Norway is a modern, highly developed country with a small but very strong economy. Per capita GDP is among the highest in the world, boosted by decades of success in the oil and gas sector and other world-class industries like shipping, shipbuilding, and aquaculture. The major industries are supported by a strong and growing professional services industry (finance, ICT, legal), and there are emerging opportunities in fintech, cleantech, medtech, and biotechnology. Strong collaboration between industry and research institutions attracts international R&D activity and funding. Norway is a safe and straightforward place to do business, ranked 9 out of 190 countries in the World Bank’s 2020 Doing Business Report, and fourth out of 180 on Transparency International’s 2021 Corruption Perceptions Index. Norway is politically stable, with strong property rights protection and an effective legal system. Productivity is significantly higher than the EU average.
Norway has managed the coronavirus pandemic with relative success two years in, maintaining a low death rate, protecting health facilities’ capacity, and cushioning economic shocks. Swift implementation of social mobility restrictions, strong political unity, and broad public support were among the country’s key success factors. Norway’s solid financial footing, including fiscal reserves in its trillion-dollar sovereign wealth fund and monetary policy maneuverability, enabled the government to finance generous support packages to mitigate the pandemic’s economic impact on workers and businesses.
Norwegian lawmakers and businesses welcome foreign investment as a matter of policy and the government generally grants national treatment to foreign investors. Some restrictions exist on foreign ownership and use of natural resources and infrastructure. The government remains a major owner in the Norwegian economy and retains monopolies on a few activities, such as the retail sale of alcohol.
While not a member of the European Union (EU), Norway is a member of the European Economic Area (EEA, which also includes Iceland and Liechtenstein) with access to the EU single market’s movement of persons, goods, services, and capital. The Norwegian government continues to liberalize its foreign investment legislation with the aim of conforming more closely to EU standards and has cut bureaucratic regulations over the last decade to make investment easier. Foreign direct investment in Norway stood at USD 160 billion at the end of 2021 and has more than doubled over the last decade. There are approximately 8,100 foreign-owned companies in Norway, and over 700 U.S. companies have a presence in the country, employing more than 58,000 people.
1. Openness To, and Restrictions Upon, Foreign Investment
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
The government continues to play a strong role in the Norwegian economy through its ownership or control of many of the country’s leading commercial firms. The public sector accounts for nearly 66 percent of GDP. The Norwegian government is the largest owner in Norway, with ownership stakes in a range of key sectors (e.g., energy, transportation, finance, and communications). 74 State-Owned Enterprises (SOEs) are managed directly by the relevant government ministries, and approximately 33 percent of the stock exchange’s capitalization is in government hands. State ownership in companies can be used as a means of ensuring Norwegian ownership and domicile for these firms.
Norway is party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO) and a signatory to all relevant annexes. SOEs are thus covered under the agreement.
Successive Norwegian governments have sustained stable levels of strong, transparent, and predictable government ownership. The former center-right government took limited steps to reduce ownership stakes.
8. Responsible Business Conduct
Corporate Social Responsibility (CSR) is very much part of Norwegian corporate and political consciousness. Significant attention has been given to ethical and sustainable business practices over the last several years; the GON has issued a series of white papers, most recently in 2015, on promoting human rights through foreign policy and foreign development assistance. In 2009, a white paper laid out responsibility of Norwegian businesses in the global economy and in 2006-2007, the GON set down guidelines for ethical and responsible conduct in state-owned enterprises, and incorporated climate policy, procurement policy, and development policy as parts of the GON’s broader CSR vision.
As an OECD member, Norway adheres to the OECD Guidelines for Multinational Enterprises. Norway’s National Contact Point (NCP) for the OECD Guidelines raises awareness of the due diligence approach of the Guidelines and handles complaints against Norwegian businesses with international operations, in the event they are not behaving in accordance with the Guidelines. The NCP facilitates resolution of these complaints through dialogue and mediation. Kompakt is the Government’s consultative body on matters relating to CSR:
The Norwegian Accounting Act requires companies listed on the Oslo Stock Exchange to provide a report on their policies and practices for corporate governance. The Norwegian Corporate Governance Board, composed of nine independent organizations, issues and updates the Norwegian Code of Practice for the above-mentioned companies. Transparency and disclosure are key to the development of corporate social responsibility. Large enterprises are required under Section 3-3c of the Accounting Act to report on their CSR activities. Public disclosure requirements are increasingly regulated. The work of the EU in this area may lead to the development of regulations of relevance to Norway.
In the mining sector, Norway encourages adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas and participates in the Extractive Industries Transparency Initiative (EITI).
In order to prevent tax evasion and the use of tax havens to conceal financial information, large enterprises and public-interest entities that are active in the extractive industry or in the logging of primary forests are required to report on a country-by-country basis. In addition, Norway has entered into a number of new bilateral tax information exchange agreements in recent years.
Norway is a signatory of The Montreux Document on Private Military and Security Companies, a supporter of the International Code of Conduct or Private Security Service Providers, and a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).
Business is generally conducted “above the table” in Norway, and Norway ranks fourth out of 180 countries on Corrupt activity by Norwegian or foreign officials is a criminal offense under Norway’s Penal Code. Norway’s anti-corruption laws cover illicit activities overseas, subjecting Norwegian nationals/companies who bribe officials in foreign countries to criminal penalties in Norwegian courts. In 2008, the Ministry of Foreign Affairs launched an anti-corruption initiative, focused on limiting corruption in international development efforts.
Norway is a member of the Council of Europe’s anti-corruption watchdog Group of States against Corruption (GRECO) and ratified the Criminal Law Convention on Corruption in 2004, without any reservations. Norway has ratified the UN Anticorruption Convention (2006) and is a signatory of the OECD Convention on Combating Bribery.
10. Political and Security Environment
Norway is a vibrant, stable democracy. Violent political protests or incidents are extremely rare, as are politically motivated attacks on foreign commercial projects or property. However, on July 22, 2011, a Norwegian individual motivated by extreme anti-Islam ideology carried out twin attacks on Oslo’s government district and on the Labor Party’s youth summer camp in Utøya, killing 77 people. The individual, now in prison, operated alone and this incident is not generally considered an indicator of increased political violence in the future.
11. Labor Policies and Practices
Obtaining work permits for foreign labor, particularly for semi-skilled workers, can be cumbersome.
Skilled and semi-skilled labor is usually available in Norway. The labor force as of year-end 2021 totaled about 2.917 million persons, representing 72.3 percent of the working-age population. 2.817 million persons were employed at year end 2021 (72.3% of male labor force and 67.3% of female labor force), with unemployment at 3.4 percent.
Union membership is in excess of 1.94 million persons, 68 percent of the labor force. The unions are independent of the government but some, such as the largest (LO), have close and historic ties with the Labor Party. Norway has a highly centralized and constructive system of collective bargaining. The government may impose mandatory wage mediation should strikes threaten key sectors of the economy, particularly the oil and gas and transportation sectors. Mandatory wage mediation has been used 120 times since 1953, most recently in 2021 to end a strike among municipality workers ranging from nurses and teachers to janitors.
Employee benefits are generous, e.g., one year paid parental leave (shared between parents, and financed chiefly by the government), and unemployment benefits for up to 104 weeks. There are special provisions for layoffs linked to lower activity for the employer.
The average number of hours worked per week in one’s primary job, 33.6 in 2020, is the third lowest in the OECD, after the Netherlands and Denmark. Productivity, however, is high – significantly higher than the EU average. Sickness and absenteeism rates have been between 6-8 percent over the last decade and stood at 6.1 percent at the end of 2020. Relatively high disability rates, especially among young people, are a concern.
Norwegian blue-collar hourly earnings are comparatively high. High wages encourage the use of relatively capital-intensive technologies in Norwegian industry. Top-level executives and highly skilled engineers, on the other hand, are generally paid considerably less than their U.S. counterparts, which, when combined with relatively high wages at the bottom of the wage scale, contributes to Norway’s very high level of income equality relative to other OECD countries.
14. Contact for More Information
Embassy of the United States of America
+47 2130 8665