Iceland: economy, industry, agriculture, standard of living

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

Iceland is an island nation located northwest of Europe, in the middle of the Atlantic Ocean, not far from Greenland. The origin of the name is associated with a harsh and cold climate. In literal translation, it is called the country of ice or the ice country. Iceland is an island with an area of 103,000 km2 along with small islands around it.

The capital of the state is the city of Reykjavik. 202 thousand people live in it. Cities in Iceland are clean, tidy, and look respectable. Among the largest are Kopavogur, Hafnarfjordur, Akureyri. There are city-communities and municipalities, port cities: Gardabair, Akranes, Selfoss, Grindavik, Siglufjordur, Torlaukshebn and others.

The history of Iceland began in the 9th century. There are very few resources on the island. Nevertheless, the UN declared Iceland the most comfortable country to live in. The economy in this state is well developed, although it has its drawbacks. The standard of living in Iceland is high and income distribution isuniform. Crises are rare.

Natural conditions

Despite the presence of signs of glaciation, the climate here is milder than the average for these latitudes. This is due to its oceanic nature. It is classified as a marine moderately cool type. It is humid, windy and the weather is very changeable. There is no marine glaciation near the island.

In general, Iceland's natural conditions are quite unfavorable. Bare lifeless spaces or a kind of tundra prevail. Sheep grazing contributes to this. Previously, forests were actively cut down, after which they were almost not restored. Naturally, all this has a negative impact on the development of the economy of this island nation.

Iceland has a population of 353,070 and a density of 3.1/km2. The country's GDP is $23 billion, and the GDP per capita is $70.3 thousand.

Transportation

There are no railways on the island. Transport communication is carried out by means of road, sea and air transport. Road transport is represented by buses, cars and trucks. The most practical type of vehicle in this country is a car. This is due to the low density of the transport network and the sparseness of the population.

Economy

Iceland's economy is very sophisticated and well developed. It is based on the Scandinavian model and perfectly fits the realities of the modern world. The country is characterized by rapid economic growth, equal distribution of income andlow unemployment. In recent years, tourism has been actively developing in the country, which leads to the diversification of the Icelandic economy and its further growth.

Although the crisis of 2008-2009 had a great negative impact on the country's economy, already in 2010 many indicators recovered. In 2013, the gross domestic product reached the pre-crisis level.

In 2017, the total GDP of Iceland was 16.8 billion dollars, and per person - 67.5 thousand dollars (nominal).

At the same time, Iceland has the world's largest external public debt (699% of GDP in 2012).

Financial activity

Active development of the country's financial system began in the late 90s of the 20th century. Despite the fact that the basis of the local economy is fishing, Iceland has managed to become one of the leaders in the field of financial activity in Europe. This led to the stimulation of economic growth, an increase in the income of the population, but at the same time increased the country's dependence on world currency fluctuations. That is why the crisis of 2008 affected the situation in this island nation so hard.

Industry of Iceland

There are practically no natural resources in the country, the basis of the economy is catching and processing fish. In total exports, fish products account for 63 percent, and 1.3 million tons are caught annually. Environmental regulations for catching fish are getting tougher every now and then. The country is interested in preserving its natural resources. There are catch quotas, bans on certain speciesfishing. A complete or partial ban on fishing may be introduced in some areas.

Important commercial fish species are cod and herring. And due to the reduction of stocks, they also began to catch capelin and saithe.

In addition to fishing, the country is engaged in aluminum smelting based on imported raw materials. In addition, shoes, metal products, furniture, electrical equipment, building materials, and clothing are produced here. Mineral fertilizers are produced near Reykjavik. Also in the country there is a cement plant and a plant for the production of an alloy of iron and silicon. The production of metal sheets is widespread.

Electric energy is produced from renewable sources (geothermal and hydropower). Oil comes from Norway and the UK. It is required for the operation of the fishing fleet.

Farming in Iceland

The country is dominated by farming, represented by animal husbandry. Once the island was covered with birch forests, but they were gradually destroyed, and various kinds of wastelands formed in their place. Sheep are now bred there, which are the main domestic animal species in Iceland.

In the 19th century, 70-80 percent of the inhabitants of the island were involved in agriculture. However, in the 21st century this share is only 5%. Livestock grazing fully covers the country's needs for meat and milk.

In 2006 there were 4,500 farms (mostly private). In 2008, there were 460 thousand sheep, 130thousand heads of cattle, 75 thousand horses, 200 thousand chickens, 4000 pigs and 500 goats.

As for the cultivation of crops, this direction is poorly developed. Only 1% of the total territory of the country is cultivated fields. These are usually low-lying areas. Grow vegetables and flowers. Fruits and vegetables are grown in greenhouses powered by geothermal energy.

All this makes it possible to obtain products such as potatoes, cauliflower, carrots, cabbage, rhubarb, rutabagas, leeks, kale, and more recently also rapeseed and barley.

Recently attempts have been made to grow crops. The global climate is warming and opportunities for agricultural development are expanding. Wheat, barley, and rapeseed began to be grown on a limited scale. Over the past two decades, the wheat harvest has increased more than 20 times and reached 11,000 tons.

Another important feature of Icelandic agriculture is its environmental friendliness. In conditions of a cool and cold climate and sparse vegetation, crops are pest-free. This means that there is no need to use pesticides. Also, there are no harmful industries, and the population density is very low. The air coming from the ocean is quite clean.

Prospects for agricultural development are linked to projected GDP growth and declining inflation.

Economic ties with Russia

In 2005, the trade turnover between the two countries amounted to $55 million. Iceland exported us fish, fish products, as well asindustrial products. Russia sent oil, oil products, lumber, and metal to Iceland. Negotiations are underway on cooperation between the two countries in the field of aluminum production.

At the same time there were problems. Both countries claim the same fish resources in the Barents Sea, which has been a source of controversy in the past. This applies to cod fishing.

Conclusion

Thus, Iceland's economy is one of the best in the world. Despite the harsh conditions, lack of fossils and remoteness from the mainland, various types of economic activity are well established here. The population allows itself to live quite richly. At the same time, the economy is built in such a way that it almost does not pollute the environment.

The disadvantages of the Icelandic economy are high public debt and sensitivity to global financial crises.