Today, capital flows freely across borders between economies throughout the world and also contributes to growth in prosperity in many countries. In many Norwegian industries, other countries’ markets and foreign capital have been used to create jobs and generate economic growth. For example, the development of the petroleum sector in Norway, which started thirty years ago, was financed by international capital. In addition, we drew on the knowledge and experience of other countries. Foreign companies and labour played an important role during the development of the Norwegian continental shelf. Norway currently invests a large share of its petroleum revenues in foreign equities and bonds in order to be able to convert the substantial petroleum revenues we have today into greater room for manoeuvre for fiscal policy in the future. Without global goods and capital markets, it would not have been possible for the Norwegian state to diversify risk in its wealth management as it does through the Government Petroleum Fund. Globalisation also means a change in trading patterns. The lowering of trade barriers between countries has created new opportunities for many countries and industries. The textile industry is one example. Over the past decade, Norwegian clothing imports have shifted from high-cost countries in the West to low-cost countries in Eastern Europe and Asia. These developments have occurred in parallel with the gradual removal of quotas and a reduction in tariff rates on imports from these countries. Globalisation is to the advantage of Norwegian consumers.
The delegation of monetary policy decisions to a central bank is underpinned by the need to create stable expectations concerning economic developments and by the favourable experiences of countries such as the US and Germany and the less favourable experiences of countries where interest rate changes have been decided on the basis of more short-term considerations. Delegation to a central bank promotes credibility, confidence and consistency because the central bank must adhere to the mandate laid down by the political authorities. Democratic governance is safeguarded by the government authorities, who define the mandate and assess the results. The mandate provides for professional judgment in a defined area. A year and a half ago, the Government and the Storting adopted new guidelines for economic policy, which stipulate annual spending of petroleum revenues over the central government budget equivalent to the expected real return on the Government Petroleum Fund. One of the aims is to answer the question of when petroleum revenues should be used. The uncertainty and the speculation surrounding central government spending of these revenues, which could have adverse effects on the mainland economy, can thereby be reduced. At the same time, the Government issued a new operational mandate for monetary policy. Norges Bank shall set the key rate with a view to maintaining low and stable inflation.