ABSTRACT
This chapter provides a short introduction to the role of capital markets, both domestic and international, in modern economic theory. It sketches a picture of the changing nature of Norway's domestic capital markets. The chapter examines Norway's reliance on international capital by focusing on foreign direct investments. Any industrial transformation requires access to capital for investment. Indeed, for many development economists, significant capital formation is the crucial component for development. Norway relied on three channels to access foreign capital: international lending in the form of bonds floated in international financial centers, the capital that came from migrants and foreign direct investment. The chapter focuses on the role of foreign direct investment as a source for funding Norway's nascent industrialization. The balance that was eventually struck relied heavily on licensing requirements that helped infant Norwegian industries get established. Foreign technology, skill and capital were absolutely necessary for developing Norway's industrial and export potential.
