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- GDP (PPP):
- $280.0 billion
- 0.8% growth
- 0.8% 5-year compound annual growth
- $54,947 per capita
- Inflation (CPI):
- FDI Inflow:
Norway’s economic freedom score is 71.8, making its economy the 27th freest in the 2015 Index. Its score has increased by 0.9 point since last year, with solid improvements in six of the 10 economic freedoms, including labor freedom, monetary freedom, and the management of public spending, outweighing a decline in freedom from corruption. Norway is ranked 15th out of 43 countries in the Europe region, and its overall score is well above the world and regional averages.
Improvements in the regulatory environment and trade freedom have caused Norway’s economic freedom score to expand by 1.1 points over the past five years. The only decline was in government spending as the government responded to low economic growth with additional spending.
Steady improvements in the 10 economic freedoms have underlined Norway’s development of strong institutions. A small, open economy, Norway has low barriers to entry for foreign businesses and an investment regime that encourages international participation. The business environment is welcoming to new entrepreneurs, although the labor code remains rigid. High taxes and government spending are supplemented by the world’s largest sovereign wealth fund. The property rights regime is the world’s second best.
Norway has been a member of NATO since 1949. Voters have twice rejected membership in the European Union, but Norway is a party to a European Free Trade Association agreement. Prime Minister Erna Solberg of the Conservative Party was elected in September 2013 to lead a new center-right coalition minority government. Solberg’s government has promised to lower taxes, decrease reliance on oil production, increase investment in infrastructure, and curtail immigration. Norway is one of the world’s most prosperous countries. Fisheries, metal, and oil are the most important commodities. Norway saves a large portion of its petroleum-sector revenues, including dividends from the partially state-owned Statoil and taxes from oil and gas companies operating in Norway, in its Government Pension Fund–Global.
Norway is ranked 5th out of 177 countries in Transparency International’s 2013 Corruption Perceptions Index. Well-established anti-corruption measures reinforce a cultural emphasis on government integrity. The judiciary is independent, and the court system operates fairly at the local and national levels. Private property rights are securely protected, and commercial contracts are reliably enforced.
Norway’s top individual income tax rate is 47.8 percent, and its top corporate tax rate is 27 percent. Other taxes include a value-added tax, a tax on net wealth, and environmental taxes. The overall tax burden equals 42.2 percent of the domestic economy. Public expenditures amount to 43.3 percent of domestic production, and public debt is equal to 30 percent of GDP.
The efficient and transparent business framework supports private-sector development. Incorporating a business costs about 1 percent of the level of average annual income and takes four procedures. The non-salary cost of employing a worker is high, but severance payments are not overly burdensome. Monetary stability has been well maintained, although the government subsidizes numerous renewable energy projects.
Norway has a 0.3 percent average tariff rate, but the agricultural sector is subsidized and protected from competition. There are few government barriers to international trade and investment, and foreign investors generally receive national treatment. The well-developed financial system provides a wide range of services. Banking remains generally well capitalized. The state retains ownership of the largest financial institutions.