How socialized health care made Norway an oil power

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In Saturday’s FT, Martin Sandbu tells the amazing tale of Farouk al-Kasim, the Iraqi geologist who has been more responsible than anyone else for Norway’s success as an oil power.

[H]e and his Norwegian wife, Solfrid, had decided that their youngest son, born with cerebral palsy, could only receive the care he needed there. But it meant turning their backs on a world of comforts. Al-Kasim’s successful career had afforded them the prosperous lifestyle of Basra’s upper-middle class. Now they would live with Solfrid’s family until he could find work, though he had little hope of finding a job as rewarding as the one he had left behind. He was not aware that oil exploration was under way on the Norwegian continental shelf, and even if he had known, it wouldn’t have been much cause for hope: after five years of searching, still no oil had been found.

This was in 1968. Once in Oslo, Al-Kasim paid a visit to the Ministry of Industry, just to see if anyone there  knew of any oil-company work in Norway. Before long he was part of the inner circle of Norwegian government officials mapping out the country’s future as a major oil exporter. His most important early contribution, as Sandbu tells it, was in persuading his Norwegian colleagues that the country actually had a future as an oil exporter. All the early wells drilled had come up empty, but Al-Kasim’s analysis of the results convinced him that a big strike was in the offing. It came in December 1969, with the discovery of the gigantic undersea oil and gas field known as Ecofisk.

After that, Al-Kasim was put in charge of mapping out how Norway would exploit its newly discovered resource. He did a remarkable job of marrying private-sector competitiveness with government control, and Norway seems to have avoided the “resource curse” that has dragged down the economies of many nations with big hydrocarbon reserves. It’s all in Sandbu’s article, which I highly recommend.

Now Norway surely would have discovered oil even if Al-Kasim had never showed up, and the Norwegians—being Norwegians—would probably have done an okay job of managing their find without his help. But this still seems to be a striking case of what an economist who believes in such things would call path dependence. If Norway didn’t have a such a generous health care system—and if Al-Kasim hadn’t married a Norwegian—the country would have been substantially less well prepared to take advantage of its oil bounty.