Norway in the 1980s: Competitive Adaptation or Structural Crisis? A Comment on Katzenstein's Small‐State/ Flexible‐Adjustment Thesis

The article comments on Katzenstein's small‐state/flexible adjustment thesis on the basis of the recent economic development in Norway. It is argued that the Norwegian case in the 1970s and 1980s provides a quasi‐experimental situation where the years before and after the 1986 oil‐price fall permit a discussion of some of the limitations of his theory. The article argues that the Katzenstein thesis needs qualifications on at least three points: (1) Size and competitive exposure do not always coincide, as assumed in a strong formulation of the thesis. (2) A discussion of national competitiveness based on highly aggregated indicators may miss important sectoral differences that can be of crucial importance to the national political economy. (3) The question of the adaptive effects of integrative, negotiated and non‐polarized styles of policy‐making in small states has to be modified. Because Katzenstein's basic idea seems theoretically sound, and seems to hold up to at least aggregated data, the issue is not rejection, but rather a modification, and an attempt to specify some of the elements that constitute the relevant condition‐set.