Norway: Oil’s golden years stifled innovation

For the average Norwegian, these are golden years. In the 1970s its citizens were close to the bottom of inter-national rankings of per capita wealth at about $4,000, but today they are at the top with $35,000 – all thanks to a stroke of geological good fortune that deposited huge wealth under the seabed millions of years ago.

But the trouble with oil and natural gas is that it runs out. Norway’s energy resources in the North and Norwegian seas are already maturing. Oil production is expected to increase until 2011 and then fall gradually, while gas production is expected to increase rapidly until 2013 and then plateau, according to the Norwegian Petroleum Directorate, the government body.
While new deposits in the Arctic will fill the gap, at some point the Norwegian economy must wean itself off energy and find new businesses.

There are preliminary signs this shift could be more difficult than thought – with one credible explanation being that the security of oil wealth has undermined Norwegians’ desire to innovate.

The Organisation for Economic Co-operation and Development points to a “puzzle” about Norwegian innovation, which it says is “low by international standards”.

It adds that “weak patenting shows that there is less technological innovation activity than elsewhere” and that “future economic prosperity will depend not only on greater labour utilisation but also on innovation-driven productivity growth”.

Financial Times Deutschland