Using the Bank of Canada’s average rate of exchange for 2014, the Norwegian oil fund had a value of more than $1.2 trillion CAN as of March 31. The Government Pension Fund Global returned 5.3 percent, or 401 billion kroner, in the first quarter of 2015, the highest rate of return in the fund’s history.
All Norway’s oil and gas revenues go into this sovereign wealth fund and only part of earnings from the fund are spent. The country has a progressive tax system with levels higher than in Canada. However, Norway provides one year of paid parental leave after birth of a child, very low cost kindergartens for children older than one year, after-school clubs and free education, including colleges and universities. The system enables low unemployment and high participation rates and Norway has among the highest percentages of intact families anywhere.
Norwegian Prime Minister Jens Stoltenberg noted,
“The problem in Europe, with deficits and the debt crisis, is that many European countries spend money they don’t have, in Norway we don’t spend money we have.”
Each one of the 5.166 million Nordmenn owns a share of the sovereign wealth fund worth $238,493.
In Alberta, the Heritage Fund had a net value of $17.2 billion as of December 2014, giving each one of 4,160,000 Albertans a share worth $4,135. In addition, the Alberta government is operating with a deficit or, as Stoltenberg would say, “They are spending money they don’t have.”
Prime Minister Jens Stoltenberg of Norway addressed the topic “Avoiding the Oil Curse: The Case of Norway” at the John F. Kennedy Jr. Forum at the Harvard Kennedy School. Stoltenberg discussed how the “Oil Curse” occurs in countries with natural resources, noting the negative relationship between countries with a large amount of natural resources and real GDP per capita. Stoltenberg focused on the Norwegian experience and how although oil and gas has a large impact on the economy it is balanced in a way to combat the common “curse.” Stoltenberg highlighted other elements of the Norwegian economy that make the country exemplary in social equality including high employment and the dual maternity, paternity leave granted to citizens.
Lifting the resource curse, George Soros (free registration required):
Countries that are rich in natural resources are often poor, because exploiting those resources has taken precedence over good government. Competing oil and mining companies, backed by their governments, are often willing to deal with anyone who can assure them of a concession. This has bred corrupt and repressive governments and armed conflict. In Africa, resource-rich countries like Congo, Angola, and Sudan have been devastated by civil wars. In the Middle East, democratic development has been lagging.
Curing this “resource curse” could make a major contribution to alleviating poverty and misery in the world, and there is an international movement afoot to do just that. The first step is transparency; the second is accountability.
The movement started a few years ago with the Publish What You Pay campaign, which urged oil and mining companies to disclose payments to governments. In response, the British government launched the Extractive Industries Transparency Initiative (EITI)…