You are watching Places!
Every Tuesday we bring you an insightful look into fascinating events from all around the world.
Welcome to ALUX.com!
The place where future billionaires come to get inspired.
Hello, Aluxers, and welcome back for another exciting original video brought to you by our team here at Alux.com.
Norway is a fascinating country for many reasons.
It’s freezing cold, they have some of the highest tax rates in the world, and the cost of living is also sky high,
yet Norway has been consistently recognized as one of the best places to live for many years.
What’s their secret?
Well, the wealth of the nation plays no small part in the happiness of its people, and today we’re going to explore just how rich Norway really is, but first let’s cover the basics.
The Kingdom of Norway is located in Northwestern Europe and is bordered by Sweden, Finland, and Russia.
Norway has 63,000 miles of coastline, which is the second-most in the world behind Canada.
Norway is a constitutional monarchy that functions as a highly developed democracy.
Harald V of the House of Glucksburg has been the king since 1991.
The Kingdom of Norway was formed in 872 and has existed continuously for over 1,145 years.
Norway opted out of the European Union as a result of a referendum in November 1994;
however, they still take part in the EU’s single market, and they significantly contribute to the budget of the European Union.
Norway is consistently among the top-ranked happiest places to live in the world, along with Denmark and Finland.
In 2017, it claimed the very top spot on the list, which is published by the United Nations Sustainable Development Solutions Network
based on surveys conducted in 132 countries around the world.
Norway ranks particularly high in the categories of freedom, generosity, honesty, health, caring, income, and good governance.
They also have a strong economy, which we’re going to take a closer look at next.
Norway’s economy is based on the “Nordic model,” which is also embraced by Finland, Sweden, and Denmark.
This economic model puts an emphasis on social equality with a comprehensive welfare system, a high rate of unionization,
and strong collective bargaining policies within workplaces, meaning that the employees have a significant say in salaries,
working conditions, and benefits.
Norway stands out among the Nordic countries because the state has a stake in a large number of the country’s biggest publicly listed companies,
owning a total of 37 percent of the Oslo stock market.
The state also owns and operates some of the largest non-listed companies, including the petroleum company Equinor and the hydropower company Statkraft.
Norway is blessed with numerous natural resources, including oil and gas, fish, minerals, and forests.
They are the second-largest exporter of seafood behind China, and they are also one of the leading petroleum exporters worldwide.
Their overall economy has experienced modest positive growth from 2010 through 2019 and is expected to continue this trend in the years to come.
The Nordic model gives plenty of opportunities for economic success to all citizens, but some end up benefiting more than others.
Norway comes in at number 25 on Forbes’ list of the countries with the most billionaires.
Out of the 5.3 million people that live in Norway, there are 15 billionaires.
The richest person that lives in Norway is Odd Reitan with a net worth of $6.1 billion.
He is a self-made billionaire who owns one of the largest chains of grocery stores in Norway.
As of 2019, there are approximately 46.8 million millionaires in the world.
About 163,000 of these millionaires live in Norway. That’s about 1 in every 287 people.
But, beyond the millionaires and billionaires, Norway is the only major Western economy where younger generations are increasing their wealth,
with Millennials seeing a 13 percent increase in disposable income in 2018.
In every other major Western economy, Millennials are not doing as well financially as the generations that came before them.
The average monthly salary is around 8,000 US dollars, although salaries, of course, vary significantly from job to job, and a large percentage of salaries go to taxes,
which brings us to our next topic.
The term “welfare state” may create a negative perception of a lazy workforce and free handouts from the government, but this is not the case for Norway.
Their welfare system maximizes labor force participation, supports gender equality, and promotes income redistribution.
It also encourages innovation by providing a social safety net for those who start businesses.
In 2018, single Norwegian citizens with no children paid a personal income tax rate of 38.52%,
while married couples with two children paid a tax rate of 23%, the fifth-highest tax rate for this category worldwide.
There’s also a 25% value-added tax for most goods and services.
These factors combined give Norway one of the highest cost of living rates worldwide.
In fact, it is the 4th most expensive country to live in behind the Cayman Islands, Bermuda, and Switzerland.
However, most Norwegians will tell you that these taxes feel more like an investment than a burden.
In return for paying high taxes, Norwegians receive free health care, free education up to and including university tuition, subsidized childcare,
extended parental leave paid at 80% of the normal salary, paid sick and personal leave, substantial unemployment insurance, and retirement benefits.
But if Norway is paying out all of these benefits, how much money is left over?
Let’s get to the question of the hour.
In order to understand just how wealthy Norway is, let’s start with the gross national product.
Norway’s nominal GDP in 2018 was just over $434 billion.
The figure that is better used to measure Norway’s economy is the per capita GDP, which in 2018 was 81,695 US dollars.
This is the 4th highest per capita GDP in the world behind Luxembourg, Switzerland, and Macau.
Whatsmore Norway, Luxembourg, and Switzerland are the only 3 countries worldwide that have a per capita GDP that’s above $70,000
that are not listed island nations or microstates.
However, a better indication of Norway’s wealth is the money that they have on hand.
Norway has the world’s biggest sovereign wealth fund, the Government Pension Fund of Norway, totaling over one trillion dollars.
The money in this fund, which was established in 1990, comes from investments made with the country’s oil revenues.
The fund itself is 2.7 times bigger than the entire Norwegian economy and contains enough money to hand each citizen over 180,000 US dollars.
The fund has increased due to strategic investments in shares, property, and bonds in 77 different countries.
This investment fund actually has a stake in nearly 9,000 companies in these countries.
Its biggest equity holdings include Microsoft, Alphabet Inc., Nestle, Apple, Amazon, and Royal Dutch Shell, which certainly helps explain its massive success.
A total of 37% of their investments are made in U.S. companies.
Whatsmore, Norway refrains from investing in companies that produce landmines, tobacco, and nuclear weapons,
and in 2019 it was announced that they would no longer invest in oil and gas stocks.
The fund is managed by Norges Bank Investment Management on behalf of the Ministry of Finance,
but the fund is officially owned by the Norwegian people.
It was put in place primarily to put Norway in a good financial position so it didn't rely on oil revenues that would eventually dry up.
Norway officially has a little over $157 billion in public debt, but they are in a net asset position,
meaning the total financial assets of the government exceed the total debt.
Essentially, they borrow money at low rates and then reinvest.
Norway has secured its position as one of the richest countries in the world thanks in part to its high tax rates, strong economic model, and bountiful natural resources.
However, the main factor in its wealth accumulation has been the strategic investment of oil revenues,
which is providing economic security for many years to come, even after all the oil is depleted.
Norway is indeed one of the happiest places to live on Earth because the government invests in its people
and ensures the taxes, high as they may be, benefit each citizen to the highest extent.
Because of all of these factors, Norway will likely maintain its status as a wealthy nation for the foreseeable future.
And Aluxers, if you’re interested in learning more about this fascinating country,
check out our video of 15 things you didn’t know about Norway by clicking in the top right corner.
Now, as we wrap this up we're curious.
Let us know what you think in the comments.
And, of course for sticking with us until the end, what could that possibly mean?!
The Norwegians are known to be an innovative people.
The inventions that have come out of Norway include: the cheese slicer, aerosol spray can, paper clip, salmon sushi, and modern skiing.
Thank you for spending some time with us Aluxers.
Make sure to subscribe so you never miss another video.
We also handpicked these videos for you to watch next.
As always the conversation continues on social media.
Thanks again and we can't wait to have you back tomorrow.