade and investment. The quality of the legal framework is among the world’s highest, providing effective protection of property rights. The rule of law is well maintained, and a strong tradition of minimum tolerance for corruption continues.
Prime Minister Jens Stoltenberg heads a labor–socialist coalition government. Norway has been a member of NATO since 1949, but voters have twice rejected membership in the European Union. Instead, it maintains close economic interaction with EU members under the European Economic Area agreement. Norway is one of the world’s most prosperous countries. Fisheries, metal, and oil are the most important commodities. It weathered the economic crisis well but is exposed to Europe’s economic problems since 80 percent of its trade is with EU member states. The government continues to save a large portion of its petroleum-sector revenues, such as dividends from the partially state-owned Statoil and taxes from oil and gas companies operating in Norway, as part of its Government Pension Fund-Global, currently worth approximately US$590 billion.
The judicial system is sound and efficient, providing secure protection of private property rights and reliable enforcement of commercial contracts. Protection of intellectual property rights is consistent with world standards, and the laws are evenly applied. Well-established anti-corruption measures reinforce a cultural emphasis on government integrity. Transparency has been an emphasis and is a key institutional asset.
The top income tax rate is 47.8 percent, and the corporate tax rate is a flat 28 percent. Other taxes include a value-added tax (VAT), a tax on net wealth, and environmental taxes. The overall tax burden equals 42.8 percent of GDP. Government spending is equivalent to 44.6 percent of total domestic output. Public debt is below 50 percent of GDP. Large oil revenues have preserved the fiscal balance despite attempted stimulus spending.
The entrepreneurial framework is transparent and efficient. Starting a business takes five procedures and seven days on average, but licensing can be time-consuming. Bankruptcy proceedings are relatively simple. The labor market lacks flexibility, but the non-salary cost of employment is not high in comparison to other countries in the region. Monetary stability is well maintained.
The trade-weighted average tariff rate is one of the world’s lowest at 0.4 percent. Although there are some trade-distorting agricultural subsidies, non-tariff barriers are largely nominal and not burdensome. The investment code is efficiently administered, but domestic or European Economic Area investors are favored in some sectors. The financial sector is market-driven, although the state retains ownership of the largest financial institution.