How Norway Became Insanely Rich
Norway is the 10th richest country globally and one of the most democratic, with one of the smallest income inequalities worldwide. It is the seventh happiest and ninth healthiest nation on Earth. Many countries have failed to achieve in their entire history what Norway has in the last hundred years.
Norwegians enjoy one of the highest standards of living in the world, bolstered by the sovereign wealth fund, now worth over $1.7 trillion USD as of 2025, the largest of its kind, unmatched anywhere.
However, Norway’s geography appears unforgiving, almost cursed at times. It is one of the least densely populated countries, with an area of about 385,000 square kilometres. Compared to Malaysia’s 330,000 square kilometers, Norway is slightly larger, but Malaysia’s population is more than six times bigger.
With rocky terrain and mountains, only 2.7% of the land is arable. In contrast, Denmark has 70% arable land. Norway’s fertile patches are fragmented across valleys and hills, making large-scale farming tough. Farms are tiny compared to American ones, and the northern latitude means short growing seasons, limiting output.
A century ago, few would predict Norway ending up among the world’s richest. Yet it did. Today’s question: How did this small nation, facing such geographic hurdles, create immense wealth for its people and future generations?
And no, it wasn’t just oil overnight. Norway was a fishing and farming society in the early 19th century, but by mid-20th, it thrived. It boasted Europe’s second-largest merchant fleet after Britain, led in lumber and timber exports, and built dams on rivers pre-oil. Oil amplified existing prosperity.
The world should admire Norway’s exception to the oil curse. While many oil-rich nations faltered in growth and jobs, Norway’s cautious management dodged the resource trap, cementing its riches.
Norway was well-off pre-oil, but could have been poorer. Did it play smarter? Visionary leaders? Luck? Why did Norway succeed where others failed, even imitators? How did it go from poor to rich?
This is the story of a tiny, poor European nation with two hours of daylight half the year, freezing temps, mountains, and fjords hindering travel. Once underdeveloped and obscure, it became one of Earth’s most prosperous—not just in wealth, but every prosperity metric.
This is how Norway became insanely rich…
1820-1900: Building a Modest Economy
Thomas Malthus toured Norway in 1799, describing it as an agricultural society where most lived simply off harvests. The wealthy faced high import costs.
Censuses of 1801 and 1815 showed over 90% of 0.9 million Norwegians in rural areas, focused on agriculture, fisheries, and hunting. Harsh climate, tough travel, and communication; not even independent. Farmers toiled on scarce land under isolated villages.
Norway gained independence from Denmark in 1814, unioning with Sweden. The new nation lacked institutions, entrepreneurs, and capital.
Yet, success stemmed from overcoming challenges via unique landscape.
Rugged mountains curbed land transport but gifted deep fjords for maritime culture. Fjords enabled quick settlement travel and trader access inland. Fast rivers and sea proximity let felled trees float to ports for export. Norway outsold Europe in lumber, becoming its powerhouse.
Dispersed population connected via sea and fjords, fostering shared identity. Ships vital for trade; villages collaborated on builds, sharing profits from lumberjacks to carpenters.
This cooperative model spread, preventing a dominant capitalist class unlike Britain, France, or US. Geography forced communal building for good. This culture influenced agriculture, forestry, fishing, banking, hydropower—and later oil.
In 1849, Britain’s Navigation Acts ended, opening markets. With Viking seafaring roots, Norway jumped from 8th to 3rd largest fleet in 28 years, behind only Britain and US.
By 1870s, GDP per capita topped Europe’s average.
Then crisis: Mid-1870s to 1890s, economy tanked from global stagnation, gold standard, and sail-to-steam shift. Prices fell; emigration surged to America, peaking 1882. 250,000 left 1879-1893.
In crisis, Norway harnessed water power, rocketing to wealth, industrializing, and changing fate.
Hydroelectric Power: The Game Changer
Modern Norway industrialized via rivers and waterfalls for hydropower. Samuel Eyde pioneered it; Gunnar Knutsen pushed parliament in 1892 for industry.
By 1920, Norway led per capita electricity use. Abundant rivers fueled energy-intensive industries like aluminum via Norsk Hydro, now a global giant.
Hydropower shifted timber economy to modern industry, providing cheap, clean power for a century.
Today, Norway tops Europe’s hydropower, sixth globally; state, counties, municipalities own 90%.
Seen as Europe’s battery, Norwegian firms export tech worldwide, boosting economy.
By 1950s, Norway was a manufacturing hub with top fleet, shipping expertise. Laws curbed foreign resource ownership, monopolies. Railways, roads, comms improved transport.
Geography no longer a curse; welfare, education, public industry drove growth. Wealthy above average, but not powerhouse—then oil.
1950-1990: Oil Discovery and Management
1959 Groningen gas find eyed North Sea. Norway worried over boundaries, security.
1965 agreement gave Norway 131,000 sq km seabed, averting potential conflict.
Post-agreement, exploration; after fails, struck “giant” oil.
Initially foreign-led, but government nationalized via Statoil (now Equinor), holding two-thirds.
Statoil built refining, workforce, infrastructure, keeping revenues home.
Oil often curses: stagnation, weak democracy, inequality. “Dutch Disease” hurts other sectors. Venezuela’s tale: corruption, concentration.
Norway hit too: 1985 oil crash turned surplus to deficit. Lesson: Diversify.
1990: Government Pension Fund Global born. Invests oil surplus globally for future, diversifying. 3% withdrawal cap guards against misuse, ensuring sustainability unlike petro-states.
Management invested in services, cut oil reliance. Oil/gas now ~14% GDP in 2025, showing resilience.
Beyond Oil: Recent Discoveries and Diversification
Norway’s success extends past oil. In 2023, the world’s largest phosphate deposit found off coast—huge for geopolitics, challenging China/Morocco dominance. Phosphate key for fertilizers, batteries, solar, EVs.
EU eyes environmental risks, but it offers strategic edge, growth via fund or aid.
Challenges Amid Prosperity
Despite strengths, issues linger. Oil fund wealth isn’t direct; not in personal accounts.
High taxes, household debt, skilled worker shortages, labor costs challenge. Climate risks, high income taxes too.
Norway Today: A Diverse Powerhouse
Norway, modern with a thriving private sector and safety net, built wealth via lumber, hydropower, and cooperatives pre-oil. The 1960s oil boom boosted it.
Economy diverse: seafood, forestry, minerals, services like finance, fintech, IT, medtech, biotech, renewables. Sustained by the world’s largest fund, efficient laws, global trade, EU access.
High taxes fund education for a skilled workforce—all pre-oil.
Contrary to myth, Norway was developed before oil; a strong economy set the stage for amplified success.
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