Since then, Norway has benefitted greatly from the opportunities that the petroleum sector has provided. The spillover effects from the oil sector to the wider Norwegian economy are substantial. Oil-related jobs can be found throughout the country. More than 10 percent of all employed persons in Norway either directly or indirectly work for the oil industry. Innovation and skills development in the industry have also benefitted other sectors. From where Norway stands today, one may get the impression that our history as an oil nation is only a story about success. This is not the case. Chart: Oil and gas revenues and government spending Policymakers’ handling of Norway’s newly discovered petroleum wealth got off to a rather bumpy start. During the first 25 years of oil production, Norway experienced two deep recessions. Both downturns were rooted in wildly optimistic income expectations. In the 1970s, public spending surged before oil export revenue started to kick in. Eventually the government had to tighten fiscal policy. In the 1980s, a credit-fuelled consumption boom in the private sector led to necessary cut-backs after the oil price plunge in 1986. The turbulence made clear how vulnerable a small economy is to terms of trade disturbances. Let that part of our history stand as a warning. But lessons were learned, and formed the basis for the framework that was put in place from 1990 and onwards. During the past 50 years, Norway has experienced how oil prices can change almost overnight in response to international politics, economic disturbances or disruptive technologies.
The productivity gains to the economy can be more long lasting than the petroleum industry itself. And never forget: The real test of how a petroleum producing country has managed its fortune, will come when the boom in the petroleum industry ends. Oil and gas resources do not last forever. Emphasis should therefore be given to further development of human capital as the primary source of long-term prosperity and wealth. Thank you for your attention. 4/4  BIS central bankers' speeches