Manufacturing Dynamics in Norway: The Effects of Establishing a Centralized Oil Sector on Structural Change and Growth

Abstract

In this thesis, we analyze how establishing a centralized oil sector impacts structural change and growth for the surrounding manufacturing sector and its sub-industries. Using manufacturing statistics from the two Norwegian counties, Rogaland and Sør-Trøndelag, we utilize the natural experiment where the Norwegian oil sector was established and centralized in Stavanger in Rogaland. On the sector level for manufacturing, we find increased gross production, value added and number of employed workers. Simultaneously, within the manufacturing sector, we find changes in structural composition favoring sub-industries that are likely to have the potential to provide necessary goods to an emerging oil sector, at the expense of non-oil-related sub-industries. Furthermore, our results suggest that these oil-related sub-industries experience significant increases in productivity and salary per worker, indicating that the establishment of the oil sector not only reshapes the structural composition of the manufacturing sector but also improves the economic outcome for workers within the oil-related sub-industries.