Ladies and gentlemen,

It is a great pleasure for me to take part in this meeting. North America is a region of great economic, scientific and political significance to Norway. The work done by the North American Chamber of Commerce is in this respect important. It is an appreciable contribution to a realisation of the great potential for co‑operation between Norway and the US and Canada.

(Sheet: Goals - Sustainable Economic Growth and Continued Welfare)

I have been asked to update you on our ongoing efforts at reforming our policy instruments. I will revert to this shortly, but would first like to start by establishing a backdrop consisting of the main priorities in our trade and industrial policy. The priorities have to be viewed in light of the Governments’ main objectives, namely to secure sustainable economic growth and continued welfare in the 21st Century.

In Norwegian trade and industry policy there are three priority areas: better framework conditions for trade and industry, more pointed and efficient instruments of policy and a reduced and more professional state ownership. Furthermore, increasing innovation levels throughout the economy has been established as a guiding principle for most of the work done in these areas.

Regarding state ownership, the picture shows a plant owned by Norsk Hydro. The Norwegian state owns 43,9 percent of the shares in this company. Without commenting on this particular case, it is obvious that the degree of state ownership in general is very high in Norway. At present the Government owns about 40 percent of the shares listed on the Oslo Stock Exchange. The position by the Government is clear: Where there is no clear foundation for state ownership, government assets should be sold off.

(Sheet: Strenghtening the Competitive Position)

If we are to succeed at ensuring growth and welfare, a better competitive framework for our companies is crucial. The development of basic conditions favourable to business growth is therefore at the heart of the Governments’ efforts. Challenges here include higher growth in wages than our trading partners, a strong currency and a high interest rate. Clearly, these are all factors that influence the ability of our firms to compete.

The main approach by the Government in this regard has been to ensure a tight financial policy. Mainly as a result of this policy, the interest rate has dropped, and the exchange rate is now at a more reasonable level. The result is increased competitive strength for our trade and industry. Also, we have experienced a halt in the development we saw last year with a transfer of both production and employment abroad.

(It is always a pleasure to see politics work!)

(Sheet: Good and Stable Framework Conditions a Main priority)

In addition to securing a tight financial policy, other priority areas are: a good electronic and physical infrastructure, a reduction in regulations and red tape burdening our firms and securing more well-functioning markets, not least by increasing competition. In the area of tax reductions, the Government has already done a lot. The lion’s share of total reductions at about 20 billion Norwegian kroner has benefited trade and industry. We expect this to bring about investments and growth.

(Sheet: Free trade is Pivotal to Norwegian Industrial Development)

Trade increases the welfare of the nations who participate. Norway is a small, open economy, and export about half of what we produce. Three quarters of our exports goes to EU-countries, and about twenty percent to North America and Asia. We regard trade policy as an important part of our efforts at boosting economic growth in Norway. Hence, we are active in the European Economic Area and EFTA, as well as in the World Trade Organisation.

Our aim is to ensure that markets are open and exposed to competition. We share the overall objective of Doha to further liberalise access to markets for goods and services, and regret the setback in Cancun. Negotiations should be resumed as soon as possible.

Since this meeting takes place in Canada, I would also like to stress that we would like to see a positive outcome of the EFTA-Canada free trade agreement process. These negotiations should also be resumed as soon as possible.

Open markets are important if we are to achieve industrial development. Our current industrial structure and exports are largely based on raw materials. We do however see a potential for industrial development by taking better advantage of the relatively cheap skilled labour force in Norway. Our engineers are high-class, but reasonably paid. They are therefore an apparent comparative advantage in skill-intensive production. Norway is however in itself to small a market for most of the products. Hence, we rely on trade.

(Sheet: Innovation Challenges)

In general, I believe Norway has an excellent basis for economic growth. In industries like the petroleum, maritime, and metals sectors our industrial and research communities possess expertise of high international standard. Our industry also has proven record of innovation and ability to adapt to market needs. At the same time we have some challenges.

As I have already mentioned, we have seen a trend with emigration of low-tech firms. In the years to come, the share of workers relative to pensioners will most likely be reduced, due to demographic factors. And we clearly need growth in non-petroleum trade and industry. In light of these challenges, the comparatively low levels of innovation in the Norwegian economy have given rise to concerns.

The Governments’ answer has been to establish an increase in innovation levels across the economy as a main priority.

(Sheet: Increasing our Innovation Capacity is Fundamental)

The Government has launched a plan for a comprehensive innovation policy. The plan aims at engaging both private and public actors in dealing with the innovation challenge. Good co-ordination across policy sectors in order to facilitate innovation is a main theme in the plan. Removing obstacles to innovation in the body of laws and regulations is one example.

Another – and a very important one – is research and development. The Government has stated that Norway shall be in the forefront in prioritised areas in research and technology. In order to achieve this, we do for one thing need to be an active player on the international research and technology arena. Our participation in this arena has to be based on national strengths in research and technology. Such strengths are both an entry-ticket into international co-operation, and a pre-requisite for being able to make use of new knowledge.

In addition, we need to increase our ability to transform knowledge into new competitive products and processes. This, I believe, what innovation is all about.

(Sheet: Complete Revision of Public Instruments of Policy)

To further encourage innovation, the Government initiated a complete revision of the whole set of policy instruments for industrial research and business support in 2001. A preposition on the issue was approved by the Parliament in June. Parliament agreed that innovation should be a guiding star for all our policy instruments in the field of industrial research and business support.

Currently, we have a complex set of schemes, programs and institutions, targeting various sectors and objectives. In sum, they could hardly be described as being guided by one consistent policy. Now we have established a single, clear‑cut objective to guide the whole set of policy instruments: to increase innovation in business activities all over the country.

By doing this we also believe we have initiated a shift in trade and industry policy in Norway. This is not least evident by the fact that we have established three focus areas and five target groups for our policy instruments.

We have defined three core areas that shall be the focus of all public schemes, programs and institutions involved in business support. These are:

• Internationalisation
• Research and knowledge
• Idea, development and commercialisation

We strongly believe these are fundamental areas with respect to increasing innovation levels. We also believe it is within these areas publicly funded instruments of policy means will have the greatest impact on innovation levels, and thus the greatest potential for increased value creation.

(Sheet: Innovation – internationalisation)

The reason for establishing internationalisation as a priority area is that we know that companies with international activities are more innovative than those only serving the domestic market. They are exposed to new ideas, experiences and knowledge more frequently that their national counterparts. They also need to innovate more in order to expand in international markets.

It is a particular challenge to make sure that not only big firms take advantage of the possibilities in international markets. New high-tech start-ups for instance often need access to international markets in order to grow and prosper. They are therefore included in our target groups, which I will turn to next.

Before moving on to our target groups, I would however like to underline that we will put a lot of effort into making sure that innovation, regional development and internationalisation is well linked, and treated as a whole. We need to apply an international perspective on our local efforts at innovation, and a local perspective on our international efforts.

(Sheet: Public support will be targeted at….)

A clear and consistent objective and defined core areas are important. However, we also want to see public support targeted at groups with a potential for innovation and value creation. Target groups for our policy instruments will be the four groups listed here.

I would like to emphasise that entrepreneurship is a clear priority, both in this context and in the wider innovation context. This has to do with the fact that entrepreneurs are fundamental if we are to achieve switchovers in our production and have new entries and increased flexibility in our economy. I also want to underline that the innovative potential of the whole population must be utilised. Increasing female entrepreneurship is one important challenge.

Innovation systems are not users per se. Still, a focus on innovation systems stresses the importance of developing networks to support entrepreneurs. Stronger links between entrepreneurs on the one side and enterprises, R&D institutions, banks and public institutions on the other is an important criterion for success.

(Sheet: New Organisation – Key to Success)

In the process of reviewing our policy instruments, one prominent issue has been how the public instruments should be organised in order to reach the objective of increased innovation. The conclusion was that a new entity focusing on innovation and internationalisation should be established. The new entity will be formally established 1 January 2004.

The new entity will be a merger of existing public funding and programs within the four institutions listed here.

(Sheet: Substantial portfolio….)

The new entity will have a broad portfolio of public schemes and programmes within the four main areas to the left on the sheet. “Marketing” includes both marketing of Norway as a tourist destination and marketing of Norwegian trade and industry abroad. With such a broad portfolio the new entity will be the dominant governmental instrument targeting profitable and innovative industrial and commercial development.

Another major actor in Norway is the Norwegian Research Council. Good co-operation and a clear division of labour between these two institutions are important issues, and will be addressed shortly.

(Sheet: Managing principle: user-friendliness)

The establishment of the new organisation implies a merger of the existing regional offices belonging to the Industrial and Regional Development Fund and the offices abroad belonging to the Norwegian Trade Council and the Norwegian Tourist Board into one integrated network of offices. By connecting the offices, we establish a "One Stop Shop" to all our instruments of policy.

This is in line with what has been a guiding principle for us, namely to increase user-friendliness. We want the users to meet accessible, comprehensive, competent and efficient public policy instruments. Clearly, for the customer, how we organise the instruments of policy is of limited interest as long as the services offered are easily accessible.

The new organisation will focus on the priority areas and target groups mentioned earlier also when they are operating abroad. Entrepreneurs, new firms, researchers and small firms with a potential for growth will be a main concern. Our Foreign Service will however have a broader approach to trade policy, export promotion, marketing abroad, travel promotion and relations with foreign authorities. This includes assisting large companies and established trade and industry.

The representatives of the new institution abroad shall as a guiding principle be more integrated in our Foreign Service than what has been the case so far with the Norwegian Trade Council and The Norwegian Tourist Board. Clearly, this will pave the way for closer co-operation abroad and a more coherent approach to all Norwegian business and industry.

Ladies and gentlemen,

The Norwegian Government is seeking to develop a new and modern policy for industrial research and business development. In doing so, it focuses on innovation. Hence, we are developing a more comprehensive plan for innovation policy, and we are in the process of establishing a new organisation with innovation and internationalisation as main targets.

I strongly believe these are key elements in a policy that will make us able to move forward in the emerging global information and knowledge economy.

Thank you for your attention.