Hawaii urged to learn
from Iceland’s prosperity

What do Iceland and Hawaii have in common? More than you would think, according to East-West Center economists who listened to Iceland's Minister of Finance Geir Haarde speak yesterday during the final day of the Pacific-Asia Free Trade and Development conference held in Hawaii.

The three-day conference titled, "Does Trade Deliver What it Promises? Assessing the Critique of Globalization," brought 60 top business leaders, government officials and trade economists to the state to discuss regional policy questions and issues.

While Iceland is not in the Pacific Rim, it is of interest to this region because it is a volcanic island that once depended mainly on fishing and tourism, but has diversified its economy to include biotechnology, software and geothermal activities.

Iceland's broad economy is one that Hawaii should aspire to follow, said University of Hawaii professor Sumner LaCroix, who serves as a senior research economics fellow at the East-West Center.

"I really believe that we should spend more time looking at Iceland because they've prospered," LaCroix said. "After World War II, they really worked hard to reshape themselves."

The country has expanded its scope by emphasizing education and encouraging liberalization, privatization and deregulation, Haarde said.

"People don't think of Iceland when they are looking for a place to invest," Haarde said. "But that's changing as we have begun building the infrastructure and legal framework that investors seek."

Iceland's krona was the fourth-biggest gainer against the U.S. dollar last year as the Icelandic central bank boosted rates and economic growth surged, according to a Bloomberg News report.

The country's ability to show that business can be done in Iceland has resulted in a better quality of life for residents, Haarde said.

"Our after-tax take-home pay has risen 30 percent in the last 10 years," he said, adding that the $14 billion Icelandic economy is expected to grow another 5 to 6 percent this year.

The country grew 5.8 percent last year, Bloomberg reported.