Iceland: Conquering the Economic Crisis with Entrepreneurship
Amidst all the bad news in Iceland related to the economic crisis and the disruption caused earlier this year by the Eyjafjallajokull volcano, the country has seen some entrepreneurial silver linings. The stream of positive signs I noticed began in March this year when Iceland replaced the United States as the INSEAD world champion in innovation. Then in Dubai that same month, Iceland won the Global Entrepreneurship Congress award for best entrepreneurship movement during the 2009 Global Entrepreneurship Week. And more recently, entrepreneurship was incorporated into public discourse as a main driver of economic regeneration when Iceland’s President led a summit in his country on innovation, entrepreneurship, and green energy. With Iceland getting so much attention for being on the brink of bankruptcy, I thought such good news about signs of an entrepreneur-led economic resurgence deserves note.
Iceland certainly felt the effects of their unprecedented financial collapse. According to an OECD report, domestic demand fell sharply in 2009, and the economy continued to shrink during the first part of this year. The declining economy, combined with news of excess and corruption in the financial sector, caused violent protests, the resignation of a government, and a lingering anger against big business. Kauffman Foundation president and CEO Carl Schramm’s article in the May/June issue of Foreign Affairs introducing a new area of economic inquiry called expeditionary economics was well timed for Iceland. Schramm proposes a new model for how to tackle such collapse whether caused by economic or natural disasters or conflict that emphasizes the formation and growth of firms, ideally firms that are capable of scaling and thus employing many people.
This new doctrine is based on the recognition that a country’s political and social stability stems from economic opportunity and job growth. While the argument in "Expeditionary Economics—Spurring Growth after Conflicts and Disasters” focuses on the reconstruction experiences in war-torn economies, countries like Iceland and Greece deserve considerable attention for they can offer great insights and lessons in this regard from a less dramatic platform for other nations fearful of similar fates.
Iceland’s leaders are clearly committed to an entrepreneurial strategy for recovery. President Ólafur Ragnar Grímsson who led the MIT Global Startup Workshop (GSW) this year spoke under the theme of “Conquering the Economic Crisis with Innovation, Entrepreneurship, and Green Energy.” He attracted entrepreneurial leaders, financiers, students, professors, government agents and other private sector parties to build a global support network for entrepreneurship.
These efforts could quickly take off and generate benefits of innovation, job generation and economic regeneration for Iceland’s economy. The 2009 Eurobarometersurvey reports a favorable attitude towards entrepreneurs in Iceland (82% of the population share this favorable view). And this attitude translates into action. Thorlindur Kjartansson, Chairman of Innovit, a centre for innovation and entrepreneurship in the country, reported recently that even in the midst of a turbulent sociopolitical and economic climate, Iceland has seen a surge of entrepreneurial activity. And much of this activity is focused on high-impact projects. The OECD predicted last November that economic growth will return to Iceland thanks to an expected stabilization of financial conditions coupled with increased investments in large energy-related projects. Iceland’s geography allows the country to be the home of many geothermal ventures and other cleantech ventures. It is estimated that around 80 per cent of Iceland's energy now comes from renewable sources and many argue that the country is further along the road to becoming a low-carbon economy than any other.
While the application of an entrepreneurial growth strategy always varies by country, one of the core tasks is identifying high-growth entrepreneurial opportunities specific to each economy. If Iceland’s innovative entrepreneurs are willing and have a supportive climate to grow new businesses, the country has already embarked on a homegrown path to economic stability and will resurge firmly. European nations threatened with future economic fears might do well to invest now in their own homegrown high-growth potential entrepreneurs. Who knows, maybe they might just be the key to avoid the fiscal doom so many economists predict.
Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.
[photo courtesy Flickr user Stuck in Customs ]