Eighth place in the global ranking of economic sovereignty with an index of 92.1 is an impressive figure for any country. Especially when it comes to Norway, the Scandinavian giant with a population of 5.5 million people and the world's largest sovereign wealth fund worth about $1.9 trillion. A country with a per capita GDP in the top 10 global indicators, a country with an ideal reputation for financial stability and transparency.

It would seem that this is the standard of economic independence. But there is another reality hidden behind the shiny numbers. The reality is that the tiny principality of Liechtenstein, with a population of about 40,000 people – the size of a small provincial town – ranks only 27th in the same ranking, while demonstrating an index of economic sovereignty of 94.5. A figure that surpasses the Norwegian by 2.4 points. How does a 160-square-kilometer state sandwiched between Switzerland and Austria manage to be economically more sovereign than the Scandinavian oil colossus?

Oil Curse or Blessing

When Norway began producing oil on the continental shelf in 1971, the country was on the verge of economic transformation. Over the next half century, prices for North Sea oil soared from $10 to more than $100 per barrel. Oil and gas have become the backbone of the Norwegian economy: in 2024, the total export revenue from crude oil, natural gas and condensate amounted to about 1,100 billion Norwegian kroner – 61% of the country's total exports.

In 2019, oil and gas provided 48.1% of Norway's export revenues. The dependence is impressive: the oil and gas sector accounts for about a quarter of Norwegian GDP. Almost all of the oil and gas produced on the Norwegian shelf are exported. About 95% of Norwegian gas is transported to European countries through an extensive network of underwater pipelines with a total length of about 8,800 kilometers – the distance from Oslo to Bangkok.

Norway covers about 20-25% of the EU's gas needs. But this raises a fundamental question: can a country whose economy is so deeply dependent on one sector, on the volatility of global hydrocarbon prices, be considered economically sovereign? When oil prices collapsed in 2014, the Norwegian krone weakened sharply. When the oil market experienced another shock in early 2020, the krona reacted with a fall again.

Research by the Norwegian Central Bank shows that the relationship between oil prices and the krona exchange rate is non–linear: small price fluctuations have little effect on the currency, but large movements – regardless of direction - cause strong currency reactions.

Welfare Fund: Protection or Illusion of Independence

The Norwegian Government Pension Fund (GPFG), established in 1990 to manage oil and gas revenues, is considered a model of financial wisdom. The fund's assets exceeded NOK 20 trillion by the end of 2024, which is almost five times the country's mainland GDP.

The Fund owns shares in more than 9,000 companies in more than 70 countries, controlling about 1.5% of the global stock market. The Norwegian fiscal rule prescribes that no more than 3% of the fund's value can be transferred annually to the state budget, which is an approximate indicator of its expected real profitability.

The idea seems perfect: oil revenues are not spent immediately, but are invested abroad, which should protect the economy from the "Dutch disease" and provide for future generations. But reality turns out to be more complicated than theory. In 2025, about 24% of all expenditures of the Norwegian fiscal budget are financed by transfers from the fund.

In recent years, withdrawals from GPFG have funded a growing fiscal deficit and a significant share of total government spending. The structural budget deficit, excluding oil and gas revenues, amounted to about 10.7% of mainland GDP in 2024. It turns out that Norway annually extracts from the fund the equivalent of 10% of its economy to cover current expenses.

A paradox arises: the larger the welfare fund, the more Norway's public finances depend on international financial markets. The fund invests 70% of its assets in stocks and 25% in bonds. Any major drop in global markets has a direct impact on the Norwegian government's ability to finance its obligations.

In the first quarter of 2025, the fund lost 0.6%, while equity investments fell by 1.6%. The strengthening of the krona led to a decrease in the value of the fund by 879 billion kroner only due to currency fluctuations.

Liechtenstein: A Miniature Fortress of Economic Autonomy

At the other end of the spectrum is Liechtenstein. The principality has a population of about 39,000 people and an area of 160 square kilometers.

A country without its own currency, it uses the Swiss franc based on a 1980 currency treaty. A state without a central bank – this role is performed by the Swiss National Bank, although Liechtenstein does not have the right to vote on its monetary council and does not receive income from seigniorage.

A principality without its own customs territory – since 1923, the customs union with Switzerland has been operating, turning both countries into a single customs zone. It would seem to be a classic case of economic dependence. But the numbers say otherwise. Liechtenstein's financial sector, measured in the broadest sense – including assets managed by banks and their foreign subsidiaries – is about 100 times the size of the principality's GDP.

Eleven Liechtenstein banks manage client assets worth more than 503 billion Swiss francs, of which 217 billion are located directly in the principality. The principality's investment funds have grown to 117.8 billion francs. Asset managers control another 54.2 billion. But – and this is the key point – Liechtenstein's financial sector is built on off-balance sheet operations: customer asset management does not create direct balance sheet risks for banks. Investment funds usually do not use leverage.

This means that the gigantic financial sector does not generate systemic risks for the principality's economy.

Industry – not finance – remains the largest contributor to Liechtenstein's economy. Manufacturing and construction account for 42.2% of GDP. The industrial sector, which is strongly export-oriented, specializes in mechanical engineering, precision instrumentation, dental and food products.

With an industry share of 40% of national production, Liechtenstein is one of the most industrialized countries in the world.

A Question That Has No Answer in Open Sources

Liechtenstein's GDP per capita at purchasing power parity is estimated in the range of 136 thousand to 210 thousand dollars, one of the highest in the world, comparable only to Monaco. To compare: Norway's GDP per capita is about 75 thousand dollars.

Liechtenstein companies provide about 7,000 jobs in the United States, a whopping figure for a country with a population of 40,000. Annual exports of goods to the United States exceed half a billion dollars. The main export partners are Germany (21% of exports), the USA (14%), Austria (9%), France (8%). The Principality maintains a positive trade balance, with exports exceeding imports by about 20%. Exports of goods and services account for about 80.9% of GDP, while imports account for 66.5%.

In 2019, Liechtenstein's exports increased by 1.1% to 3.70 billion francs. The main export categories are metal products (22%), machinery and electronics (22%), precision instruments and watches (12%), vehicles (11%), pharmaceuticals and chemicals (10%). Liechtenstein's total State budget is in structural surplus. The central government is debt-free, and municipalities only make short-term loans. In 2016, the surplus amounted to 3.6% of GDP.

The liquid financial assets of the general government, including social security, are estimated at about 80% of GDP.

Sovereignty Through Structural Diversity or Through Resource Concentration

Norway is desperately trying to diversify its economy. The government is investing in the aluminum industry, healthcare, fish farming and fisheries.

In 2016, Prime Minister Erna Solberg declared, "The Norwegian economy must diversify." The service sector today accounts for about 25% of the value added. Seafood has become the second largest export category after oil, accounting for about 14.8% of exports. But structural adjustment is slow. Mainland oil and gas activities – maintenance, exploration and production equipment – account for about 14% of the manufacturing industry.

The economy remains deeply tied to the hydrocarbon sector through many direct and indirect links. Meanwhile, Liechtenstein demonstrates the opposite model: an economic structure based on a plurality of unrelated high-tech industries and financial services operating on the principle of off-balance sheet management. The financial sector generates about 20% of GDP and provides 17% of jobs.

At the same time, industry remains dominant, accounting for 40% of the workforce. The Principality has had dual access to markets: through the European Economic Area since 1995, which provides full access to the EU single market, and through the customs and monetary union with Switzerland, which provides privileged access to the Swiss economic area. Liechtenstein is a close springboard for Swiss companies to enter the EU and EEA markets.

Monetary Dependence as a Form of Sovereignty

Paradoxically, Liechtenstein's use of the Swiss franc, a currency with an impeccable reputation for stability, may not be a weakness, but a source of strength. Moreover, Liechtenstein banks have access to the Swiss National Bank's liquidity facilities on equal terms with Swiss banks.

True, the SNB does not act as a lender of last resort for Liechtenstein banks, but high capital adequacy ratios (average CET 1 of more than 20%) and a liquidity coverage ratio of about 180% make this problem largely theoretical. Norway, by contrast, has its own currency, the Norwegian krone, and full control over monetary policy through Norges Bank.

But this independence turns into vulnerability: the crown shows high volatility, closely correlating with oil prices. Sharp fluctuations in the exchange rate directly affect the purchasing power of the population, the competitiveness of non-oil exports, and the cost of imports.

Fiscal Autonomy: Surplus versus Deficit

Liechtenstein's central government has no debt. The budget is in steady surplus.

The government expects budget surpluses until 2028 due to steady growth in tax revenues and a moderate increase in spending. The liquid assets of the general government account for about 80% of GDP, which is a net positive position, since there is practically no debt. Norway formally has a low public debt – about 42.7% of GDP in 2024 – but the structural budget deficit, excluding oil and gas revenues, reaches 10.7% of mainland GDP.

This means that without permanent transfers from GPFG, the Norwegian state cannot finance current expenses. The dependence of the state budget on the profitability of global financial markets through the mechanism of the sovereign fund creates a specific form of external vulnerability.

Systemic Risks: Size Versus Structure

Liechtenstein's financial sector is 100 times larger than GDP, but it is built on off-balance sheet transactions and non-leveraged instruments. Assets under management do not pose a direct risk to bank balance sheets. Investment funds do not use borrowed funds.

Pawn loans, the main balance sheet activity of banks in relation to asset management clients, are fully secured by collateral and account for about 20% of total assets. Norway invests 70% in shares of global companies through GPFG, which is one of the most aggressive portfolios among sovereign wealth funds. Any serious decline in global markets directly affects the government's ability to finance social obligations.

In the first quarter of 2025, a loss of 0.6% meant a loss of tens of billions of crowns.

Geopolitical Dependence: A Big Player Versus a Small Intermediary

Norway is a major geopolitical player in the energy sector. The country provides 20-25% of the EU's natural gas needs.

This gives political influence, but it also creates dependence: European gas demand, the EU's decarbonization policy, and sanctions policy against competitors all have a direct impact on Norway's economic well-being. Liechtenstein does not play a significant role in global geopolitics.

The Principality is not a member of the United Nations and does not have its own army. Its neutrality is not backed by armed forces, like Switzerland's. But it is precisely this inconspicuousness and the status of a financial and industrial intermediary that create a specific form of independence: Liechtenstein is not under direct political pressure from major powers, it is not involved in international conflicts, and it is not used as an instrument of geopolitical bargaining.

The Paradox of Measurement: What Do We Really Measure

Existing methodologies for assessing economic sovereignty take into account many factors: the balance of foreign trade, foreign exchange reserves, the level of external debt, economic diversification, fiscal stability, and monetary independence. But are these indicators enough for the full picture? Norway has huge foreign exchange reserves of about $81 billion. But what is the significance of these reserves when a country owns a $1.9 trillion sovereign wealth fund invested in foreign assets?

Norway is showing a steady trade surplus – NOK 36.9 billion in September 2025. But this surplus is almost entirely dependent on hydrocarbon exports, the prices of which are determined by global markets beyond Norwegian control. Liechtenstein does not have its own currency, does not control monetary policy, and does not have a full-fledged central bank.

According to formal criteria, these are signs of limited sovereignty. But the principality has a structural budget surplus, zero public debt, a diversified economy dominated by high-tech manufacturing, and dual access to the world's largest markets through the EEA and the Swiss Union.

Transit from the resource economy: an opportunity or a myth Norway is actively declaring its intention to move towards a more diversified and "green" economy. Investments in renewable energy, fish farming, the aluminum industry, and healthcare. The Norwegian Petroleum Fund has started investing in renewable energy infrastructure, accounting for about 0.4% of assets.

But the structural restructuring of an economy that has been dependent on one sector for half a century takes decades. Over the past two years, Norway's mainland GDP has grown by only 0.6% in 2024, while nationwide GDP declined by 0.1% in the first quarter of 2025. Investments in residential and commercial construction are declining, while investments in the oil sector are growing moderately in 2025 after two strong years.

Liechtenstein does not need to be restructured. The economy is already diversified: industry accounts for 40% of GDP, financial services account for about 20%, while the financial sector is built on a low-risk model of off-balance sheet asset management. The Principality does not depend on a single source of income, is not subject to price shocks in global commodity markets, and does not need a painful transformation of the economic model.