Norway has successfully developed a resource based economy (hydroelectricity, petroleum, fisheries, agriculture) and is also competitive in specific sectors on the world market (light metals, automotive parts, maritime) thanks to improved productivity and innovation. Sound macroeconomic policies have kept inflation under control, with the fiscal earnings of petroleum and gas exploitation going into a Pension Fund contributing to reduce the impact of increased ageing. The country has enjoyed steady growth since the beginning of the nineties (3% per year between 1991 and 2003) and in terms of GDP per capita, it ranks third in the OECD, only behind Luxembourg and the United States. This favourable context has made it easier for successive governments to pursue regional development policies and programmes comprising a strong bias in favour of remote rural areas and the north of the country (district policy) where climate, distance and very low population densities bring forward issues of market access but also of public service delivery. Despite these proactive policies, around half of Norwegian municipalities experienced population decline in the decades following the mid-1980s, with inward migration towards Oslo and major cities in the south.

At the turn of the 20th century, Norway’s economy rested largely on the primary sector, whether fishing, agriculture or forestry. A small industrial base, located mostly in the south, and limitations imposed by nature on agricultural development limited job creation, thus leading to out-migration, in particular to North America. Prospects for the economy began to change at the end of the 19th century with the development of hydro-electric power, harnessed across the country by numerous waterfalls. Cheap electricity facilitated the expansion of metallurgical and chemical manufacturing, especially aluminium, iron alloys and fertilisers. Small cities by the fjords became central to Norwegian industry. At the same time big companies became crucial for employment and regional development in many parts of the country. In the depression after WW I, expansion in electricity production and metal industries slowed down, but became later more specialised. After WW II the state established a Norwegian Iron Works in Mo i Rana, based on regional electricity production and local iron ores. Iron from the Kiruna mines in Northern Sweden was exported from the ice free harbour of Narvik. The control of these strategic resources was a major challenge during World War II, as showed precisely by this famous battle. Their exploitation than sparked the growth of shipbuilding at the benefit of the southern part of the country.

Regional policy in Norway began in the post-war period in response to devastation produced by the conflict and, specifically, the need to reconstruct the northern parts of the country where damage to economic and social infrastructure had been very severe. Initial policy responses tended to be mostly local in scope, to answer immediate needs. In 1951, a more strategic view was introduced with the North Norway Plan, followed over the next decade by economic development measures in other parts of the country. By the early 1960s, the need for a central institution to co-ordinate the range of locally based business support schemes appeared. To this end, a Regional Development Fund was set up in 1961 under the auspices of the Ministry of Local Government and Labour. More generally, regional policy was seen as a way to balance government efforts to stimulate industrial growth in the south and east. As such, regional policy was closely linked to national economic planning, with the goal of ensuring a more balanced and equitable territorial distribution of national income.

Geography and settlement patterns strongly constitute inherent factors of regional policy in most countries. This is particularly the case of Norway, with low population densities, especially in the northern part of the country, as well as a broken, mountainous landscape that renders communication problematic and reduces accessibility to services, economic activities and jobs in large parts of the country. An illustration of this is that 40% of labour market regions consist of only one municipality, as indicated in Chapter 1. Regional policy in Norway thus traditionally seeks to address the issues stemming from dispersion of population and difficulties in access, with most of these areas characterised by lower than average economic performances and demographic stagnation or loss. The challenge of Norwegian regional policy is to compensate for these natural handicaps without stifling chances of ensuring on the longer term economic sustainability based more on endogenous growth than on handouts from the national level.