Norway got rich by learning from other oil countries’ mistakes: it built strong institutions first, kept the industry transparent and diversified, and saved oil profits in a sovereign wealth fund that spends only the returns. Not long ago Norway was one of the poorest countries in Europe. Today it has a $1.7 trillion government pension fund, about $320,000 per citizen, and owns 1.5% of every publicly listed company in the world, including Apple, Microsoft and Nestle.
The argument is that Norway used the same tools as Libya and Venezuela, and that theirs worked. This article follows why, and also covers the downsides of its model.
Watch the full video here, or skip to the breakdown below.
How Norway got rich, at a glance
- Poor farmers who built a society first
- The oil strike and the rules that protected it
- What went wrong in Venezuela and Libya
- Why Norway avoided the trap
- Governments as investors, and the risks
- A safety net or a safety trap?
1. Poor farmers who built a society first
Norway is easy to praise, but the video flags two caveats. Life there is not perfect: there is cold weather, 24 hours of winter darkness in some places, and a one-bedroom apartment in Oslo averages almost $2,000 a month. Still, only about 32,000 citizens emigrate a year, and residents get free healthcare and education, almost a year of fully paid parental leave, low crime and a right to roam on private land.
Life was not always like this. Economically, things only changed around the 1970s. Before that, Norwegians were poor farmers under Danish rule with infertile soil and long winters. By the late 1800s around 800,000 people, a third of the population, had emigrated, one of the highest rates in Europe.
What set up today’s society came after independence in 1905. With no industry, Norway built around its natural strengths: shipping along one of the longest coastlines in the world, hydroelectric power from waterfalls and rivers long before it was trendy, and fishing. It then turned to its citizens, passing laws on unemployment insurance, health insurance and pensions as early as 1910, and adding universal healthcare, education and public housing between 1945 and 1965. No one person or party did this. It took generations, and that stable, connected, semi-wealthy society prepared the country for its big discovery.
2. The oil strike and the rules that protected it
On December 23, 1969, Phillips Petroleum struck oil in the Norwegian North Sea, and it became one of the biggest offshore fields ever found. The American company had to partner with Norwegian firms, because Norway had no oil industry or workforce. It notes that natural resources can be a blessing and a curse, and that with no experience Norway knew it was vulnerable.
It started by studying what went wrong in oil-rich countries like Libya and Venezuela, which is the learning-from-other-people’s-mistakes approach the video says too few people take. It created a state-owned oil company, a technical watchdog to regulate the industry and a separation of powers between policy maker, commercial operator and regulator. Every contract, deal and field license was documented and debated in public.
Oil companies pay a 78% tax on profits, which funds public services and savings. In 1990 Norway created the Government Pension Fund, which invests excess oil revenue globally and spends only the returns, about 3% a year, in the national budget. The fund’s size nearly equals the combined net worth of the top 10 reported richest people in the world, and it sustains free education, healthcare, pensions and unemployment protection.
3. What went wrong in Venezuela and Libya
It would be unfair, according to the video, to blame only mismanagement and corruption. Both countries have long histories of colonialism. Spain ruled Venezuela for 300 years, extracting resources, and independence in 1820 left a highly unequal, plantation-based society with weak infrastructure. The Ottomans ruled Libya for over 400 years, and Italy invaded in 1911 to settle people there and take the land and resources.
Venezuela found oil in 1914, began production in 1920 and welcomed foreign companies on generous terms. By the 1940s it raised its share of profits, and three decades later its president fully nationalized the industry. Oil came to make up 90% of exports in a country once known for cocoa, coffee and sugar. Policy swung between inviting companies in and shutting them out, until oil prices tanked in 2014 and took the economy with them. By 2015 inflation had surged to 100%, then 500%, then 1,000%, which the IMF considers one of the worst economic collapses in history outside of war. In 2019 the US, Canada and most of Latin America put sanctions on its oil exports over a stolen election and human rights abuses, and Nicolas Maduro is serving a third six-year term.
Libya, under Muammar Gaddafi for 42 years, used oil money in the 1970s to make education free at all levels and pay for students abroad, raising literacy from 25% to over 80%. Healthcare became free, life expectancy rose from 51 to 74, and highways, housing and power plants reached rural areas. But there was no transparency, corruption and nepotism ran wild, and it never diversified beyond oil. In Caracas today there are daily power outages and hard-to-find water and food, and in Tripoli armed groups interrupt daily life and close schools.
4. Why Norway avoided the trap
Norway found its oil later than Venezuela and Libya, so it had hindsight. It saw that relying on one sector is dangerous, especially oil, which is affected by psychology, geopolitics, natural disasters, speculation, supply and demand. Putting all your eggs in one oil basket was a recipe for disaster, so it kept developing shipping, fishing and hydroelectric power.
It made everything transparent and public to block corruption, and allowed both the state and private foreign companies to drill rather than relying on one. These made it richer, but the key move that stacks wealth across generations was the sovereign wealth fund: a country acting like a billionaire investor to build a cushion for the future.
There are over 170 sovereign funds representing 80 countries. The first was Kuwait’s, created in London in 1953 before the country was fully independent from the British. The term sovereign wealth fund was only coined in 2005 by Andrew Rozanov in an article that warned about the power such funds hold. Over 20 years they have grown from $1 trillion to over $13 trillion.
5. Governments as investors, and the risks
These funds are huge. If one invests in an unknown tech company, its value can jump overnight. China changed the game in the 2000s by creating an investment corporation with $200 billion in seed capital, using currency reserves from exports and US Treasury purchases. Singapore, with no oil, already had two massive funds, and Australia, South Korea and Russia followed.
The funds moved from passive investing to buying real estate in London, New York and Paris, stakes in tech companies and sports clubs, and ports, energy and infrastructure. It calls this countries buying power without politics: they do not need votes or permission, they just buy. Money that once flowed through banks and private investors now flows through government funds, which makes things less predictable because decisions follow national strategies rather than profit.
Norway’s model has risks too. Some of its own politicians have challenged the focus on regulation and transparency, and there is a legal 3% yearly withdrawal limit that is tempting to break in a crisis. The fund gets caught in geopolitical tensions, funds environmental reform with oil money, and is tied to global markets, so in the first quarter of 2025 it lost nearly $40 billion.
6. A safety net or a safety trap?
Norwegians are like children of a wealthy parent whose trust fund is doing well, and the video says that can breed complacency. Why would businesses innovate or young people take entrepreneurial risks when safe public sector jobs exist? The population is educated, but startups and tech struggle to attract talent because legacy companies offer great packages, and the private sector lags other Nordic countries. Some economists argue the wealth removed the hunger that drives countries to compete and diversify.
It acknowledges that for most of the world this looks like a nothing problem. It is a privilege to live where basic needs are met above and beyond, and if the biggest problem is getting too comfortable, it says, roll on the good times.
The weight you carry
The country you come from changes how heavy the load is when you start, and the video does not pretend otherwise. But heavier does not mean immovable, and as in a workout, the heavier the weight at the start, the stronger you become.
Norway’s fund lost about $40 billion in one quarter and kept its plan, because it was built for long-term returns, not for one big withdrawal. The advice is to treat your own finances the same way: stay in the game, accept short-term dips and keep moving a little further.
FAQ
How did Norway get so rich?
After a 1969 oil discovery, it built a state oil company, regulation and public transparency, taxed oil profits at 78%, and in 1990 created a pension fund that invests excess revenue globally and spends only about 3% a year in returns.
What is a sovereign wealth fund?
It is a state-owned investment fund that a government uses to save and grow national wealth. There are over 170 sovereign funds representing 80 countries, and they have grown from $1 trillion to over $13 trillion in 20 years.
Why did Norway succeed with oil when Venezuela and Libya did not?
The video says Norway had the benefit of hindsight, diversified into shipping, fishing and hydroelectric power, kept the industry transparent, and saved the revenue. Venezuela and Libya stayed dependent on oil prices and lacked transparency.
How big is Norway’s pension fund?
The video puts it at $1.7 trillion, or about $320,000 per citizen. It owns 1.5% of every publicly listed company in the world and nearly equals the combined net worth of the top 10 reported richest people.
What are the downsides of Norway’s model?
The fund is tied to global markets and lost nearly $40 billion in the first quarter of 2025. It also notes that a generous safety net can breed complacency, with startups and the private sector lagging other Nordic countries.
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