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The production and export structure of the Icelandic economy. An international comparison

  • Bjarni G. Einarsson
  • Gudjón Emilsson
  • Svava J. Haraldsdóttir
  • Ólafur Ö. Klemensson
  • Thórarinn G. Pétursson
  • Rósa B. Sveinsdóttir

This paper describes the production and export structure of the Icelandic economy and compares it to other developed countries. We find that the composition of gross value added and investment is very similar to other developed countries with the exception of the high share of fisheries in Iceland. The organisational structure of the corporate sector is also found to be broadly similar. Despite its small size and narrow range of domestic production, the Icelandic economy is neither found to be markedly more open to trade than the average developed economy. It is, however, relatively integrated in terms of international finance. The EU and the euro area are Iceland’s most important export markets and only a handful of countries in Europe have a higher share of exports to the EU and the euro area. Icelandic exports are however concentrated in few products and significantly diverges from the composition of exports in the average developed country with high dependence on commodities exports. Export production is also less sophisticated than in comparable countries with Icelandic export sectors less interconnected with other production sectors than in other developed countries. Despite a narrow export base, the volatility of export and terms of trade are found to be similar to that of other developed countries and the volatility of terms of trade is found to be lower than among other commodity exporters.

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Paper provided by Department of Economics, Central bank of Iceland in its series Economics with number wp60.

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Date of creation: Jan 2013
Date of revision:
Handle: RePEc:ice:wpaper:wp60
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  1. Gerlach, Stefan, 1999. "Who targets inflation explicitly?," European Economic Review, Elsevier, vol. 43(7), pages 1257-1277, June.
  2. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
  3. Francis Breedon & Thórarinn G. Pétursson & Andrew K. Rose, 2011. "Exchange Rate Policy in Small Rich Economies," Economics wp53, Department of Economics, Central bank of Iceland.
  4. Andersen, Torben M. & Herbertsson, Tryggvi Thor, 2003. "Measuring Globalization," IZA Discussion Papers 817, Institute for the Study of Labor (IZA).
  5. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
  6. Francis Breedon & Thórarinn G. Pétursson, 2006. "Out in the cold? Iceland's trade performance outside the European Union and European Monetary Union," Cambridge Journal of Economics, Oxford University Press, vol. 30(5), pages 723-736, September.
  7. Bjarni G. Einarsson & Gudjón Emilsson & Svava J. Haraldsdóttir & Thórarinn G. Pétursson & Rósa B. Sveinsdóttir, 2013. "On our own? The Icelandic business cycle in an international context," Economics wp63, Department of Economics, Central bank of Iceland.
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