"We are not ten times smarter than the Chinese. The figures explain why Europe’s economy is struggling, and why our economy is at risk".
Knut Erlend vik, PA economics expert
The article argues that Norway is currently experiencing an economic bubble – which has led it to ‘leapfrog’ the restructuring changes that its trading partners are taking in order to restore competitiveness following the global financial crisis.
Knut Erlend cites five reasons why this bubble cannot continue:
in Norway the salary level is now about 60% above the average in the OECD
Norway is at the bottom level in the OECD measured in number of hours performed per person of working age
Norway invests less in research and development than the average country in the OECD – measured in per cent of its GDP
The proportion of people who study scientific subjects is about 50% lower than the OECD average, and the exam results are weak
Norway is listed as the country in the OECD region where getting higher education gives lowest commercial return.
He goes on to explain that: “The group that lives on redistributed fundingis constantly growing, and high salary increases within public and non-competitive sectors cannot be justified by associated productivity growth. Many of our companies exposed to competition are constantly struggling to maintain the competitiveness, and the export of non-petroleum goods is currently only 50% of the total export to our neighboring countries. The question is whether we are living in a bubble, and how long can we stay there.”
Knut Erlend’s view is supported in the article by leading economists and politicians – such as chief economist Knut Anton Mork in Handelsbanken (the Commercial Bank), who predicts that when Norway’s ‘oil fortune’ can no longer support the country’s high salary level, wages may be cut by up to 25%.
Knut Erlend concludes the piece by framing Norway’s economy in a global context and affirming that “We are not ten times smarter than the Chinese. The figures explain why Europe’s economy is struggling, and why our economy is at risk.”
Knut Erlend Vik is an economics expert at PA Consulting Group