Arctic Yearbook 2014 - Page 326

326 Arctic Yearbook 2014   a sovereign and independent state as the Kingdom of Iceland, having a common king with the Kingdom of Denmark since 1918. It would last another 14 years before Iceland would declare the republic it is today. At the moment, we all know Iceland as an exceptionally highly developed independent very small state, with one of the highest levels of human development in the world (number 13; notwithstanding the 2008 financial crisis) (UNDP 2013). This development raises the question: what explains Iceland’s remarkable political and socio-economic achievements over the 1900s? In this article it is argued that an important explanation of those achievements is the combination of a strong educational sector, strong human capital and abundant natural resources (Bertelsen & Hansen 2014; Bertelsen, Justinussen & Smits 2014). Iceland is a natural resources-based economy as are all Arctic economies. In particular marine resources (which are outside the scope of this article) and renewable energy resources (the topic of this article) have played and continue to play a key role in the Icelandic economy and society. Icelandic exports have overwhelmingly been based on marine resources since the mechanization of Icelandic fisheries (the industrialization of Iceland) in the early 1900s. Iceland, as a micro or very small island economy and peripheral to the world economy, has throughout its independent history struggled to develop and diversify its economy. This struggle to diversify and develop the Icelandic economy was closely connected with Iceland’s other great natural resource: renewable hydro- and geothermal energy (Ármannsson 2005; Ísleifsson 2007; Jónsson 2005; Karlsdóttir 2010; Kristinsson 2005; Kristjánsson 1997; Pálsdóttir 2005; Ragnarsson 1975, 1976, 1977; Sigurðsson 2002; Þórðarson 2004). The authors argue that Iceland has managed to create a domestically controlled, globally connected, knowledge-based energy sector (Bertelsen & Hansen 2014; Bertelsen, Justinussen & Smits 2014). This development has created work and intellectual opportunities for Icelanders at home and increasingly abroad. This development was driven by a fortuitous combination of a strong domestic tradition of primary, secondary, increasingly tertiary, and vocational education combined with a strong and successful tradition of “brain circulation”: by going abroad for study or work experience and returning to Iceland with new knowledge and networks. This section of the article will discuss how this combination has laid the foundation of this domestically controlled, globally connected, knowledg