Norway's Full‐Employment Oil Economy ‐ Flexible Adjustment. or Paralysing Rigidities?1

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Abstract
Two stones may be told about Norwegian macroeconomic management since 1973. The first one is the flexible‐adjustment story: Norway defended full employment using oil revenues to manage structural change. to keep manpower in the primary sectors and create new employment opportunities in the welfare state. The second is the paralysing‐rigidifies story: Norway used oil revenues to shelter its manufacturing industries and low‐productivity agriculture from competition, and to expand the welfare state which created numerous crowding out mechanisms. The first section below reviews some strong statements of these stories. while the following two sections review contemporary debates on the notions of flexibility and rigidity, relating also to the question of Norway's ‘democratic corporatism’. The final two sections attempt to take a more detached look at the events about which the two stories are told. Five phases are distinguished, and the two ‘consumption booms’ (1973‐77 and 1984‐86) and the following austerity phases (1977‐81, 1986‐) are compared.