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Comparative economic
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introduction
Capitalism is an economic system based on private ownership of the means of production
and their operation for profit. Characteristics central to capitalism include private property,
capital accumulation, wage labor, voluntary exchange, a price system, and competitive
markets.

Socialism is a range of economic and social systems characterized by social ownership and
democratic control of the means of production; as well as the political ideologies, theories,
and movements that aim to establish them.

So we select two different two different countries Portugal a capitalist country and Norway a
socialist countries in this report we describe the economic system type and facts about these
two countries.

Norway

Norway Economic Structure

Norways annual GDP which is measured in constant prices dipped for the first time in 20
years. However, Norways mainland GDP excludes its powerful oil and gas sectors as well as
the shipping industry. The countrys GDP and GDP Mainland dipped by 1.5 per cent from
2008 to 2009. Despite this first GDP drop, Norway's economy did not suffer the worst of the
global economic crisis due to the performance of its all important oil and gas sector. This
Scandinavian country is the fifth largest exporter of oil in the world. It is also the worlds
third largest natural gas exporter. Norway is expected to surpass Canada and soon emerge
as the worlds second largest natural gas producer.

Norway Economic Structure: Primary Sector

At the turn of the 20th century, Norways economy largely rested on its primary sector
spanning fishing, agriculture and forestry. Traditional economic activities included fish
farming and fisheries too. For women in Norway, fish processing has always an important
source of employment and fish farming continues to develop so as to expand to more
varieties. Agricultural prospects of this economic structure began to change with the
development of hydroelectric power through the various waterfalls in the country.

Norway Economic Structure: Secondary Sector

The availability of cheap electricity triggered expansion of Norway secondary sector. Norway
economic structure witnessed a growth-oriented change as it spearheaded metallurgical and
chemical manufacturing activities. Manufacturing of iron alloys, aluminum and fertilizers
began on a large scale. Shipbuilding and furniture making also emerged as thriving
economic activities in Norway secondary sector. In fact, Norway has the fourth largest fleet
in the world.

Norway Economic Structure: Tertiary Sector

The retailing industry is expanding well in the Norway tertiary sector. Norways four major
grocery retailers, Norgesgruppen, Coop Norge, Reitangruppen, and ICA Norge head the
overall retailing market in Norway, with their combined value share of 36%. They follow the
traditional, store-based retail model. Norways leading home shopping companies, De
norkske bokklubbene and Redcats, reported that 50% of their sales are through Internet
orders. It is clear that Internet retailing in Norway is fast evolving as a popular option for
consumers who enjoy online shopping and its simple order process.

Norways competitive economy benefits from openness to global commerce and a regulatory
environment that encourages entrepreneurial activity. Monetary stability is well maintained,
and the independent judicial system provides strong protection of property rights.

The accumulation of assets from hydrocarbon production in the National Wealth Fund has
provided a cushion for fiscal stimulus. In an effort to attract foreign investment and diversify
the oil-dependent economy, a multi-year measure to reduce the top corporate tax rate has
lowered the tax rate to 25 percent, with further planned reductions to 24 percent in 2017 and
23 percent in 2018.

Facts

Background
Norway has been a member of NATO since 1949. Voters have twice rejected membership in
the European Union, but Norway is a party to a European Free Trade Association
agreement. Prime Minister Erna Solberg of the Conservative Party was elected in September
2013 and leads a center-right coalition minority government. Norway is one of the worlds
most prosperous countries. It saves a large portion of its petroleum-sector revenues,
including dividends from the partially state-owned Statoil and taxes from oil and gas
companies operating in Norway. Low oil prices have been a drag on the economy, and
Norway made a withdrawal from its Government Pension Fund Global for the first time ever
in March 2016.

Rule of LawView Methodology

Property Rights 86.7 Create a Graph using this measurement

Government Integrity 88.3 Create a Graph using this measurement

Judicial Effectiveness 83.3 Create a Graph using this measurement

Private property rights are securely protected, and commercial contracts are reliably
enforced. The judiciary is independent, and the court system operates fairly at the local and
national levels. Norway is one of the worlds least corrupt countries and is ranked fifth out of
168 countries in Transparency Internationals 2015 Corruption Perceptions Index. Well-
established anticorruption measures reinforce a cultural emphasis on government integrity.

Government SizeView Methodology

Government Spending 38.5 Create a Graph using this measurement

Tax Burden 55.6 Create a Graph using this measurement

Fiscal Health 98.4 Create a Graph using this measurement

The top personal income tax rate is 47.8 percent, and the corporate tax rate has been cut to
25 percent. Other taxes include a value-added tax and environmental taxes. The overall tax
burden equals 39.1 percent of total domestic income. Government spending has amounted to
45.3 percent of total output (GDP) over the past three years, and budget surpluses have
averaged 8.1 percent of GDP. Public debt is equivalent to 27.9 percent of GDP.

Regulatory EfficiencyView Methodology

Business Freedom 89.5 Create a Graph using this measurement

Labor Freedom 48.8 Create a Graph using this measurement

Monetary Freedom 75.8 Create a Graph using this measurement

Norways transparent and efficient regulatory framework facilitates entrepreneurial activity

and innovation. The labor market lacks flexibility, but the nonsalary cost of employment is
not high in comparison to other countries in the region. Monetary stability has been well
maintained. The IMF has recommended that the government reduce its restrictive subsidies
on agriculture and supply controls on the housing market.

Open MarketsView Methodology

Trade Freedom 87.7 Create a Graph using this measurement

Investment Freedom 75.0 Create a Graph using this measurement

Financial Freedom 60.0 Create a Graph using this measurement

Trade is important to Norways economy; the value of exports and imports taken together
equals 69 percent of GDP. The average applied tariff rate is 1.2 percent, and nontariff
barriers restrict agricultural imports. State-owned enterprises distort the economy. Credit is
allocated on market terms, and banks offer a wide array of services. The government retains
ownership of Norways largest financial institution.

Portugal

Portugal Government and Politics

Portugal is a democratic republic with an established system of government, both
presidential and parliamentary. The Government is one of the four sovereignty bodies of the
Portuguese Republic, together with the President, the Assembly and the courts. The role of
the Government includes political, legislative and administrative functions, as well as the
power to negotiate with other countries or international organizations, submitting bills to the
Assembly and issuing decrees.

Portugal has made remarkable political progress after 1974. It replaced the authoritarian-
corporatist regime of Salazar, and as of the beginning of the 1990s, the country appeared to
have successfully made the transition to democracy.

Each president is elected to a five-year term with a maximum of two consecutive terms. The
current President of Portugal is Anbal Cavaco Silva who was elected in March 2006 and is
a member of PSD Portugals Social Democratic Party.

Apart from the President, The Prime Minister also holds an important role in Portugal. The
present Prime Minister is Pedro Passos Coelho, who took office on 21 June 2011 as the 12th
Prime Minister of Portugal and leader of the Social Democratic Party (PSD). As chief
executive, the Prime Minister coordinates the action of ministers, representing the
Government of Portugal from the other bodies of state, is accountable to Parliament and
keeps the President informed.

Since 1975 the party system is dominated by the social democratic Socialist Party and the
liberal conservative Social Democratic Party. Both parties are very pro-European and have
similar political views with a strong focus on market economy.

Economy
Portugals central bank is called Banco de Portugal and the two largest banks are Banco
Comercial Portugus and the state-owned Caixa Geral de Depositos. The national currency
is now the Euro which replaced Escudos on 1 January 1999 and was removed from
circulation on 28 February 2002.

In general, Portugals financial system is well managed, competitive and healthy and since
its membership of the European Union in 1986. According to the Global Competitiveness
Report for 2013-2014, published by the World Economic Forum, Portugal was placed 51st
on the economic index.

However the financial crisis of 2008 does continue to affect the Portuguese economy and
cause a wide range of domestic problems that are specifically related to the levels of public
deficit as well as the excessive debt levels. Nonetheless, the government faces tough choices
in regard to its attempts to stimulate the economy while it also seeks to maintain its public
deficit around the EU average.

The Minister of Economy, Antnio Pires de Lima displayed his proactive attitude by stating
that Portugal has technically emerged from recession, but they must continue to be very
persistent so this recovery can be consolidated. He also added that the Portuguese economy
is experiencing a turning point, and the data confirms that.

Portugal continues to grow and expand mainly due to their improved international trade
contacts. It is also home to a number of notable leading companies with worldwide
reputations, such as Grupo Portucel Soporcel, a major world player in the international
paper market; Sonae Industrial, the largest producer of wood-based panels in the
world; Corticeira Amorim, the world leader in cork production; and Conserves Ramirez, the
oldest operational canned fish producer.

Other main industries contributing to the economy, include oil refineries, cement production,
plastic products, textiles, construction, steel, footwear, leather, wine production and of course
tourism. The tourism industry is becoming increasing important to the Portuguese economy
especially in the Algarve. A large part of the national income is generated by tourism which
is also a valuable source of foreign currency.

Although a substantial amount of Portugal is dedicated to agriculture, exports in farming do

not make up the majority of the economy as they once did. The country has now become more
focused on commerce and the service sector, which includes public service, wholesale and
retail trade, real estate, banking and finance.

The Portuguese government has put a lot of effort into raising the standard of living and
according to the 2014 index of Number, the worlds largest database of countries worldwide,
Portugal was placed in the top 25 in terms of quality of life ahead of countries like Spain,
Italy, Hong Kong and China.

Facts
Portugal continues to face challenges that require urgent economic policy adjustment.
Previous reforms, which had helped to modify and diversify the economys productive base,
have lost their momentum. Despite sound institutional settings such as an efficient business
framework and an independent judicial system, the indebted and inefficient public sector has
worn away the dynamism of the private sector and reduced the economys overall
competitiveness.

Reform priorities include reducing budget deficits that have elevated the level of public debt
to more than 100 percent of GDP and enhancing the flexibility of the labor market. However,
the pace of reform has slowed. The banking system remains weak.

Background
The governing center-right coalition won the most seats in the October 2015 parliamentary
elections but lost its majority. Shortly thereafter, Socialist former Lisbon Mayor Antnio
Costa joined leftist parties in the parliament to topple the government. In November 2015,
Costa was appointed prime minister. The anti-austerity government has slowed economic
reforms, causing friction with the European Union and International Monetary Fund.
Adherence to strict budgetary discipline had allowed Portugal to move beyond the worst of
its economic crisis, but growth has slowed, and Portugal failed to meet the EU-mandated
deficit reduction target. Unemployment is high, especially among younger Portuguese, many
of whom have moved abroad for work.

Rule of LawView Methodology

Property Rights 73.3 Create a Graph using this measurement

Government Integrity 59.0 Create a Graph using this measurement

Judicial Effectiveness 68.9 Create a Graph using this measurement

Registration of property is fairly easy and can be done quickly online. According to the World
Banks 2015 Doing Business report, registration is faster and simpler than in most other
OECD countries. The constitution provides for an independent judiciary, but staff shortages
and inefficiency have contributed to a considerable case backlog. Portugal continued to
struggle with corruption scandals during the past year.

Government SizeView Methodology

Government Spending 25.1 Create a Graph using this measurement

Tax Burden 59.8 Create a Graph using this measurement

Fiscal Health 32.1 Create a Graph using this measurement

The top personal income tax rate is 48 percent, and the top corporate tax rate is 21 percent.
Other taxes include a value-added tax. The overall tax burden equals 34.4 percent of total
domestic income. Government spending has amounted to 50 percent of total output (GDP)
over the past three years, and budget deficits have averaged 5.5 percent of GDP. Public debt
is equivalent to 128.8 percent of GDP.
 Regulatory EfficiencyView Methodology
Business Freedom 86.4 Create a Graph using this measurement

Labor Freedom 43.4 Create a Graph using this measurement

Monetary Freedom 85.9 Create a Graph using this measurement

The overall regulatory framework is efficient. Rules regarding the formation and operation of
private enterprises are relatively straightforward. Labor regulations on dismissals and the
use of temporary contracts remain burdensome and costly. The continuing inefficient
operation of remaining state-owned enterprises requires ongoing subsidization. A multi-year
bailout of the banking system has cost the government billions.

Open MarketsView Methodology

Trade Freedom 87.0 Create a Graph using this measurement

Investment Freedom 70.0 Create a Graph using this measurement

Financial Freedom 60.0 Create a Graph using this measurement

Trade is important to Portugals economy; the value of exports and imports taken together
equals 80 percent of GDP. The average applied tariff rate is 1.5 percent. In general, the
government does not screen or discriminate against foreign investment. Despite some
progress toward stability, the financial system continues to face substantial risks. The
banking sector remains weak, and the share of nonperforming loans is rising.