Norway is an advanced, highly-developed economy that has greatly benefited from the exploitation of its hydrocarbon wealth. In 2004, the country had a gross domestic product (GDP)** of $250 billion, and a per-capita GDP, $40,000, which is one of the highest in the world. The Norwegian economy grew by 2.9 percent in 2004, following lackluster growth of 0.9 percent in 2003.

Norway’s economy is highly dependent on its offshore Oil and Natural Gas sector, which provides the government with its largest single source of revenue and the largest contribution to GDP. In recent years, high oil prices have made for government budget and current account surpluses, and rising disposable income.

Norway is a member of the European Economic Area (EEA), though its citizens have twice rejected referendums on joining the European Union (EU). Nevertheless, Norway has a strong relationship with the EU, with the country voluntarily adopting many EU directives.

Norway's dependence upon oil and gas revenues present long-term challenges for the country, especially since many industry analysts believe that North Sea oil and gas production has already reached or passed its peak. In particular, the country faces pension liabilities and other welfare obligations. In response to these challenges, the Norwegian government created the Petroleum Fund in 1990.
 
A portion of annual oil and gas revenues flow into the Fund each year, which serves the dual purpose of buffering the short-term variations in oil revenues and providing a mechanism to transfer current wealth to future generations. The Fund, which holds a combination of cash, bonds, and shares in both domestic and foreign companies, stood at some $179 billion in June 2005.

Source: Energy Information Administration