A lesson from Iceland what were the keys to Icelands prosperity in the 20th century

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A lesson from Icelandwhat were the keys to
Icelands prosperity in the 20th century?

• Dr. Gudrun Petursdottir
• Director
• Fisheries Research Institute
• University of Iceland
• National Forum of Cabo Verde
• April 9-11 2003

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Where is Iceland?

• Iceland is an island in the North Atlantic, on
  the same meridian as Cabo Verde, but quite a bit
  further North, between 64 and 67 NL.
  

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Climate

• Mean annual temperature is 4C
• Mean annual precipitation around 2000mm.

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Prosperous nation

• In 2002
• Icelands population was close to 280.000.
• Among six richest nations in the world.
• GNP ca 28.000 US per capita.

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The 20eth century

• In 1900
• Icelanders were 75.000 and among the poorest
  nations in Europe, and their number had been
  fairly stable for centuries.
  
• In 2000
• Icelanders were 280.000 and among the richest
  nations in the world.

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In the beginning of the 20th century

• Iceland was not independent.
• There was hardly any infrastructure
• a few elementary schools, no university
• no hospitals
• hardly any roads or bridges
• no man made harbour
• no water/sewage facilities
• communications and trade mostly in the hands of
  the colonial masters.

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What instigated the rapid changes?

• Many converging factors.
• The most important probably the struggle for
  independence.

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Independence

• The fight for independence resulted in limited
  home rule in 1904.
  
• Sovereignty in royal union with Denmark in 1918.
• Full independence with the establishment of a
  republic in 1944.

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Why is independence important?

• Independence can be a resource in itself.
• It kindles national pride and individual
  ambition, creativity and entrepreneurship.
  
• Icelanders took their affairs into their own
  hands and worked hard to build a prosperous
  society.

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Several important factors

• A bank established in 1904 provided much needed
  foreign capital.
  
• Telephone connection established 1906.  
• A steamship company was founded in 1914. Gaining
  control over shipping and trade allowed
  Icelanders to access the markets and sell their
  own products directly .

• The general level of education was relatively
  high.

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Compulsory schooling legalized

• In spite of the fact that the nation was poor,
  the level of education was relatively high.
  
• Illiteracy had been eradicated.
• Compulsory schooling
• 1907 for 10-14 year olds
• 1936 for 7-14 year olds
• 1995 for 6-15 year olds
• Teachers College 1907

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Further education has increased rapidly

• The proportion of

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Education and economic growth go hand in hand

• The national cultural heritage had been well
  preserved and respected throughout history.
  
• It was the backbone of the nations material and
  spiritual advance.

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The state of culture in 2002

• 3 Universities
• 10 Colleges at University level
• 400 books published annually,
• 500 newpaper and magazine titles.
• National and private Broadcasting
• Several Theaters
• National Opera
• Symphonic Orchestras
• Film production
• Art museums and galleries exhibit close to 300
  shows per year
  
• Etc..

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Marine resources most important

• Until 1970 fisheries were by far the most
  important factor in the national economy and
  provided ca 80 of the foreign currency income.

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• In 2002 fisheries are still very important for
  the national economy

• Seafood represents
• 50 of total export revenue - goods and
  services.
  
• 70 of export value of goods.
• Seafood provides
• 15 of the GDP.

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Icelands share is 2 of the world catch (wild).

• World catch 90 million MT (excluding
  aquaculture).
  
• Icelandic catch is
• 2 million MT
• Almost all of Icelands catch is wild - very
  little farming

• Almost 100 of the Iceland catch is exported.
• Iceland has ca 3 of the volume and value in
  international seafood trade.
  

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Why is Iceland s share so large?

• Nutritious fishing grounds
• Modern fishing fleet
• Efficient fishermen
• Modern processing plants
• First class marketing worldwide

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Nutritious fishing grounds

• One of the most important reasons is very
  nutritious fishing grounds
  
• Where hot and cold currents meet, vertical
  currents arise, mixing nutrients between
  different levels of the sea.
  
• This provides some of the best fishing grounds in
  the world.
  

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Modern fleet

• 1700 vessels with fishing permits, thereof ca
  1250 small boats.
  
• Total fishing capacity 120.000 GRT

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The fleet has been built up since the beginning
of the 20th century.

• People have been open to new technology
  throughout the century.
  
• The first engine was installed in a small fishing
  boat in 1902
  
• The first trawler was bought in 1905.

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Productive fishermen

• There are 5000 fishermen in Iceland.
• The picture shows the average catch per fisherman
  in Iceland as compared with Norway, EC and Canada.

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Modern Processing

• About 8000 people work in processing factories.
• These are modernised and increasingly automated.

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Marketing firms

• Marketing and sales were performed by large
  companies that held state granted exclusive
  rights to market certain products.
  
• Marketing was given free in the 1990s

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Main markets

• IFPC sales according to marketing area
  1943-2000
  

• In addition to selling Icelandic products, the
  companies act as brokers for seafood worldwide.
  

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Innovative fisheries

• Icelandic companies now in frontline not only in
  marketing seafood but also as developers of new
  techology.

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Gaining control over the fishing grounds

• Managing the fisheries well is vital.
• Icelanders had to gain control over the fishing
  grounds
  
• and manage the fisheries of their own fleet.

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Gaining control over the fishing grounds

• From 1901-1976, the Icelanders campaigned to gain
  sovereignty of the country's fishing grounds.
  
• During this period Iceland had very little
  control over the fish stocks.

• Effective fisheries management could only be
  based on the sole rights of the fishing grounds.
  
  

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Extensions of the fisheries zone

• In spite of fierce international opposition
  Icelanders extended the fisheries zone from 3
  miles (1901) to
  
• 4 miles 1952
• 12 miles 1958-61
• 50 miles 1972
• 200 miles 1975

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Catches of Icelandic vs foreign vessels

• Note the effect of the EEZ extension in 1975.
• Note reduced catches during WW2.

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Sustainable fisheries

• From 1976 Icelanders have been creating and
  applying a management system for biologically and
  economically sustainable fisheries.

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TAC

• Scientific assessment of marine resources and
  recommendations for fishing restrictions are the
  basis for the annual allocation of the total
  allowable catch (TAC) from the stocks.
• Most of the important stocks are managed by this
  process.

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TACs and catches 1996-2002

• Scientists recommendations (orange) vs decreed
  TACs (blue) and registered catches (green).

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Fortuitous circumstances.The effect of
WW2Technological leap

• Iceland was occupied by the Allied forces in
  WW2.
  
• No battles fought.
• Revolutionized the technological status of the
  nation, as the American forces brought the most
  advanced construction and communication
  technology then available.

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Improved communications in WW2

• During WW2 the Allies built several airports,
  e.g.
  
• International airport which has been run and
  maintained by the Americans since.
  
• Services and construction work for the American
  forces have provided up to 8 of foreign currency
  earnings.
  
• The new technology allowed Icelanders to build an
  extensive network of roads and bridges.

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Air-traffic

• The international airport enabled Icelanders to
  build up several airlines, which have gained a
  notable market share.
  
• 2 of North-Atlantic traffic, and a considerable
  share in chartered flights worldwide.

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Tourism

• International airtraffic enables international
  tourism, which now provides as much foreign
  currency earnings as the most valuable fish
  species, the cod.

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Icelands prosperity now rests on 5 pillars

• Human resources
• Marine resources
• Hydrological and geothermal energy
• Unspoilt natural beauty
• Stable political environment

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The Marine resources are precarious

• Must be harvested in a responsible and
  sustainable way

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Hydrological/Geothermal power stations

• Iceland is rich in waterfalls and geothermal
  areas.
  
• Harnessed
• About 10 of hydrological energy.
• A very small fraction of the geothermal areas.
• This provides all electricity needed and 90 of
  house-heating.

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Electricity for heavy industry

• Increasing industrial use, e.g. for heavy
  industry (aluminum).
  
• Causes conflict of interest with those who wish
  to preserve pristine nature.

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Unspoilt natural beauty, a tourist attraction

• Tourism has been growing steadily.
• Close to 300.000 foreign visitors annually.
• Short season.

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Human resources

• A well educated young generation demands first
  class jobs and living conditions.
  
• Otherwise they may emigrate.

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Stable political enviroment

• In spite of differing agendas and political
  conflicts, no Icelandic government has torn down
  what the previous government built up.
  
• Thus, the growth of the infrastructure has been
  stable.
  
• This political stability has contributed to the
  international trust and recognition that Iceland
  enjoys.
  

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The fruits of hard work

• These were some of the main forces that changed
  Iceland from an underdeveloped and poor country
  to a modern, diversified and prosperous one.
  
• The key is
• good education
• focussed and motivated hard work
• seasoned with a bit of good luck!

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Thank you !
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