deficit. exchange rate changes will also lead to fluctuations in the value of the petroleum fund. for these reasons alone, the use of petroleum revenues may in periods deviate from the 4 per cent rule. spending was also increased in response to the economic downturn in 2003. we can therefore safely affirm that the fiscal rule has been normative for fiscal policy. nevertheless, over the last years more oil money has flowed into the norwegian economy than earlier. petroleum investment shows a pronounced increase this year. moreover, government petroleum revenue spending has increased in recent years. the fiscal rule is part of a set of economic policy guidelines. the various components of economic policy have varying effects. this is why they have different functions : • monetary policy steers inflation in the medium and long term and can also contribute to smoothing swings in output and employment. • the central government budget – growth in public spending – influences the krone and the size of the internationally exposed business sector in the medium term. government expenditure and revenues must be in balance in the long term. • wage formation, the structure of the economy and incentives determine how efficiently we use our labour resources and other economic resources. there is also an interaction. to give you an example : • in its budget resolutions, the government authorities will attach importance to the effects of the budget on the norwegian economy and will therefore take account of interest rate effects. in this way, they avoid a situation where growth in public spending and the interest rate push the economy in different directions. norway ’ s history as an oil nation goes back to the end of the 1960s. at the beginning of the oil age in norway, the relationship between the use of petroleum revenues and changes in industry structure was highlighted. however, since then, competitiveness in the business sector in norway has deteriorated both due to high wage growth and in later years an appreciation of the krone against our trading partners. costs rose sharply from the mid - 1960s to the mid - 1970s. in subsequent years, costs have varied around this higher level. so far this year, competitiveness in norway ’ s manufacturing industry has been about 5. 5 per cent weaker than the average for the period 1970 - 2004. over the past 30 years, manufacturing has been scaled back in waves. a substantial decline occurred in the period 1977 to 1984 and from 1987 to 1992. the last wave occurred around the turn of the millennium. manufacturing employment decreased by close to 55 000 persons from 1998 to 2004. there are many studies in international literature2

, i believe, a major reason for the restoration of global confidence. the economic recovery has been slow and somewhat choppy, but potential disruptions have also been met with collective responses, which have, in turn, reinforced the belief that the recovery can be sustained. further, the prominence that the group gave to structural reforms of various kinds sent the signal that it was committed not just to dealing with the immediate crisis but to putting in place measures that would significantly reduce the probability of recurrence. as we know from our own experience with structural reform, crisis always presents a window of opportunity to obtain a consensus on reform measures that would just not be possible under normal circumstances. it is for the leadership to grasp this and to push through reforms that meet the needs of changing global circumstances. the group ’ s focus on structural issues was itself an important reason for the credibility it gained for its efforts to manage the crisis. in short, i think that it is a reasonable assessment that the global economy would have been in somewhat different shape today if the g20, or any collective process involving the world ’ s largest economies, had not taken place. the group can certainly draw strength from this as it now shifts focus from dealing with the crisis to dealing with the structural issues that are perceived to have caused it. but, it is precisely at this stage in the process that the challenges to change management arise. as the crisis abates, the common threat perception and collective responsibility inevitably begins to dissipate and the consensus that was visible in the crisis management phase gives way to more individualistic priorities and agendas. how are these manifesting in the g20? dividing lines a number of factors have contributed to the emergence of differences within the group. this should not be surprising in and of itself, given the fact that this is an enormously disparate set of countries. the 20 countries in the group can be classified into categories based on a large number of parameters, each of which implies different policy priorities and, consequently, different approaches to deal with domestic and global conditions. large or small, more or less affluent, net importers or exporters, commodities producers or manufacturers, aging or young populations – whichever way one looks at it, the composition of the group should not inspire much confidence that it can agree on common approaches to the structural issues that confront the global economy. let me explore a few of these dividing lines and their implications for the group. at this juncture, the variability of the recovery across the