28. ágúst 1997
Ræða Halldórs Ásgrímssonar, utanríkisráðherra
á námsstefnu um hátækni- og hugbúnaðariðnaðinn
The Economic Policy of the Icelandic Government
and Support for Industrial Development
Speech by H.E. Mr. Halldór Ásgrímsson,
Minister for Foreign Affairs of Iceland,
at the Seminar on the High-Technology and Software Industry
and Co-operation Opportunities between Finland and Iceland
Ladies and gentlemen,
The main objective of the economic policy of the Icelandic Government is to maintain stability and create conditions for further economic growth and improved standard of living. In this respect, low inflation and similar operating conditions in Iceland and the main competing countries are crucial factors, and are in fact prerequisites for increasing economic diversity and innovation. The economic policy of the Icelandic Government, reflected in the national budget for 1997 and in the budget bill being drafted for 1998, takes into account the increased demand and activity in the national economy. Therefore, the Government's economic policy is characterised by more restraint now than in recent years.
Thus, the Icelandic economic environment has been characterised by a positive development seen in rapid economic growth, low inflation and a decreasing unemployment rate. Last year, Iceland experienced the greatest economic growth since 1987, 5.7% (five point seven percent), which was among the greatest in OECD member states that year. Predictions for the period 1997 to 2001 indicate a yearly growth of 3%, which is somewhat higher than indicated by mean predictions for other OECD member states.
There are various reasons for this favourable development, of which I will mention four important ones. Firstly, in recent years the Icelandic economy has undergone extensive reform, which includes the strengthening of the market economy, the opening up of capital markets and the European Economic Area membership --- the EEA Agreement. Secondly, general economic management has focussed more than previously on ensuring stability and balance in the national economy. Thirdly, there has been general understanding in the country for the restrictions imposed on the national economy by external conditions and for the opportunities to be gained in the long run by pursuing a policy of equilibrium. Finally, favourable external conditions have coincided with good domestic conditions for growth. This is the basis of the progress and improvement in the standard of living, which has taken place in Iceland lately.
One may say that Iceland is a progressive modern European society with a high standard of living and a high level of technology and education. Since the end of the Second World War, Icelanders have rapidly adapted to a changed world and new technologies. This particularly applies to the introduction of personal computers.
When the use of computers and electronic equipment first began spreading, Icelandic authorities determined low import duties on such equipment. This has proved to be a sensible and realistic policy, as computers are very widely used in offices and homes. Therefore, considerable knowledge and experience of working with computers has been gained in Iceland and the development and production of progressive software has proved to be an ideal high-technology industry for Icelandic conditions. This can be explained by low initial investment costs and the broad knowledge of those working in the field.
The production of software and electronic appliances for the fishing industry has proved to be a vigorous part of the development of high-technology industry in Iceland, spreading to other fields. The use of electronic appliances in fish processing and the programming of such equipment are of special importance in this respect. Icelandic ingenuity in the production of computerised scales and grading machines for use at sea and on shore has led the way world-wide for years. Also, integral solutions have been developed for the processing of marine products, based on the collection and interpretation of information at all stages from initial production to final processing, leading to improved overall management of businesses and increased quality of food production in Iceland.
As a further basis for high-technology industry in Iceland in the field of software and electronics, one must point out the progress made in Iceland's communications with the outside world. Since February 1995, Iceland has been connected to the CANTAT optic fibre cable, which is the first of its kind between North America and Europe and capable of conveying ISDN services. In this way, Icelandic businesses base their operations on high-technology communications. In addition to this, Iceland was the first country in the world to complete the transition to an entirely digital public telephone system.
One can not end a short talk on conditions for the development of the high-technology industry in Iceland without referring to education and the level of education in the country. Compulsory schooling is ten years and about 25% of the entire workforce have a university education. A large number of university graduates has studied abroad, mainly in Europe and North America.
The compulsory subjects include two foreign languages: one Scandinavian language, usually Danish, and English. Most of those pursuing secondary education learn a third language, German or French. This facilitates foreign relations and eliminates, for example, the necessity of translating foreign software into Icelandic, although this may be done because market demands.
Regarding the export of software from Iceland, one may say that, roughly speaking, it has doubled each year for the last three to four years. Software exported from Iceland includes computer facsimile, virus protection software, graphical software, business programs and software for administration and recording the working hours of employees, to cite but a few examples.
Icelandic software houses welcome the opportunity offered here to present the most recent Icelandic innovations in this field. Due to the small size of the Icelandic market, software houses are increasingly interested in international Co-operation. This applies to the export of Icelandic technology and ingenuity as well as the possibility of Co-operation such as "joint ventures", direct foreign investment or other types of joint projects. The small size of Icelandic software houses as well as their versatility in catering to the home market give them a singular quality, namely flexibility in designing software which provides integral solutions.
It should also be pointed out that the software industry is probably the industry most easily transferred across trade borders, making the business environment and human resources more important than physical conditions and distances when selecting locations for investment in software production. Iceland is unique in this regard.
Iceland's trade relations with Finland have been exemplary, certain export industries being very important. For example, the Finnish market for kippers and fur is of great importance to Iceland, and the same may be said of the market for fishmeal. Still, there is every reason to increase this trade, and today's meeting contributes to this, which I welcome.
Finally, I would like to convey my gratitude for being given the opportunity to present to you in a few words the attitude of the Icelandic Government towards Icelandic participation in international economic and trade Co-operation. I welcome this seminar on the High-Technology and Software Industry and Co-operation Opportunities between Finland and Iceland and I hope it will further strengthen the trade relations existing between these two friendly nations.