Norway: The country with irresponsible use of oil money
If we were to bet on whether Norway or Dubai is the richest in 50 years, we would put our money on Dubai. Dubai has used its oil revenues to build global institutions for value creation, while Norway operates a large state.
Nicolai Strøm-Olsen, leader of Startup Migrants and Hermund Haaland, leader of the Zebr Institute.
In 1990, Oslo was larger than Dubai. At that time, oil revenues were Dubai's main income source, but only accounted for eleven percent of Norway's GDP. But Dubai made a plan for transformation and innovation. Now, oil revenues make up one percent of Dubai's GDP, while in Norway, we make up 28 percent. More and more people want to be part of Dubai's innovation story.
When Nicolai wrote the book Startup Migrants in 2019 and traveled around the Middle East, he was struck by the fact that young talented Lebanese, Jordanians, and Egyptians didn't dream of Europe or the USA. They dreamed of Dubai. Five years later, it wasn't just talents from the Middle East who went to the Emirates, but according to The Economist, also talents from the European startup environment and established businesses. Apart from Tel Aviv, Dubai has become the strongest innovation ecosystem in the Middle East, and has the strongest percentage increase in growth capital.
"I had to go out and experience some dynamism - I'm tired of the eternal stagnation in Europe," an employee in a startup in Hamburg recently told us as an explanation for why he moved to Dubai. Just over the summer, a couple of friends from Berlin moved with their whole family to Dubai. They wanted lower taxes and a more dynamic startup environment. They were a bit worried about Donald Trump and didn't like the weather in England either.
Norway's challenge is that we're not building institutions
In 1978, Dubai had 218,000 inhabitants. In 2023, the population was three million. The growth reminds us of something we've seen before: From 1845 to 1895, London grew from 1.9 million to 5.5 million. At the same time, the Parliament and Tower Bridge were built and The City of London established itself as a financial center. Likewise: From 1850 to 1910, New York grew from 590,000 to 6.1 million. Buildings like the Metropolitan Art Museum and Public Library were built, but most importantly was the New York Stock Exchange.
London and New York never looked back. The reason wasn't population growth, but that global institutions in finance, industry, and innovation were established. London is still among the world's three strongest innovation ecosystems, New York is number two. The institutions still make the cities powerhouses.
No one can say that Norway hasn't built cultural buildings while the oil money poured in, but what other lasting institutions have we built? We can't expect Oslo to compete with New York and London, but a little future ambition wouldn't hurt?
Time to take up the gauntlet
But wait, wasn't it Dubai that used all the oil revenues, instead of saving them, while Norwegians managed them well? In 2021, public expenditure in Norway amounted to about 28,000 Euros per inhabitant, while Sweden "only" used around 14,000 Euros.
Former leader of The Federation of Norwegian Industries, Stein Lier-Hansen, believed in 2021 that the public sector could be reduced by 15 percent without us being worse off. Moderate politicians like Labour Prime Minister Keir Starmer in the UK want to cut 10,000 jobs in government administration. We believe drastic cuts in public spending must also happen in Norway. It would free up capital and labor so that growth can occur.
We should have a strategy for our next decades. Entrepreneurs are moving to Dubai because they experience it as a journey to the future. Norway still seems to be telling a story about the energy and oil country Norway, without a clear plan for the journey ahead. It might attract people who want welfare benefits - but not those who want to shape the future.
https://www.finansavisen.no/makro/2025/01/12/8228199/norge-landet-med-den-uansvarlige-oljepengebruken
