The size of the offshore sector in the Norwegian economy

ABSTRACT

Writers on Norwegian economic history often claim that industries related to the sea played a major role in the Norwegian economy for centuries. However, little has been done to quantify this sector’s contribution to the economy. The present paper seeks to quantify the size of the key offshore industries compared to GDP and exports. To do so it has been necessary to draw on new historical national account calculations and export data in addition to compute new series Based on these calculations we find that the offshore sector made up a significant part of Norwegian GDP, and a dominant part of exports, 1816–2021. As a share of the total economy the sector’s traditional industries, i.e. fishing ari and ocean transport were in sum stable until the late 1950s in the long-run. Thereafter they shrunk rapidly, when the takeoff of the new offshore industry, oil and gas extraction from the continental shelf from the 1970s, made the offshore economy reach new heights in the decades to follow. This paper quantifies this development.

KEYWORDS:

• Marine
• maritime
• offshore
• economic growth
• national accounts
• economic history

1. Introduction

Sea or offshore-related industries are considered to have been very important for Norwegian growth and development for centuries. These industries historically include marine harvesting and operations, such as fishing, whaling, seal hunting, and aquaculture, i.e. fishing and related industries (fishing ari) on the one hand and maritime operations, such as ocean transportation and services on the other hand. The discovery of oil and gas on the Norwegian continental shelf in 1969, and its exploration from the early 1970s, made Norway one of the wealthiest countries in the world. Since oil and gas extraction is done on the seabed and consists of marine and maritime operations, it is considered part of the offshore sector.

Writers on economic history seem to agree that the offshore industries have been very important for Norwegian wealth and growth. The sector’s contribution has basically been channelled via high revenues and value creation, foreign exchange income, tax income, significant employment, labour force empowerment, technological progress, and ripple effects to the economy. However, a look at older and recent literature shows that, except for the petroleum industry, surprisingly little is done to measure this historical impact (Cappelen et al., 1996; Kolle et al., 2017; Statistics Norway, 2022; Tenold, 2018, 2020).

The present paper quantifies the size of the offshore sector at large by calculating the sector’s contribution to the size and growth of GDP and exports. These parameters enable one to measure the sector’s importance for the economy during the last 200 years, as they have never been put together in this way before, including sets of new calculations.

It is a considerable challenge to deal with the era of German occupation during World War II since a huge part of the offshore economy was then under control by the exile government in London. For this period, the paper offers an entire set of new calculations, which enable us to include this part of the economy in our analysis. Similar calculations have not been presented previously.

The results show that the growth rates of both offshore GDP and exports were considerably higher than those for the mainland. In the traditional offshore sector, i.e. shipping services and fisheries, contribution to GDP usually fluctuated around 10–15%. Oil and gas extraction made the share increase to between 15% and 25% most years since the 1980s. The sector normally contributed with 50–60% of total Norwegian exports. The long-term trends were surprisingly stable, until a steep decline in the traditional industries from the 1960s. However, the takeover of petroleum made the overall sector increase its importance for the economy.

2. Literature review

In the research literature, scholars seem to agree on the maritime and marine sectors’ important contribution to Norwegian historical economic growth. In his pathbreaking books on Norwegian economic history, Hodne (1975, pp. 73–133, 1981, pp. 105–172) argues that fisheries and ocean transportation were key industries for economic growth for most of the nineteenth century and even until the mid-twentieth century. This is followed up in three of his joint research-based textbooks (Hodne & Grytten, 1992, pp. 222–239, 2000, pp. 97–116, 2002, pp. 197–212). The view gained significant support in the book on Norwegian growth and development 1820–1980 by Bergh et al. (1983, pp. 71–138) and other books on Norwegian general history by Danielsen et al. (1991, pp. 195–201), Helle et al. (2013, pp. 213–216), and finally by Sandvik (2022). Not surprisingly, we also find these conclusions in the five-volume research on the history of the Norwegian fisheries edited by Kolle (2014, pp. 17–74) and on Norwegian maritime history by Tenold (2018, pp. 21–61), Johnsen and Sætra (2016), and Vigeland (1953).

Indeed, the traditional offshore sector’s importance for the Norwegian economy, exports and currency generation has been deemed so considerable that in the comprehensive research book A Monetary History of Norway, 1816–2016, fishing and shipping combined are convincingly taken into consideration in significant parts of the analysis (Eitrheim et al., 2016).¹ In the research book on the history of the Oslo Stock Exchange, Brautaset et al. (2019, e.g. pp. 105–140, 227–242) also include the significant part fisheries, ocean transport, and later petroleum played for the Norwegian economy, and in particular the two latter industries’ importance for the stock exchange and market.

Despite the significant importance of ocean-related production, there seems to be a common view that fisheries gradually lost its position after industrialisation took place from the late nineteenth century, and the merchant fleet from the second half of the 1960s. Bergh, Hanisch, Lange and Pharo stress that despite the primary industries, i.e. agriculture and fisheries along with maritime transportation

played an important role for the growth in wealth during the 1800s, it was the industrialization process, which had its takeoff during the second part of the 1800s, which gave the most important contribution to the growth of wealth in Norway. (Bergh et al., 1983, p. 24, our translation)

At the same time, they emphasise a relative comeback for ocean transportation during World War I, until the 1960s. Hodne and Grytten (2000, pp. 267, 270, 2002, pp. 226–229, 249–251) also describe the traditional offshore sector, basically represented by fisheries and maritime transportation as successful, but in ‘relative stagnation’ during the last decades of the nineteenth century. However, they also emphasise the revival of the merchant fleet during World War I, until the 1960s. Johansen et al. (2014, pp. 163–190), in an important contribution to the fishing history of Norway, also show that the value of fishing exports kept its high levels until 1920 much due to herring and canned fish, despite the industry’s relative stagnation in its total size of the economy. In the 1920s, whaling experienced its heyhdays, with substantial and increasing exports.

Taking a look at available estimates, one finds that Hodne and Grytten (1994, pp. 2–10) calculated the share of fisheries, whaling and maritime transportation to account for 14.2% and 16.0% of GDP in 1835 and 1845 respectively. Statistics Norway (NOS, 1965, pp. 68–71) estimated these industries’ share of GDP to 13.2% in 1930, 14.8% in 1950, and 13.5% in 1960. These are all very high figures, and surprisingly stable in the long-run.

It should also be added that the sector has huge ripple effects, as seen in fish processing, shipbuilding, financial activities, and other related industries (Johansen et al., 2020). Brautaset (2002) computed the size of Norwegian exports from 1830 to 1865 and concluded that ocean transportation accounted for a good 30%, and fisheries for almost 30% of total Norwegian exports, which is very high compared to most other countries. Thus, the marine and maritime industries’ direct and indirect contribution to value creation and exports have historically been very high.

Both Solhaug (1976, pp. 28–37) and Kolle et al. (2017, pp. 9–14) argue that fishing, including whaling, has been one of the largest export industries and a catalyst for technological innovation with huge ripple effects to the rest of the economy. In addition, Hovland (2014, pp. 13–22), Christensen (2014, pp. 99–134), Møller and Haaland (2014, pp. 53–86) argue that aquaculture has shown a tremendous growth since its birth in the late 1960s and now contributes significantly more to value creation than traditional fisheries. They among several other scholars (Johnsen, 2014) emphasise that aquaculture was born out of a restructuring process of fisheries, making this traditional industry more efficient and directing both capital, technology, and labour into this new and closely related industry.

In a series of papers on maritime history, Nordvik and Fischer (1987, pp. 41–66, 1988, pp. 1–3, 1989, pp. 6–9) put emphasis on the maritime sector’s great importance for foreign exchange income, technological shifts and development, and economic growth. The same is done by Tenold (2018, pp. 21–61, 2019, pp. 21–62 and pp. 275–310) in his extensive work on Norwegian maritime history, while Basberg (2004, pp. 9–14, 2017, pp. 471–496) has illuminated the contributions of whaling to technological development and ocean transportation. Brautaset and Tenold (2008, pp. 565–582) emphasise that the Norwegian maritime fleet was the most dominant factor for Norway to enter the global economy. The great importance of maritime and marine industries during the latter decades is shown in recent works by Koilo (2021, pp. 230–246), who argues that maritime and marine clusters have been networks for technology innovation, diffusion, and human capital building along a substantial domestic supply chain to an extent which has few parallels in other European countries. Since the 1970s, this development has been fuelled by closeness to the new offshore oil and gas extraction industry and related industries. These technological skills have made Norway a pioneer in the green maritime shift.

The discovery of oil on the Norwegian continental shelf in 1969 is said to pave the way for the revival of the offshore sector’s importance for the overall economy. However, one then has to bear in mind that this new offshore industry is fundamentally different from the traditional offshore industries, as it is about exploring oil and gas under the seabed and not about utilising natural resources in the sea or the sear as means of transport.

Johnsen (1988, 1990), Hanisch and Nerheim (1992, pp. 81–88) describe the pioneer years within the petroleum industry as somewhat hesitant and confusing. This attitude was, however, soon overturned by years of extraordinary optimism. Norway took renewed steps into a natural resource-dependent economy. Until then fishing and timber had been the two large natural resources of currency income. Soon, oil and, perhaps understated, gas were the two dominating natural resources in the Norwegian economy. Nerheim (1996), Olsen and Sejersted (1997), and Ryggvik and Smith-Solbakken (1997) have focused on the huge technological shift created by the new industry with considerable ripple effects to the entire maritime and marine sectors as well as the Norwegian manufacturing industry in general. Ryggvik (2013) concludes this also paved the way for Norway to become a high-tech country with a very skilled labour force. Scholars even argue that the pollutive Norwegian petroleum industry has made it both technologically and financially possible to introduce greener marine and maritime industries (Grytten & Minde, 2020, pp. 110–123; Grytten & Hunnes, 2022, pp. 76–89; Koilo, 2019, pp. 48–65, 2020, pp. 289–302).

A special feature of the high-quality research in Norwegian maritime and fisheries history is that huge parts of the research are quantitative in nature, offering a solid amount of time series on volume and price components. However, the analyses are basically qualitative (Tenold, 2020; Thowsen, 1983) and surprisingly limited effort has been put into quantifying this sector’s size of the economy. An exception to this is Brautaset’s (2002) huge effort in calculating the size of the Norwegian export sector 1830–1865, were fisheries and maritime services were two of the most important export industries. Besides these calculations, Klovland (2008, pp. 1–26, 2009, pp. 266–284, 2022, pp. 300–319), Brautaset and Tenold (2010, pp. 203–223) have put considerable effort into calculating valid and reliable freight rates for ocean transportation. As for oil and gas, the studies are far more quantitative in nature (e.g. Cappelen et al., 1996).

3. Definitions and research contribution

To be able to elaborate on the impact of the offshore sector on the Norwegian economy, the present paper will quantify the size of the sector during the years 1816–2021. We basically use two different sets of time series, i.e. value added expressed as gross domestic product, and exports. These can be calculated in current and fixed prices, and as shares of total gross domestic product and exports. The variables are important figures in both national and historical national accounts.

A central issue would be how one defines the offshore sector. There are fundamental differences between petroleum extraction on the seabed and the traditional offshore sectors represented by ocean transportation and fishing and related industries, which operate in or on the sea itself. Hence, we offer different discussions for these different sectors of the offshore economy.

The paper uses two kinds of series, GDP or value added and exports. Firstly, we focus on GDP. In the present national accounts for Norway, Statistics Norway defines the mainland economy in the following manner: ‘Mainland Norway consists of all domestic production activity except exploration of crude oil and natural gas, transport via pipelines and ocean transport’.²

Statistics Norway formerly also excluded service activities incidental to petroleum from Mainland Norway. However, as part of the main revision of the national accounts in 2014, they became excluded from the offshore economy and included in the mainland economy. One may always ask about the validity of the definition since parts of the petroleum sector are more land-based than others. However, we choose to use the common standard to make our figures in line with existing definitions within the national account system.

In addition, the present paper includes the other Norwegian major offshore industries, i.e. fisheries, whaling, seal hunting and aquaculture (fisheries ari). Again, we look at the core of these industries and not at their service industries. One could discuss if the processing of fish, oil and gas, shipbuilding, construction of oil and gas rigs, and their related industries should be included. However, these are basically onshore industries servicing the offshore sector. Thus, we have in line with definitions in the national account, opted them out in our GDP analysis.

Historical GDP series by industry and expenditure have recently been calculated (Grytten, 2022, pp. 181–202, 2023, pp. 429–470). The contribution of the present research is to specify and amplify the understanding of the offshore sector and to add a new and extended series of the combined offshore economy back to 1816. These are finally used to map the size and trends of value added in the extended Norwegian offshore economy, 1816–2021.

As for exports, the public statistics reports ‘Value of goods and services to abroad’. It includes exports from ‘residents to non-residents’.³ It is less branch or industry-focused and more product-oriented, which means that processing to a large degree is incorporated in the offshore sector statistics. This makes both oil, gas and fisheries relatively larger in these series. Since exports are accounted in gross value and not value added, this also contributes to making offshore industries larger in the export statistics than in the value-added statistics.

The novel contribution of this paper when it comes to GDP is in the first place to produce a combined offshore series. In nominal prices, we sum up data given by Grytten (2022). Secondly, for the fixed price series, it is significantly more complicated, since series with changing base years over sub-periods lack additivity when summed up from industrial to aggregated series. Hence, we make aggregated series for each sub-period and then link them and construct new fixed price series and corresponding implicit deflators. In this way, we reach at novel aggregated series for the offshore economy at constant prices. Thirdly, the paper offers novel calculations of offshore GDP for World War II and extended GDP calculations combining both the occupied and the non-occupied economies of Norway. Fourthly, the paper offers novel estimates of persistent annual export series for offshore exports 1816–2021 in nominal and fixed prices. Finally, it maps the size and growth of the offshore sector’s value creation and exports.

All in all, the new composition of series enables us to examine the absolute and relative size of ocean-related industries or the offshore sector of the Norwegian economy during a good 200-year period.

4. Data and methods

Gross domestic product (GDP) measures the sum of economic activity by value creation in a geographical area. It can basically be measured by three approaches, i.e. the production approach, the expenditure approach, and the income approach. The present paper uses the production and expenditure approach. The production approach describes the supply side of the economy, while the expenditure approach describes the demand side.

From the supply side, we present computations of the total production value in the Norwegian economy and production values by industries. GDP is constructed by summing up the value added in all production units, by finding output subtracted by input for each of the units: (1) $y_t=q_t-h_t$(1)

Here y is the gross value added in period t, q is the gross value of output in period t, and h is the value of intermediary consumption used in production (input) in period t. Aggregates for the entire economy are found by adding the sums of all production units (capital letters). Here Y^BV is GDP, Y, expressed in base values, BV, i.e. without net-taxes on products, i.e. producer value less product tax plus product subsidies: (2) $Y_t^{\mathrm{BV}}=Q_t-H_t$(2)

One obtains GDP in market values, Y^MV, by adding net product taxes, calculated as gross product taxes, T^Q, minus product subsidies, S^Q to Y^B: (3) $Y_t^{\mathrm{MV}}=Q_t-H_t+(T_t^Q\text{–}{S}_t^Q)=Y_t^B+(T_t^Q\text{–}{S}_t^Q)$(3)

GDP from the expenditure side describes the demand side, where c denotes consumption of different products, i investments by activity, g, government consumption by purpose, and x exports and m imports by-products in period, all in period t: (4) $y_t=c_t+i_t+g_t+(x_t\text{–}{m}_t)$(4)

In aggregated form we obtain aggregated GDP, in market values, Y^MV by adding aggregated private consumption, C, aggregated investments, I, government consumption, G and aggregated trade surplus (exports less imports), X − M, all for the same time-period, t: (5) $Y_t^{\mathrm{MV}}=C_t+I_t+G_t+(X_t\text{–}{M}_t)$(5)

The export sector, which is the most interesting parameter in the current analysis, is the sum of all exports of goods and services produced by a Norwegian production unit. This includes both products made in Norway and products made by a body registered in Norway, e.g. ocean transport.

To analyse the importance of the offshore sector in the Norwegian historical economy, we will in the following highlight calculations of its size of both the GDP and the export sector.

It is a special challenge to quantify the size of the offshore industries during World War II, when Norway was under German occupation. However, approximately 90% of the Norwegian merchant fleet, one of the largest in the world at the time, escaped and served the Norwegian exile government and its allies throughout the war. It would be meaningless not to include this part of the maritime sector into our calculations. Hence, we come up with a hybrid model of the Norwegian economy, including both occupied Norway and the exile economy, made up by the Norwegian armed forces and public administration abroad and the merchant fleet, sailing for the allied powers.

This implies that the paper offers calculations of an extended composite GDP in base values, Y^C _t ^BV, with value-added figures in base prices for the domestic economy, Y^D _t ^BV, and the abroad economy, Y^A _t ^BV: (6) $Y^C{{}_t}^{\mathrm{BV}}=Y^D{{}_t}^{\mathrm{BV}}+Y^A{{}_t}^{\mathrm{BV}}=(Q_t^D-H_t^D)+(Q_t^A-H_t^A)$(6)

One can express the composite GDP in market values, Y^C _t ^MV, by adding product taxes minus product subsidies both for the domestic, (T^QD_t – S^QD_t), and the abroad economies, (T^QA_t – S^QA_t): (7) $Y^C{{}_t}^{\mathrm{MV}}=Y^D{{}_t}^{\mathrm{MV}}+Y^A{{}_t}^{\mathrm{MV}}=(Q_t^D-H_t^D)+(Q_t^A-H_t^A)+(T_t^{\mathrm{QD}}\text{–}{S}_t^{\mathrm{QD}})+(T_t^{\mathrm{QA}}\text{–}{S}_t^{\mathrm{QA}})$(7)

Since the existing GDP series for World War II are less precise and detailed than the rest of the historical national accounts, we will also have to calculate a novel series for marine industries at the time, i.e. fishing, whaling combined, which also has never been published before. The new series are described in the following sections.

5. Extended offshore sector’s contribution to GDP

The early historical estimates of GDP by sector made by Statistics Norway (1965) are somewhat problematic. In the first place, they are basically done for a few benchmark years and include a limited number of industries until 1930. Secondly, they do not present annual series by industry before 1930. Thirdly, they are constructed according to the System of National Accounts from 1958 (SNA1958). This does not include parts of the service sector, which are included in the modern SNAs, e.g. huge parts of domestic services. Hence, the GDP figures are lower, and the relative size of the non-service figures are significantly higher than what they would be according to modern definitions.

Fourthly, the first calculations of value creation by primary industries made by Schweigaard (1840) and Tvethe (1848) for 1835 and 1845, respectively, included significant parts of processing, i.e. agricultural and fish preservation were considered agriculture and fisheries respectively. In the latest calculations, one defines all agricultural and fish processing as part of the food processing manufacturing industry, including preservation. This is in line with the SNA2008. Thus, the first historical GDP calculations present overestimations of the offshore sector, in particular fisheries, compared to modern accounts. Hence, one needs to reconsider the existing figures and construct a new historical series of GDP by industry (Grytten, 2022, pp. 181–202, 2023, pp. 429–470). New series of gross products from the production side, i.e. sectoral value added, was given for 17 different industries, 1816–2021, and, additionally, from the expenditure side.

Given that these resent calculations rest on considerable rich and detailed data on output, input, and prices from public and private sources reported and assessed in real-time, we find them both valid and reliable even at industry-specific levels, with relatively moderate sources of error compared to former historical GDP figures for Norway. However, it should be noted that the data coverage and reliability are weaker for the years 1816–1829, when data were more scarce and the aftermaths of the Napoleonic wars disturbed the picture by starting from artificially low levels in the offshore economy (Grytten, 2023, pp. 429–473). Hence, we present our analytical calculations here both with 1816 and 1830 as starting points.

The series makes it possible to map the development of the different production sectors of the economy. By diving into the data, reorganising them and do additional calculations, one might be able to come up with novel and original value added and export series for the offshore sector.

Starting with GDP, it is possible to trace value added from fishing ari, ocean transport, and petroleum. These are all calculated based on various domestic sources, presented in the following paragraphs.

5.1. Fishing, whaling, and hunting (fishing ari)

Fishing is basically limited to the first-hand value of the catches. This means that all kinds of preservation and processing are considered food processing industries, and not fisheries.

Based on the foreign trade statistics, it is possible to calculate the volume of catches exported, and based on consumption data, one might find catches for domestic use. Multiplying volumes with available price notations, we reach at value series. In this way Brautaset (2002, pp. 168–189) calculated detailed series of fish exports for 1830–1865. Consumption surveys provide information on domestic fish consumption for households. Adding these two together, it is possible to make estimations of total production figures.

From 1865 onwards, public statistics provide detailed figures on volumes and prices of fish exports, along with consumption in several benchmark years (NOS, 1949, pp. 91–104). From 1866, public statistics report quantities and prices of fish brought on shore, and from 1908 gross and sometimes net values of catches. Input has been computed based on benchmark year calculations for 1835, 1845, 1855, 1865, 1875, 1890, 1900, 1910, 1920 and 1930 found in the historical national accounts by Statistics Norway (NOS, 1965) and reports from county representatives (Amtmannsberetningene).

We assume constant fixed price output–input relations between the benchmark years. Before 1830, we backstrapolate the gross product series to 1816 with available trade statistics (Schweigaard, 1840; Tvethe, 1848). From 1930 onwards, we used revised annual figures from Statistics Norway.

As for whaling and hunting, the use of data is different. According to applied definitions, the entire process from hunting the whale until oil production is considered whaling, when first-hand sales are considered the value of hunting for other kinds of animals. Our data are basically taken from Kiær (1887, pp. 193–205) and Statistics Norway (NOS, 1965, pp. 67–71). To interpolate, we use public foreign trade statistics along with public records on catches and oil production (NOS, 1949, 1969). These are coupled with corresponding 1930 values of whaling and hunting in the revised historical national accounts by industry, calculated by Dean (2018, pp. 81–98) and Statistics Norway. In our figures, we include management and administration of fishing and whaling vessels, but not related services, as part of the value creation of the sector.

To cover the gaps in the existing historical national accounts for World War II, we use reported fish catches and whaling along with their corresponding prices registered and summarised by Statistics Norway (1949, pp. 96–105). This makes it possible to calculate production values. Due to limited data, we assume a log-linearly fixed relationship between output and input to find the gross product of the sector. This means that we interpolate between the gross products calculated for 1939 and 1946 by starting in 1939 and adjusting the production values log-linearly to hit the benchmark level of 1946.

5.2. Ocean transportation

Estimations of historical gross product in Norwegian ocean transport were first made by Kiær (1877, pp. 121–130) and thereafter 125 years later by Brautaset (2002, pp. 257–261). Both serve as reliable sources on this industry’s contribution to GDP from 1830 and towards the turn of the century. The Wedervang Archive gives us detailed information on income and cost structures, freights, and wages in the merchant fleet as early as the eighteenth century, and thus, serves as a valid and reliable source for the new estimates covering the years 1816–1830 (Brautaset, 2004, pp. 119–142). The data have the best coverage for the fleet engaged in foreign ports. However, we also find sufficient coverage for domestic ports. Value added is calculated based on benchmark year calculations given by Statistics Norway (Bjerke, 1960, 1965), Kiær (1877, 1888) and records from the Wedervang Archive. This rich archive on historical prices and wages also contains ship accounts for the 18th and nineteenth century used in calculations of national accounts (Grytten, 2015).

In addition, Statistics Norway (NOS, 1978, pp. 376–408) reports volumes of the fleet and the ships’ engagements making it possible to interpolate with constant fixed price output–input relations between benchmark years. From 1930, we use the revised Statistics Norway accounts for ocean transport, additionally revised by Dean (2018) and thereafter running data from Statistics Norway. In our series, we thrive to include services directly connected to ocean transportation, like administration and management of the ship-owning companies. However, port management and onshore cargo handling and services are not included.

5.3. Oil and gas extraction

Norwegian petroleum extraction was conceived by the discovery of exploitable oil and gas on the Norwegian Ekofisk field on the continental shelf of the North Sea in October 1969 and was born by the first production from the same field in June 1971. The production is still solely located on the seabed of the continental shelf along the Norwegian coast. The industry is made up of different kinds of advanced marine and maritime operations and represents presently the core of Norwegian offshore activities. Services linked to the extraction process are excluded from the definition of offshore activities here (Tjønneland, 2018).

This paper applies the national account figures for oil and gas extraction calculated by Statistics Norway, running from 1971, after the first production had started up in June of that year. The national accounts data for oil and gas extraction along with similar data for other sectors and industries are presently published in the databank of Statistics Norway, with regular updates even for the historical figures.⁴

5.4. World War II

To calculate the offshore sector’s contribution to an extended composite GDP during World War II, one needs to add maritime transportation plus the gross product of military forces and government administration abroad to the total GDP. The necessary data can be found in the ‘London Accounts’, which were compiled and published in a single publication by the ministry of Finance in 1951 (Finans- og Tolldepartmentet, 1951). A challenge with these records is that they were originally made by budget years, stretching from 1st July to 30th June the following year. To make them compatible with the rest of our series, we have annualised them, by assuming half of the costs were used from 1st July to 31st December the first year and a half from 1st January to 30th June the following year.

An alternative source would be the statistical economic survey for the war years published by statistics Norway. However, the value-added calculations there apply only to the domestic economy. Nevertheless, one can trace relevant statistics on the foreign fleet and the London governments expenses. The statistical economic survey may basically serve as a source of verifying the reliability of the London accounts. Cross-checking the data, we conclude they are close to identical, and thus, the survey of the Norwegian economy for World War II confirms the reliability of the London accounts (Statistics Norway, 1945, pp. 223–229; pp. 243–256).

The annualised London Accounts are presented in Table 1. It reveals that the Norwegian exile government, unlike most other exile governments, was able to cover all its expences. Nortraship alone covered between 84.5% and 94.3%. In addition, the state-controlled ship-owning company sailed for an excessive fortune. Not surprisingly, defense made up the largest expenditure share, i.e. between 58.8% and 79.2% of all governement expenditures of the exile government during the war (Finans- og Tolldepartementet, 1951, pp. 2–3).

Table 1. Income and expenditure by the Norwegian exile government 1940–1945.

Expenditures
Year	Government administration		Defense		In all		Share
	UK pound	NOK	UK pound	NOK	UK pound	NOK	Defense
1940	612,419	10,778,574	2,332,942	41,059,770	2,945,361	51,838,345	0.792
1941	1,474,108	26,165,417	3,141,945	55,769,515	4,616,053	81,934,932	0.681
1942	2,612,299	46,368,298	5,126,759	90,999,972	7,739,058	137,368,271	0.662
1943	4,049,257	71,874,303	8,374,047	148,639,325	12,423,303	220,513,628	0.674
1944	6,412,715	113,825,682	10,763,000	191,043,241	17,175,714	304,868,924	0.627
1945	4,032,946	71,584,783	5,762,333	102,281,411	9,795,279	173,866,193	0.588
Income
Year	Miscellanous		Nortraship		In all		Share
	UK pound	NOK	UK pound	NOK	UK pound	NOK	Nortraship
1940	167,573	2,949,276	2,777,788	48,889,069	2,945,361	51,838,345	0.943
1941	714,495	12,682,286	3,901,558	69,252,646	4,616,053	81,934,932	0.845
1942	1,084,569	19,251,100	6,654,489	118,117,171	7,739,058	137,368,271	0.860
1943	1,188,971	21,104,235	11,234,332	199,409,393	12,423,303	220,513,628	0.904
1944	2,110,519	37,461,703	15,065,196	267,407,220	17,175,714	304,868,923	0.877
1945	1,428,560	25,356,940	8,366,719	148,509,253	9,795,279	173,866,193	0.854

Source: Finans- og Tolldepartementet (1951, pp. 2–3).

5.5. Ocean transportation during World War II

To cover the World War II gap in the gross product figures for ocean transportation, we first search through the London Accounts reporting the incomes and costs of the Royal Norwegian government in exile. This had a huge deficit every year, which was covered by the Norwegian national ship-owning company, Nortraship, controlled by the exile government. When the German armies attacked Norway on 9 April, their plan was to hijack as many merchant ships as possible, since Norway had the fourth biggest merchant fleet in the world. However, they were unsuccessful and about 90% of the fleet was kept in the hands of the Norwegian exile authorities. This fleet, engaging more than a thousand ships, became the largest Norwegian contribution to the allied warfare, and it financed the large bulk of the London-based exile government’s expenses. However, these data do not provide sufficient information on the total gross product contribution provided by the fleet.

Thus, we seek a better method. We conclude by using the tonnage of the fleet engaged distributed by sailing, steam, and motor vessels (NOS, 1949, pp. 242–243) multiplied with corresponding freight rates taken from Mohammed and Williamson (2004, pp. 172–203) and Jacks and Stuermer (2021) as an indicator for interpolation between the existing benchmark calculations for 1939 and 1946. Again, we interpolate between the gross products calculated for 1939 and 1946 by starting in 1939 and adjusting the movements of the production values log-linearly to hit the level of the existing accounts in 1946. A close examination of alternative sources (Basberg, 1993; Mossige, 1989; Thowsen, 1992) confirm that the approach gives a valid approach to the size of the exile fleet during World War II.

5.6. Government administration and defense during World War II

The accounts also enable us to give estimations of the size of the exile government’s contribution to GDP. In the existing national accounts, one finds the ratio between value added and expenditures on government administration and defense (NOS, 1965). Assuming the same ratio for each relevant expenditure group in the London Accounts as for the interwar period, it is possible to find annual series for government administration and defense’s contribution to GDP during the war years with a methodology which is very similar to the one Statistics Norway applied for the years leading up to and after the war in their historical national accounts.

It might seem surprising that the income connected to Nortraship almost quadrupled between the first and last full war years 1941 and 1944, since a huge part of the fleet was taken out by German submarines. However, the reason was a sharp increase in freight rates. Also, looking at other exile government income and expences, one finds considerable inflation during these years.

By drawing on this information, one can calculate the extended composite GDP series at base values for 1940–1945 by adding GDP for the exile-government-controlled merchant marine and public administration and defense, as reported in Table 2.

Table 2. GDP in current prices for the Norwegian exile and extended economy.

Year	Fishing, whaling, and aquaculture	Maritime transportation	Government administration and defense	GDP in base prices	Offshore share of GDP	Extended Composite GDP in base prices	Offshore share of extended composite GDP
1940	160,456	1,140,124	24,844	6,891,608	0.189	8,031,731	0.162
1941	278,497	1,270,676	39,269	8,494,001	0.182	9,764,677	0.159
1942	293,334	1,251,547	65,836	8,589,743	0.180	9,841,290	0.157
1943	258,288	1,198,880	105,684	8,555,687	0.170	9,754,567	0.149
1944	266,459	1,118,440	146,113	8,207,392	0.169	9,325,831	0.149
1945	295,499	898,501	83,328	9,306,758	0.128	10,205,259	0.117

Source: Finans- og Tolldepartementet (1951).

5.7. Constant price calculations for World War II

To obtain GDP results in constant prices we need to deflate the nominal series with relevant deflators. For the expenditure side one can rest on the new price index by Grytten (2020, pp. 129–144). As for the production side, the Norwegian historical national accounts, contrary to most other historical national accounts, use to a large degree a double deflation technique, i.e. both output and input are deflated to arrive at value added in fixed prices. For the war period, we do not have sufficient data to construct a double set of deflators. Thus, we deflate value added directly, as is common for historical national accounts for most countries.

For fisheries, whaling and aquaculture, we find an implicit deflator by dividing the value of catches by the volume of the catches as reported by Statistics Norway (NOS, 1978, pp. 176–181). However, to interpolate between 1939 and 1946 in fixed prices, the series should be adjusted to hit the right volumes. This is done by extrapolating from 1939 and backstrapolating from 1946. The two series are then summed up by rolling weighted averages, where the year’s closeness to a benchmark year decides its weight. E.g. for 1940, the forward extrapolated series from 1939 accounts for 65% and the backward extrapolated series from 1946 acounts for 35%. For 1941, the weights are 60% and 40%, for 1942, 55% and 45%, for 1943, 45% and 55%, for 1944, 40% and 60%, and finally, for 1945, 35% and 65%, respectively.

For ocean transportation, we apply the same principle by using the implicit deflator for values compared to volumes of tonnage in use (NOS, 1978, pp. 388–391 and pp. 403–404). For public administration and defense, we use the available British consumer price index from Statistics UK. Both indices are adjusted to hit both benchmark years 1939 and 1946 by using the same weights as for the deflator for fisheries, whaling and aquaculture. As for exile public administration and defense, we use an adjusted form of the corresponding deflator for the similar sector in UK World War II GDP calculations (Thomas & Williamson, 2023). By doing this, it is possible to calculate both GDP for the offshore sector and the extended composite GDP for the war years 1940–1945. The results are reported in Table 3.

Table 3. GDP for Norway in current and constant prices 1940–1945.

	Fisheries, whaling, and aquaculture	Ocean transport	Exile public administration and defense	Extended composite GDP in base values	Extended composite GDP in market values
In current prices
1940	160,456	1,140,124	24,844	8,031,731	8,564,483
1941	278,497	1,270,676	39,269	9,764,677	10,505,744
1942	293,334	1,251,547	65,836	9,841,290	10,607,728
1943	258,288	1,198,880	105,684	9,754,567	10,517,489
1944	266,459	1,118,440	146,113	9,325,831	10,057,379
1945	295,499	898,501	83,328	10,205,259	10,918,300
In 2015 prices
1940	2,025,985	10,726,380	1,907,658	245,239,248	257,522,576
1941	1,495,788	9,566,614	2,614,147	249,181,151	262,998,729
1942	1,391,665	7,928,136	3,967,491	238,496,057	252,969,142
1943	1,159,412	6,974,606	6,036,070	235,010,826	249,289,570
1944	1,158,900	6,555,794	7,858,895	224,885,689	238,375,896
1945	1,328,771	6,774,405	4,171,517	247,247,572	261,822,393

Source: Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

For the years from 1949 and onwards, we use the deflators used in the historical series by Statistics Norway, mentioned above. We use deflators by industry for each fixed price period. The series for the offshore sector are summed up and implicit deflators are found for each sub-period. Both the value added and the export series and their deflators are chained into the annual series.

6. Growth in offshore and mainland economy

Summing up all the historical series of gross product for offshore industries and comparing them to the gross domestic product per industry as compiled by Grytten (2022, pp. 181–202, 2023, pp. 429–470), we can extract the series of offshore and mainland GDP back to 1816, which is reflected in Figure 1, which depicts the share of the mainland compared to the total GDP, 1816–2021. The graphs illustrate the difference between the traditional or conventional way to calculate mainland GDP and the new or present way, done in this paper. The figure also draws polynomial trendlines calculated by the Hodrick-Prescott filter with a standard smoothing parameter of the annual figures of 100.

Figure 1. Mainland GDP’s share of total GDP for Norway 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

As one can see there is a downward trend until the end of the nineteenth century and then huge fluctuations, with downturns during the two world wars. Then another downward trend during the last approximately 50 years. This clearly gives a message that the traditional combined offshore sector really held ground and even in some periods increased its size of the Norwegian value creation during the period from the early 1800s until the late 1950s. Thereafter, it declined, when the new offshore sector, oil and gas extraction increased its importance.

The figure also shows a significantly larger difference between the traditional and new way to calculate mainland GDP for the nineteenth century and until the 1970s than after. This is mainly explained by the introduction of fisheries ari as part of the offshore sector into our calculations, which boosts the traditional offshore sector until its relative decline. At the same time petroleum, which had already been included in the offshore economy, gained strength. Hence, the figures for the last 50 years become more similar for the two different approaches to calculate the combined offshore sector.

By deflating our GDP series as described above, we are now able to draw charts reporting GDP for both the entire Norwegian economy and for the mainland economy for every year, 1816–2021, as shown in Figure 2.

Figure 2. GDP for Norway 1816–2021 in market values, in constant NOK-2015 prices. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

The calculations also enable one to compare the growth for the offshore with that for the mainland economy. This should also be done at constant prices, as in Figure 3, which undoubtedly shows significantly higher overall growth in the offshore than in the mainland sector of the economy. Note that the argument is clearly valid even before the takeoff of oil and gas in the 1970s.

Figure 3. GDP for Norway in volume indices, 1816–2021 (1816 = 1). Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

Figure 4 shows the growth of the offshore sector decomposed into the three main industries, i.e. in the first place, fishing, whaling, and aquaculture, secondly, ocean transport, and thirdly, extraction of oil and gas from the continental shelf.

Figure 4. Volume indices of GDP by industry, 1816–2021 (2021 = 1). Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

The figure clearly shows that ocean transport and petroleum had significantly higher growth than the mainland economy for most of the period, when fishing, whaling and aquaculture performed more in line with the mainland economy, but still marginally weaker during the entire time span, when measured in fixed prices.

6.1. Relative contribution to GDP

Growth in volume figures gives important, but still limited value to the present analysis since relative shares in national accounting should be compared to current prices. This applies partly because of the lack of additivity in constant price or volume series. However, more importantly, value arguably might be a more central contributor to the economy than volume in the present analysis.

Thus, we look at the composition of GDP in current prices. What were the shares of the industries that made up the offshore sector compared to the total economy? The necessary calculations are reported in Figure 5.

Figure 5. Industries of the offshore sector’s contribution to the Norwegian GDP in current basic values 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

Figure 5 shows that the traditional joint marine and maritime sector normally accounted for 8–10% of the entire economy 1816–1860, and thereafter between 10% and 13% most years until 1940. A clear exception was during World War I, when due to high freight rates and high fish prices, the joint sector peaked with 22.5% in 1916. During World War II, it peaked again with around 15% or more of the total extended economy 1940–1944. After World War II, we find new peaks in 1950 with 17.5% and in 1955–1956 with approximately 16%, before a minimum of between 8% and 9% in the early 1970s.

Thereafter, the new dominant offshore industry becomes oil and gas extraction. The introduction of petroleum also made the offshore sector become even more volatile than it had already been, causing peaks to reach higher than 28% in 2006 and 2008.

The figure reveals huge fluctuations in the combined maritime and marine sector’s contribution to GDP. To map the trends, we again use the Hodrick-Prescot filter with a smoothing parameter of 100, which is standard for annual trend estimations. The results are shown in Figure 6. Along with an impressive growth in the value of fishing from the early 1800s until present times, its share of the economy-wide GDP has been steadily decreasing, despite strong comebacks before and during World War I and in the 1920s. These were the heydays of industrial whaling around Antarctica. During the last decades, aquaculture has made the industry’s relative contribution to GDP increase again.

Figure 6. Share of offshore sector industries to GDP for Norway 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

As for ocean transport, the industry was growing rapidly even compared to nation-wide GDP. It peaked during the 1870s and 1880s, during World War I, and during World War II until the 1960s. Thereafter it saw a huge decrease, which to a large extent can be explained by flagging out the bulk of the fleet.

Oil and gas extraction showed an explosive trend in the 1970s and until the mid-1980s, thereafter one experienced contraction before an impressive new growth period took place until the second decade of the twenty-first century.

6.2. Contribution of exports

Another way to quantify the size of the offshore sector is to look at the composition of exports. The historical foreign trade statistics for Norway are quite good, with detailed bookkeeping of goods entering and exiting the country. Norway also has decent historical statistics of volumes and values of export of services, thanks to Brautaset’s (2002) work on foreign trade in historical national accounting.

Nevertheless, a persistent annual series of exports by product categories have not been published before, when an overall export series for 1816–2021 was published along with the new historical GDP series (Grytten, 2022, pp. 178–201, 2023, pp. 429–470). For the period 1830–1865 these figures almost sit entirely on the work by Brautaset (2002) on quantifying Norwegian exports for 1830–1865 as part of establishing historical national accounts for Norway. For the rest of the period, the new series uses export data from the historical national accounts for Norway for the period 1865–1970 (Skoglund, 2009; SSB, 1965). However, checking Statistics Norway’s own historical sources along with updating them to SNA2008 made it necessary to revise the series. From 1970, the export series rests on Statistics Norway’s revised export series, as reported in their national accounts.⁵

For the offshore sector, the exports of fish and fish products, along with whale and aquaculture products are compiled from the trade statistics of Statistics Norway, reported in historical surveys (NOS, 1949, 1959, 1969, 1978 and 1994). These stretch back to 1850. The same statistics also report sales of ships and oil and gas rigs and partly overlapped by the solid figures by Brautaset for 1830–1865. For the period 1816–1830, we used more randomly collected data from the official trade records and from Schweigaard (1840) and Tvethe (1848).

The data for fish, with the exception of mixed products with fish as one out of several ingredients, are valid to handle. However, the data for whale products are significantly more intricate. This is basically because whale fats and oil were used as side products or mixed products in the process industry, and there is no clear definition of exports of these whale-based products. Thus, we dive deeper into foreign trade and manufacturing statistics. By using Statistics Norway’s detailed foreign trade records from the nineteenth and twentieth centuries, we conclude that whale-based exports are best mirrored in the value of whale oil caught by Norwegian vessels, as the domestic use of whale products seems to equalise the added export values of the reminding value of whale oil for exports (Minister of Domestic affairs 1860–1876, Statistics Norway 1877–1950). This conclusion is in line with that of some of the foremost Norwegian experts on Norwegian whaling history (Basberg et al., 1993).

As for ocean transport, we use the trade records for 1816–1830, Brautaset’s (2002) calculations of aggregated gross freight for the ocean-going fleet, and thereafter the same kind of data from Kiær (1871, 1877, 1886, 1877, 1888) and Statistics Norway (NOS, 1949, 1959, 1969, 1978 and 1994), before we use revised exports data from the historical national accounts (NOS, 1965; Skoglund, 2009). From 1970, we use the present and revised export series reported in the GDP figures by Statistics Norway.⁶ For the period 1865–1930, we need to inflate volume figures with price observations. This is done by using calculations of relevant freight rates conducted by Klovland (2008, pp. 1–26, 2009, pp. 266–284, 2022, pp. 300–319).

6.3. Export growth

To examine the development and size of the offshore sector compared to the entire economy, the paper also investigates both the growth and the shares of total exports.

In Figure 7 we look at the offshore and the mainland sectors as volume indices based on calculations in constant prices. We find that the export volumes increased significantly more for offshore-related than mainland-related exports, with annual compound growth rates of 3.8%–3.3%, respectively, 1816–2021. A gap between the two sectors appeared at three periods: first, from the early years until the 1840s, basically due to fisheries; thereafter, during the golden era of the merchant fleet in the second half of the nineteenth century; and finally, after the introduction of oil and gas extraction in the 1970s. This development also confirms that the offshore sector was a driving force behind the export growth during most of the last 200 years.

Figure 7. Export volumes of the offshore and the mainland sector, 1816–2021 (1816 = 1). Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404, 261–275 and 388–408, 1994, pp. 424–448), Thomas and Williamson (2023), Brautaset (2002), Kiær (1871, 1877, 1886, 1888), NOS (1965, pp. 340–363), Skoglund (2009, pp. 16 and 22).

6.4. Relative export contribution

By combining the different sets of data presented here, we reach at export series for different industries, making up the offshore sector of the economy. We add data derived and calculated from the exile government accounts and other post-war reported data for the World War II period. This enables us to calculate the share of the offshore sector relative to total exports, including the extended economy during the war 1939–1945. A significant part of these newly calculated series has never been published before. The key industries of the offshore sector’s share of total Norwegian exports for 1816–2021 is depicted in Figure 8.

Figure 8. Offshore sector’s exports as share of total exports in current prices, 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404, 261–275 and 388–408, 1994, pp. 424–448), Thomas and Williamson (2023), Brautaset (2002), Kiær (1871, 1877, 1886, 1888), NOS (1965, pp. 340–363), Skoglund (2009, pp. 16 and 22).

Firstly, Figure 8 reveals that the offshore sector’s share of total exports has been very high, for most years over 50%. Secondly, it also shows long-term stability despite short-term fluctuations. Thirdly, it reports that fishing (and whaling) remained the largest offshore export industry until around 1850. Thereafter, ocean transport was dominant until the end of the 1970s. Thereafter oil and gas extraction rapidly gained a significant hegemony. When fishing and whaling declined gradually, ocean transport fell dramatically both in relative and absolute terms in the 1960s and 1970s.

Perhaps surprisingly, petroleum rather defended the offshore sector’s export share than increased it, as shown in Table 4, which includes both GDP and exports for the entire period 1816–2021 and alternatively 1830–2021, due to lower quality of the figures 1816–1829. For GDP, we find a huge difference before and during the introduction of oil and gas, as the offshore average contribution increases from 10.9% to 18.6% of the total value added. As for exports, we see a moderate decline from an average of 59.4% to 55.8%. For the entire period, we find averages of 12.8% of GDP and 58.5% of exports. The intervals fluctuated between 7.8% and 17.9% and 51.4% and 65.5%, respectively, mostly within one standard deviation.

Table 4. Offshore industries’ shares of GDP and exports 1816–2021.

	Shares of GDP			Shares of exports
	1816–2021 (1830–2021)	1816–1970 (1816–1970)	1971–2021 Petroleum included	1816–2021 (1830–2021)	1816–1970 (1830–1970)	1971–2021 Petroleum included
Average	0.128 (0.132)	0.109 (0.112)	0.186	0.585 (0.587)	0.594 (0.598)	0.558
Median	0.113 (0.115)	0.107 (0.109)	0.193	0.578 (0.581)	0.581 (0.590)	0.574
Stdev	0.050 (0.050)	0.027 (0.012)	0.060	0.071 (0.072)	0.073 (0.075)	0.054
Lower bound	0.078 (0.082)	0.082 (0.100)	0.126	0.514 (0.515)	0.520 (0.522)	0.504
Upper bound	0.179 (0.182)	0.136 (0.125)	0.247	0.655 (0.659)	0.667 (0.673)	0.611

Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404, 261–275 and 388–408, 1994, pp. 424–448, 1965, pp. 340–363), Thomas and Williamson (2023), Brautaset (2002), Kiær (1871, 1877, 1886, 1888), Skoglund (2009, pp. 16 and 22).

Hence, the descriptive statistics confirm that the offshore sector’s historical and present contribution to Norwegian exports is nothing less than astonishing. The high share implies that the sector has been and still is a dominant source of currency income. And, when one offshore industry declines its share, another one takes over its role. It could be tempting to say that fishing and the related industries have gradually failed as important contributors to the Norwegian economy. However, its relative decline is not due to the contraction of the industry, but to lower growth rates than for the economy at large. Nevertheless, also in this field, it has contributed to overall growth. High productivity growth in fisheries with less fishermen catching more fish, has led to transfer gains into other industries and thereby economic growth. Studies of ripple effects in fishing conclude that the effect increases with productivity, i.e. higher ripple effect per crew member as the number of crew members decreases due to increasing productivity levels. Including first and second waves Nordbø (2020, pp. 69–74) calculated the ripple effects of fishing to a multiplicator of 5.7 for value added and 7.2 for employment in 2019. At the same time, according to the Norwegian Seafood Council fishing and aquaculture exports from Norway summed up to 151.4 billion kroner in 2022 or approximately 15 billion US dollars, i.e. still around 10% of Norwegian exports of goods and 25% of exports of traditional goods (excluding oil and gas) in a normal year.⁷ These facts illustrate that the industry is still of significant importance to the Norwegian economy.

As for the rapid decline of ocean transportation, one should note that the Norwegian fleet to a large degree was transferred from ocean-going bulk cargo to offshore oil and gas extraction supply from the 1970s onwards, which disturbs the statistical development in disfavour of the traditional ocean transport. During the last decades, Norway has had the world’s second-largest fleet of offshore vessels after the United States, serving the gas and oil industry. All categories included, the Norwegian-controlled merchant fleet was recorded as the fifth largest in the world in 2022, measured by value. Norway was still behind China, Greece, and Japan, and neck and neck with Germany. However, around half of the Norwegian ocean-going fleet is still registered under flag of convenience abroad (Abrahamoglu et al., 2023, pp. 3–19; NSA, 2022).

7. Offshore sectors’ contribution to Norwegian economy

We find the anticipated relative decline of the extended offshore sector from the late nineteenth century neither in the value added nor in the export series. However, due to very high productivity growth, it is obvious that their share of total employment declined rapidly. An illustration can be found in the historical national accounts. They report 66,000 man-years in fishing and whaling in 1930. In 2021 it was 20,000 in the corresponding fishing, whaling and aquaculture industries. At the same time, value added was multiplied by a factor of 11.64 (NOS, 1965, p. 328).⁸ On the other hand, this implies that the offshore-based industries must have contributed significantly to transfer gains and economic growth through productivity gains.

According to PPP calculations, Norway moved around 10–15% above Swedish GDP per capita for most of the nineteenth century and around 10% under most years between the early 1920s and the early 1970s. If one looks at mainland Norway only, the new estimates show that the levels were quite even during the nineteenth century, when Mainland Norway clearly underperformed in the 1920s until the 1970s (Grytten, 2022, pp. 181–202, 2023, pp. 429–470). In other words, fishing and maritime transport made Norway comparably wealthy during the 1800s until the 1970s. Thereafter, the shipping crisis from 1973 hit the Norwegian merchant marine hard, and it swiftly lost ground to low-cost countries. At the same time, fisheries were restructured rapidly towards a more efficient fleet. However, at the same time, oil and gas were about to make Norway significantly wealthier. Hence, the extended offshore sector obviously brought significant wealth to Norway and made the European country closest to the Arctic a wealthy nation even by European standards in the nineteenth, twentieth and first decades of the twenty-first century.

A common feature for all the extended offshore industries is that high productivity growth resulting in high productivity levels have given a limited number of employees. At the end of 2021, fisheries, aquaculture, maritime transportation, and oil and gas extraction accounted for 62,000 man-years, i.e. 2.4% of total Norwegian man-years, but contributed with 25.1% of total GDP the same year.⁹

As already seen, the impact of the combined offshore sector on the economy can be examined through growth rates of GDP and exports. The annual growth rates of the aggregated volume series are reported in Figures 9 and 10. It is no surprise that the annual fluctuations in offshore GDP are considerably higher than in the mainland, when in exports they are more of the same magnitude. The average first-order difference in absolute values of offshore GDP volumes is surprisingly high, i.e. 8%, when for the mainland, it is 3.4%. Similarly, it is 9.3% for offshore export volumes and 10% for mainland exports.

Figure 9. Relative first-order differences for mainland and offshore GDP, 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404), Thomas and Williamson (2023).

Figure 10. Relative first-order differences for mainland and offshore exports, 1816–2021. Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404, 261–275 and 388–408, 1994, pp. 424–448, 1965, pp. 340–363), Thomas and Williamson (2023), Brautaset (2002), Kiær (1871, 1877, 1886, 1888), Skoglund (2009, pp. 16 and 22).

This implies that the offshore economy has been important both in the short- and long-run. In other words, the offshore sector has contributed significantly both to economic growth as well as to the ups and downs of business cycles. As for foreign trade, the findings imply that offshore-related products normally made up the bulk of total exports. Its growth rate in constant prices is higher than that of land-based exports. However, the annual fluctuations in exports from the offshore and the mainland sector are of the similar sizes.

The impact of the extended offshore sector to the economy can also be studied by comparing the compound growth rates of GDP and exports for key periods. Those would be the relative peak era of fishing, 1816(1830)–1858; the relative peak era of ocean transport, 1858–1914; the turbulent years, 1914–1945; the post-World War II period, until oil was commercially extracted from the Norwegian continental shelf from 1971; and finally during the petroleum era from 1971 until now. The calculations are presented in Table 5. Since the series for 1816–1829 are of lower quality than the rest of the series, the table alternatively offers calculations from 1830.

Table 5. Annual compound growth rates and correlation coefficients of GDP and exports in the offshore and mainland economy, 1816–2021.

	GDP compound growth rates			Exports compound growth rates
	Correlation coefficients	Offshore	Mainland	Correlation coefficients	Offshore	Mainland
1816–2021	0.316	0.038	0.026	0.186	0.038	0.034
1830–2021	0.305	0.039	0.027	0.194	0.037	0.033
1816–1858	0,234	0.029	0.022	0.039	0.038	0.034
1830–1858	0.171	0.033	0.025	0.089	0.032	0.027
1858–1914	0.074	0.031	0.018	−0.064	0.032	0.033
1914–1945	0.501	0.010	0.015	0.296	−0.005	−0.002
1945–1971	0.383	0.073	0.045	−0.021	0.102	0.097
1971–2021	−0.083	0.049	0.027	0.055	0.040	0.025

Sources: Grytten (2022, 2023), Finans- og Tolldepartementet (1951, pp. 2–3), NOS (1978, pp. 176–181, 388–391, 403–404, 261–275 and 388–408, 1994, pp. 424–448, 1965, pp. 340–363), Thomas and Williamson (2023), Brautaset (2002), Kiær (1871, 1877, 1886, 1888), Skoglund (2009, pp. 16 and 22).

Table 5 reveals significantly higher annual compound growth rates for offshore GDP than mainland GDP for all periods, except for 1914–1945. For the foreign trade sector, we see a similar trend, but with lower differences between the offshore and the mainland industries. For 1858–1945, the growth rates of exports are almost identical for the two sectors. We find positive correlation coefficients between growth rates of offshore and mainland GDP for all periods, except for the petroleum era from 1971 onwards. For exports, the correlation between the offshore and the mainland sectors is limited, and sometimes negative.

All in all, our calculations confirm that the offshore sector played a significant role in the Norwegian economy during the last good-200 years, accounting for a large share of the economy throughout the entire period. The argument seems to have the most quantitative support for the long-term rather than the short-term development since it is easier to track long-term or cross-period correlations than correlation for each sub-period. However, splitting between the traditional and the new offshore sector it is obvious that the combined traditional sector shrunk rapidly in relative terms from the 1950s.

Combining the long-run stability of the traditional offshore sector and their considerable fall in the share of employment, it should be obvious that they contributed significantly to transfer gains.

8. Conclusions

The present paper offers new calculations of the historical size of the Norwegian offshore sector, represented by the traditional offshore sector fisheries and related industry and ocean transportation on the one hand and the new offshore sector oil and gas extraction on the other hand. These are compared to the economy-wide Norwegian GDP and exports. We compute both growth rates and shares in comparison with the mainland sector. For the World War II period, it was necessary to include the exile economy.

In detail the paper firstly offers a new organisation of the offshore sector based on a recent published historical GDP series for Norway. Secondly, it gives new fixed price calculations of these series with new implicit deflators, which is necessary when summing up different industries into a combined sector, due to lack of additivity between sub-sectors in national account series covering several fixed price periods. Thirdly, the paper calculates the GDP contribution from the exile sector during World War II. Fourthly, it puts together persistent annual export series of offshore industries in nominal and fixed prices. Finally, by giving different statistical measures of the new series, the paper discusses and concludes on the size of the offshore sector of GDP and exports.

We find that the annual compound growth rates of offshore GDP were significantly higher than those of mainland GDP throughout the period 1816–2021. The same applies to exports if not to the same impressive degree. At the same time, there was a significant shift from the traditional offshore to the new offshore sector from the 1970s.

This development is mirrored in that the traditional offshore sector’s, i.e. shipping services and fisheries, whaling, and related industries, contribution to GDP normally fluctuated around 10–15%. The share was higher after the takeoff of the new offshore sector, oil and gas extraction; commonly, it ranged between 15% and 25% but displayed huge fluctuations. One should note that in the GDP calculations, fish processing is considered a manufacturing industry and not fisheries, i.e. the contribution of fisheries was arguably higher than reported in the GDP figures.

As for exports, the offshore sector was dominant, as it normally contributed with 50–60% of total Norwegian exports. We find that fisheries made the largest contribution until the mid-1850s, thereafter ocean transport until the mid-1970s, and thereafter oil and gas extraction. We also find that the long-term trends of the traditional offshore industries were surprisingly stable, but with a steep decline in the 1960s and 1970s. Thereafter oil and gas extraction took over as the major offshore contributor, when the combined share stayed at a steady level in the long-run. However, we find significant short-term movements.

Based on quantitative measures, it is obvious that the historical contribution of the offshore sector to the Norwegian economy has been of a considerable magnitude. When the traditional combined offshore sector decreased significantly from the 1950s, oil and gas extraction took over as the main offshore sector contributor to the Norwegian economy from the 1970s and onwards. All in all, the findings imply that the offshore economy almost constantly played a huge role in the Norwegian economy during the period 1816–2021.

Combining the long-run stability of the traditional offshore sector and their considerable fall in share of Norwegian employment, it should be obvious they contributed significantly to transfer gains and thereby economic growth until present times.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 References to the two industries can be found on pp. 57, 120, 124–125, 135, 139, 147, 185, 214, 259, 263, 287, 290–292, 311, 312, 366, 372, 434, 441, and 503.

2 https://www.ssb.no/en/nasjonalregnskap-og-konjunkturer/metoder-og-dokumentasjon/begreper-i-nasjonalregnskapet.

3 https://www.ssb.no/en/nasjonalregnskap-og-konjunkturer/metoder-og-dokumentasjon/begreper-i-nasjonalregnskapet.

4 https://www.ssb.no/statbank/table/09672/.

5 https://www.ssb.no/statbank/table/07336/; https://www.ssb.no/statbank/table/09189/.

6 https://www.ssb.no/statbank/table/09672/; https://www.ssb.no/statbank/table/07336/; https://www.ssb.no/statbank/table/09189/.

7 https://seafood.no/aktuelt/nyheter/norge-eksporterte-sjomat-for-1514-milliarder-kroner-i-2022/.

8 https://www.ssb.no/statbank/table/09175/; https://www.ssb.no/statbank/table/09171/.

9 https://www.ssb.no/statbank/table/09175/; https://www.ssb.no/statbank/table/09171/.