Oil Wealth Dissatisfaction and Political Trust in Norway: A Resource Curse?

Recent scholarship has proposed a resource curse hypothesis arguing that an abundance of natural resources stimulates dysfunctional economic policy choices and rent-seeking, creates conflicts over the distribution of wealth, and, ultimately, can lead to civil war. Norway has attempted to avoid the resource curse by using state institutions to bring oil wealth under political control, including a strong government involvement in the production of oil, a tax regime that guarantees a large income to the state from oil production, and the more recent establishment of an oil fund invested abroad. The strong state involvement in the oil sector strengthens citizens' expectations of benefits they may receive. As much of the wealth is locked up in the oil fund - a fast growing cake that voters cannot eat - voters have become morenegative regarding the current policy, which they see as too tight on spending. We demonstrate that oil wealth dissatisfaction most likely contributes to the recent decline in political trust in Norway. Compared to other forms of resource curse effects, we consider the Norwegian variety a mild form.