Economic diversification has lured many Icelanders home after decades abroad. Leaving a Harvard professorship in neurology five years ago, Kari Stefansson returned here to found Decode Genetics Inc., a gene-hunting company researching some 60 diseases. But this is my country. Foreigners are coming, too. Western Wireless International, a subsidiary of cell-phone operator Western Wireless Corp. of Bellevue, Washington, five years ago bought a majority stake in telecommunications company Tal hf here.
Privatization has spurred much of the recent growth here, Icelanders say.
Fifteen years ago, government agencies controlled everything from wholesale fish prices to bank interest rates. But with the growth of world trade, the government decided it had to create a competitive business environment, says Geir Hilmar Haarde, Iceland's finance minister. Authorities moved to privatize industries from alcohol to banks, and cut tax rates. But that doesn't mean there aren't still problems. Iceland's tiny size, coupled with its reliance on trade, makes it particularly vulnerable to slowdowns in the global economy, says Edda Ros Karlsdottir, an economic analyst at Bunadarbankinn, a major bank.