Here is another post by Sandra Ljung in Sweden:

When I think of the Nordic region, leading companies and brand names, something intriguing strikes me. Finland has Nokia and Marimekko. Sweden has Volvo, Eriksson, Astra/Zeneca and lots of design labels ranging from crystal-ware to fashion. Denmark has the transportation giant Maersk, Bang & Olufsen, pharmaceutical industries, and a colossal design industry in fashion, jewellry, furniture, and home-ware. And Norway has…..well, not much comes up actually, when I think about Norway and brands.

These countries all have similar climates, are located in the same part of the world, and have similar social and political structures. Yet, Norway seems to stand in stark contrast to its’ neighbors when it comes to the area of brandnames. It stands in contrast to Sweden, Denmark and Finland in another important aspect as well. Norway has oil. Since the oil revenues are carefully saved, Norway has no national debt. It is reputedly one of the most expensive countries in the world with Oslo regularly finding itself among the top five on the list of the most expensive cities in the world to live in. This is Norway’s fundamental economic difference from her neighbors, and the question is:  does all this matter when it comes to innovation?

The concept called “the curse of natural resources” is an economic theory coined by Jeffrey Sachs that states, counter-intuitive as it may sound, that countries well-endowed with natural resources tend to not develop as much and as fast as countries which lack them. According to the theory this is due to the fact that people have a tendency to rely entirely on the resources for income, and lose focus of everything else. In many cases the existence of natural resources leads to disputes over ownership between different groups of people within  the same country, and sometimes even civil wars, all of which not only further distract from trying to find alternative income sources, but also drains countries in very serious ways. Many examples of this can be found in Africa where fights over oil and diamonds are common. Hence, the theory says, what should really have been a blessing for the country may turn out to be a “curse”.

If this theory holds true, then maybe it plays a role in the case of Norway as well? Norway is a well-established democracy with functioning state  institutions, and there is a plan in place for saving oil revenues in order to carry the country over when the oil runs out. But, has innovation been affected negatively during this long period of relative economic prosperity and certainty? Because it is really the latter that somehow constitutes the core of the curse of natural resources. Knowing that a certain income level can almost certainly be sustained for a quite long period of time may be nice and cushy, but it doesn’t exactly promote the risk-taking that is needed to start new businesses, and to innovate in general. My guess is that the sense of urgency will kick in at a later date in Norway resulting in more innovation, but as we know from the “Medici Effect” innovation doesn’t always happen over-night. It can be years and years of trials and failures preceding any one innovation, so it seems as if aiming for economic diversification is always a good thing regardless of what the current economic situation looks like.