Innovation in Norway in a European Perspective

This paper seeks to shed new light on sectoral patterns of innovation in Norway in a European perspective. It puts forward a theoretical framework based on a new sectoral taxonomy that combines manufacturing and services within the same framework. It then analyses innovative activities in Norway and compare them to other European countries by making use of data from the Fourth Community Innovation Survey (CIS4). Finally, it studies the recent evolution and current characteristics of the industrial structure in Norway and points out its peculiarities vis-a-vis other European economies. The results of this work point to a contrasting pattern. On the one hand, Norwegian sectoral systems appear to be very innovative, often above the European average and, for some of the CIS4 indicators and some of the sectoral groups, they indeed emerge as the most innovative in Europe. This pattern is in fact more evident for those technologically advanced groups that the new sectoral taxonomy points out as the most progressive industries of the ICT-based age. On the other hand, these sectoral groups are relatively small in Norway, accounting for a much lower share of production than their European counterparts. In a nutshell, by focusing on the sectoral characteristics of the Norwegian economy and by analysing them in a European perspective, the paper sheds new light on the so-called Norwegian paradox, according to which Norway is characterized by a peculiar combination of low innovation and high economic performance. The commonly made statement that innovation is low in Norway does in fact hide the contrasting pattern outlined above. The problem is not with innovative activities, as frequently asserted, but it has rather to do with the sectoral composition of the economy.