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Minister of Trade and Industry, Mr. Ansgar Gabrielsen.
Ministers, ladies and gentlemen,
It is a great pleasure for me to be here in Washington. On a personal note,
I have fond memories of my family’s trade in exporting fish to North
America. It is an honor to be back here representing the Norwegian
Government.
The Norwegian Coalition Government took office in October with a firm belief
that major challenges in our economy had to be dealt with head on. These
include our dependence on revenues from the oil sector, the high overall tax
level, the comprehensive public ownership, the government’s increasing
accumulation of capital, a large and growing public sector and expected
growth in government spending on pensions.
If we are able to tackle these challenges I believe Norway has an excellent
basis for economic growth. Like the US, we have a well-educated and skilled
workforce. Furthermore, the exploitation of our natural resources has led to
technological progress.
Norwegian industrial and research communities today possess expertise of
high international standard in sectors like the energy, maritime, marine and
metals sectors. Our industry also has a proven record of innovation, and
ability to adapt to market needs.
Let me add that interaction between industry and new technology has created
an important transformation in our traditional industries. The interaction
has also led to the creation of new business areas. [top]
INDUSTRIAL POLICY
The aim of my Government’s industrial policies is to ensure robust and
sustainable economic growth and continued welfare in the 21st Century. A
better competitive framework for our companies lies at the heart of our
efforts.
A key policy in this respect is privatization. The government still owns
about 40% of the shares listed on the Oslo Stock Exchange. For reasons
mainly of history, we own significant stakes in companies like DnB, Norsk
Hydro and Telenor. We own large and small stakes in other companies, as
well – from about 14% of Scandinavian Airlines to the entire 20 million
kroner equity capital in Electronic Chart Service.
The degree of public ownership is way too high. I will come back to why I
believe this is the case. Compared to other countries, which have seen
comprehensive privatization over the last decades, we have a significantly
higher rate of public ownership.
Under the slogan: “A smaller and better public ownership”, I recently
presented a White paper on public ownership to the Norwegian Parliament.
Where there is no clear foundation for state ownership, government assets
should be sold off.
Some of the state-owned companies are small, and will remain state-owned
because there is not a normal market for their services. Some are large,
and, if the price is right, we will sell shares in them as rapidly as
Parliament will allow us to.
However, as we hold large positions in some big companies, it will take some
time to divest those assets, regardless of how eager we are to sell.
Therefore, the Norwegian policy is not simply to sell – it is also to be a
predictable and professional owner for as long as we have to hold some of
these shares.
The are two main arguments in favour of reducing state ownership. Firstly,
companies owned by the state seem systematically to have little ability to
adjust to change, and are less focused on profitability than private
companies. The state is often seen to guarantee that operations will
continue, whether there are profits or not. Furthermore, state ownership can
too often tempt politicians to interfere with profitability in order to
satisfy political gains. [top]
Secondly, the main role of the government is to regulate the economy where
it is needed. If the state is an important owner of enterprises as well, the
potential for conflicts of interest is obvious.
State wealth is not without challenges to industrial policy. Many
politicians – and even industry leaders – see the government’s wealth as an
almost irresistible temptation. This is understandable in a situation where
the government is wealthy and at the same time the national market for
venture capital has not fully matured. Many draw the conclusion that the
road to financial well being is through infusing large amounts of government
capital into private companies – perhaps limited only by securing that the
government is in a minority position. It is very dangerous when companies
and business leaders feel that there is more to be gained by lobbying
politicians than by doing their job in the market. This is certainly not the
road to prosperity.
Apart from privatization and ensuring an effective and cool-headed
management of our petroleum wealth, reducing taxes is a central priority for
the current Government. I am very pleased that a tax deduction scheme for
expenses on research and development already has been put in place. I am
also pleased to note that my Government has established an expert group to
look into reforms of the Norwegian tax system at large. I am looking forward
to see their recommendations, due in December this year.
I am told that Thomas Edison, the great inventor, had a sign on the wall of
his workshop, which read: "There are no rules here, we are trying to
accomplish something". Although we certainly not should do away with all
government regulations, a central objective of our industrial policy is to
reduce red tape.
In the area of policy instruments we emphasize more pointed instruments
towards innovation, entry of firms and increased research and development.
By also removing obstacles to creativity among the citizens, I believe we
should be well prepared to take advantage of the possibilities in the
emerging information and knowledge economy. [top]
TRADE POLICY
Trade increases the welfare of nations. Norway is dependent on a high level
of trade. Hence, as a means of contributing to reduced trade barriers in the
world, our membership and active participation in the WTO is important. We
hope to see substantial results on all the issues agreed upon in Doha.
Our membership in the European Economic Area is also very important to the
Norwegian economy. This ensures full market access to our most important
export market, the EU. [top]
US-NORWEGIAN - RELATIONS
We are pleased to say that trade relations with the US are in general good.
The USA is our most important trading partner outside of the EU, and trade
has been growing steadily over the years. We are, however, disappointed with
the US measures restricting trade in steel. We think such measures are
negative not only for exporters to the US market, but also for the US buyers
of steel. We hope they will be lifted soon, to the global benefit of
industry and consumers alike.
We are very impressed by the recent performance of the US economy,
especially its ability to change continuously. In the words of Martin Baily,
former Chairman of the Council of Economic Advisors, the US economy "appears
to be growing steadily. But, beneath the surface, there is massive change.
New firms are entering and old firms are leaving. New technologies are
developed and gain competitive advantage for a period and then are
overtaken. Jobs are being created and destroyed." The economy is in other
words in the grip of what Joseph Schumpeter called "creative destruction."
In bringing about a flexible economy with a capacity for change, we probably
have more to learn from the US than from many of our neighboring nations in
Europe.
I believe Norway needs policies which support change - a policy framework
which allows the elimination of the "old" while also encouraging the
creation of the "new." [top]
CONCLUSION
Summing up, Norway has some special challenges related to the management of
our petroleum wealth and the privatization of public assets. The current
government is aware of this and is taking action accordingly. If we can also
learn from good practices of successful economies like America’s, I believe
Norway stands to benefit from continued economic growth in the future. This
will benefit the already prosperous economic relations between our two
countries.
Thank you for your attention. [top]
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