What you are talking about doesn't even describe Norway properly -- they have largely not spent the revenue they got from oil. Instead, it has been collected into a sovereign wealth fund. At present, the fund holds some $100 000 for every Norwegian. Future decline of oil profits will be covered by the investment income from the fund. There hasn't been any cutting of government services to fit revenues -- there hasn't been any need to.
Sweden, like the other Scandinavian countries, has held a responsible and rational budget for most of it's existence as a democratic country. So while it might be incredibly rare for governments worldwide, for some reason it seems that the Scandinavians can make the idea of a well-run welfare state work. I have yet to figure out why they can do it and most of the rest of the world seemingly can't.
Normally an influx of wealth from oil (or other natural resources, even humanitarian aid) will suppress the country's abilities to be competitive in manufacturing or other (non-oil) sectors. It's often called a "Resource Curse" or "Dutch Disease".
Avoiding the curse requires not to spending the oil money directly... and instead to invest it and spend only the interest.
It helps a lot to have a small country with an ethnically homogenous population, extremely low corruption, high tax morale, and high public trust of government offices and institutions.
Maybe, or a big but dictatorial country like China.
an ethnically homogenous population
Care to elaborate? Would you consider countries such as Switzerland, Canada, Taiwan, and Singapore ethnically homogeneous?
extremely low corruption, high tax morale, and high public trust of government offices and institutions.
Chicken and egg problem - High tax compliance and trust in government come from having a reasonable tax rate from which you get a lot of effective government services. Low corruption is a pre-requisite for trust in government institutions.
I bet what also helps is not having a culture of cousin marriage, that seems to create a culture where is much more difficult to have any kind of trust with people outside of your clan.
I think the modern well functioning democracy is to a very large degree a result of complex game theory.
You don't have to look back much more the 2 centuries, to see thousands of years of European history that's full of corruption, lawlessness, crushing tax rates, all the typical modern day 3rd world problems and then some.
If just being Swedish led to modern Sweden, Swedish history would be a lot less interesting. For one, it would almost certainly be entirely Viking free.
http://en.wikipedia.org/wiki/Making_Sweden_an_Oil-Free_Socie...
According to Wikipedia (http://en.wikipedia.org/wiki/Economy_of_Sweden) Sweden's main industries are: telecommunications equipment, wood pulp and paper products, motor vehicles, pharmaceutical products, iron and steel.
That's quite a nice spread.
And ABBA. (I'm only half joking the royalties on their music equal quite a few Volvos.)
... between 1974 and 1982,they earned nearly twice the GNP of Sweden
This too: "When ABBA was active, only the Volvo car company made more money in Sweden.".