It is not known that Norway uses GDP MN for such purposes in other international statistical reporting. Clearly, Norway’s education expenditures appear higher when using GDP MN instead of total GDP. The Ministry of Education has contacted Statistics Norway to assess the use of GDP MN versus total GDP as the reference measure in this statistical reporting.

In the share measurements published in EaG, Norway ranks at the top when GDP MN is used. The report shows that if total GDP were used, Norway’s education expenditures as a percentage of GDP would rank somewhat lower.

An immediate challenge in preparing the report was the availability of a consistent time series for total education expenditures in the OECD database. Due to a relatively short time series (2012–2021) with several breaks, it was decided—given the purpose of the report—to use COFOG data, i.e., data on general government expenditures by function. EaG also includes expenditures financed by other sectors, but in Norway, the share financed by general government is dominant (95 percent). Using COFOG data also allows for a longer and more consistent time series, which makes it possible to highlight certain years where the choice between GDP and GDP MN as reference measures has significant impact.

It is found that, on average, the share of education expenditures is 1.3 percentage points higher when using GDP MN (6.4 percent) than when using total GDP for the period 2005 to 2024. Similarly, when using income measures as the reference, the expenditure share is on average 1.2 percentage points higher when using petroleum-adjusted gross national income (6.2 percent) compared to total gross national income over the same period.

In addition to affecting the level of education expenditure shares, the choice of reference measure can also influence observed changes. By decomposing the development in the share of education expenditures relative to GDP and GDP MN, it is found that major global economic events have affected total GDP more than GDP MN. This results in greater volatility in the share of education expenditures relative to GDP, which reflects changes in GDP rather than in education policy.

According to recently updated international guidelines for national accounts, the cost of using non-renewable natural resources should now be taken into account. The implementation of these updated guidelines may make it more relevant to use net national product (NNP) rather than various GDP measures in such reference calculations going forward.

No clear recommendation is given in the report to change the reporting to OECD’s Education at a Glance from using GDP MN to total GDP. In the final part of the report, several factors are highlighted for reflection when choosing between the two GDP measures. It is worth noting that in a parallel OECD publication on health expenditures, Norwegian health expenditures are measured as a share of total GDP, not GDP MN.

The need for a GDP measure that excluded activity considered “foreign to the domestic economy” emerged in the mid-1970s as the size and significance of the petroleum sector increased. The rationale for GDP MN was clearly not related to a need for a new and presumably more stable reference measure, but rather to better understand developments in the rest of the economy and thereby enable better-informed decisions and more targeted economic policy. Over time, GDP MN has become a widely used concept in Norway, including in reference measurements.

This report is financed by the Ministry of Education and Research.