Norway possesses the second highest GDP per-capita and second highest PPP per-capita in the world, and maintains 1st place in the world in the UNDP Human Development Index (HDI) for the fifth consecutive year. Cost of living is also about 30% higher in Norway than US and 25% higher than the UK, so the purchasing power can be correspondingly adjusted downwards. The Norwegian economy is an example of mixed economy, featuring a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector and they also controlled electricity production, until they a few years ago sold it to private owners. The control mechanisms over petroleum resources are a combination of state ownership in major operators in the Norwegian fields (Statoil approx. 70% in 2005, Norsk Hydro 43% in 2004) while specific taxes on oil-profits for all operators are set to 78%, finally the government controls licensing of exploration and production of fields. The country is richly endowed with natural resources: petroleum, hydropower, fish, forests, and minerals. Norway has obtained one of the highest standards of living in the world, partly from petroleum production and the substantial income related to this sector. Norway also has a very low unemployment rate, currently below 3% (March 2007). The hourly productivity levels, as well as average hourly wages in Norway are among the highest in the world. The egalitarian values of the Norwegian society ensures that the wage difference between the lowest paid worker and the CEO of most companies is much smaller than in comparable western economies.

In 2004, oil and gas accounted for 50% of exports.[citation needed] Only Russia and OPEC member Saudi Arabia export more oil than Norway, which is not an OPEC member. During the last thirty years, however, the Norwegian economy has shown various signs of the economic phenomenon called Dutch disease. In response, the Norwegian state began in 1995 to save its annual surplus in a fund now called the “Government Pension Fund” (commonly known in Norway as the “Oil Fund”). The fund is invested in developed financial markets outside Norway. The fiscal strategy is to spend the “normal interest” of the fund each year, set to 4%. By January 2006, the Fund was at USD 200 billion, representing 70% of GDP in Norway. During the first half of 2007, the pension fund became the largest fund in Europe, totaling about USD 300 billion. Already (April 2007), Norway has the largest capital reserve per capita of any nation. Projections indicate that the Norwegian pension fund is set to become the largest capital fund in the world. Conservative estimates tell that the fund may reach USD 800-900 billion by 2017. This means that Norway by 2017 will have accrued about USD 180 000 per capita in state savings, exclusively to cover pensions. The future size of the fund is of course closely linked to the oil price and the developments in international financial markets in which the fund is invested. There is political consensus that only parts of the dividends from the oil fund can be phased into the economy each year. These self-imposed restrictions prevent the economy from overheating. This policy ensures economic stability and enviable financial flexibility, perhaps unmatched in the world. Other emerging oil exporting countries are trying to learn from the Norwegian experience by establishing similar petroleum funds. Referendums in 1972 and 1994 indicated that the Norwegian people wished to remain outside the European Union (EU). However, Norway, together with Iceland and Liechtenstein, participates in the European Union’s single market via the European Economic Area (EEA) agreement. The EEA Treaty between the European Union countries and the EFTA countries – transposed into Norwegian law via “EØS-loven” – describes the procedures for implementing European Union rules in Norway and the other EFTA countries. This makes Norway a highly integrated member of most sectors of the EU internal market. However, some sectors, such as agriculture, oil and fish, are not wholly covered by the EEA Treaty. Norway has also acceded to the Schengen Agreement and several other intergovernmental agreements between the EU member states.

In 2000, the government sold one-third of the then 100% state-owned oil company Statoil in an IPO. The next year, the main telecom supplier, Telenor, was listed on Oslo Stock Exchange. The state also owns significant shares of Norway’s biggest bank, DnB NOR and the airline SAS. Since 2000, economic growth has been rapid, pushing unemployment down to levels not seen since the early 1980s.

The Norwegian currency is the krone.