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4) Industrial policy Norway’s active use and introduction of a national industrial strategy has helped shelter infant industries and create linkages between the natural resource-based industries and other sectors of the economy. For two decades (1972-1994), preference was given in a transparent fashion to local content in procurement to help build supply industries, and provisions were set in for international firms to train nationals, use domestic service industries and cooperate in R&D with local institutions. Though Norway pre-dates the GCC in this development, the region shares in many ways some of these policies, leading to the emergence of national champions. The main difference appears to relate to the scope, extent and degree of innovation involved in offshoot industries at this stage, in our view. Chart 28: Norway real GDP per capita growth outpaced GCC over the Chart 29: Norway outperforms Saudi indicators on a per capita basis past decades 6 . ; = Saudi Arabia mm Norway 300 Real GDP per capita (1970=100) 5 —— Norway == Saudi Arabia 4 250 — Other GCC (1980=100) a= Iran 3 200 2 150 0 100 Real GDP growth OilrealGDP Non-oil real GDP Per capita non-oil (%) growth (%) growth (%) real GDP growth 50 (%) 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 Source: Haver, BofA Merrill Lynch Global Research. Data represents averages over 1979-2014. Source: Haver, BofA Merrill Lynch Global Research Chart 30: Norway’s hydrocarbon sector share in real GDP has dropped Chart 31: Human capital is Norway’s most important resource 120 —— (il prices (US$/bbl) 40 === Oil sector (% of.real GDP, rhs) 35 100 30 25 20 15 10 80 60 40 20 0 ™ Discounted value of labor = Real capital or t Fe OM GB DN HDB oO + + . : F S282 SHB RBBBARSSSEEE = Discounted petroleum rent = Financial assets a ON OO OC Source: Haver, BofA Merrill Lynch Global Research Source: Norway Ministry of Finance, BofA Merrill Lynch Global Research OO erartll Lynch GEMs Paper #26 | 30 June 2016 33 HOUSE_OVERSIGHT_016143