Iceland                                         In Search of a Path for                                            Competi...
Overview:                 •      The collapse of the financial system in 2008...                 •      The situation in I...
Iceland´s Financial Collapse in 2008 (1) • After an economic upsving and enourmous expansion of   private banks, in Icelan...
Iceland´s Financial Collapse in 2008 (2) • Assets of the banking sector had been 1xGDP in 2000,   8xGDP in 2006 and ended ...
Iceland´s Financial Collapse in 2008 (3)• The Icelandic State (re)established small domestic banks  (over a weekend) to pr...
The situation in Iceland in 2009 • More people were moving abroad than to the country...   ...both of foreign and Icelandi...
The Strategy 20/20 idea put forward   • Iceland and the Icelandic People had been hit badly...     ...the financial collap...
Why be concerned about                        Iceland’s Competitiveness?•             As well known - a study of a nations...
The Strategy 20/20 Program defined • In the S-LG Government agenda a progressive plan   should be developed – taking the f...
The Strategy 20/20 Program defined • In the S-LG Government agenda a progressive plan   should be developed – taking the f...
The Strategy 20/20 Program defined• A steering group was appointed under leadership of Dagur  Eggertsson, vice chairman of...
The scope of the 20/20 Program• The Strategy 20/20 Program became already from the start  somewhat of an all-inclusive pro...
The Pillars of the 20/20 Program                                                                                   Steerin...
The intentions of the 20/20 Program• To have the Icelandic Parlament agree on that the  Government of Iceland would develo...
Some of the Providers to the Program• The Social Science Institute at the University of Iceland and  The Economic Institut...
The timeline of the 20/20 Program...                                                                  ...until May 2010......
The activities of the 20/20 Program• There was a big emphasis on mobilizing very many  people on a voluntary basis in a st...
The process and outcomes of the Program...• In the beginning of the Program there were both interest  and support. Many pe...
The timeline of the 20/20 Program                June                                         January - March             ...
Learning points – so far...                                                                                       • The 20...
Learning points – so far...                                                                                       • The 20...
Concluding remarks• The Strategy 20/20 Program is one of many activities and  projects that the Government of Iceland has ...
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Iceland in search of a path for competitiveness

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PRESENTATION: Dr. Runólfur Smári Steinþórsson, prófessor,
Viðskiptafræðideild Háskóla Íslands.

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Iceland in search of a path for competitiveness

  1. 1. Iceland In Search of a Path for Competitiveness: A study (in process) of a progressive plan Runólfur Smári Steinþórsson Center for Strategy and Competitiveness This presentation is based on different sources and research done by the presenter. Among the sources is a Status Report on Iceland which was jointly produced by The Social Science Institute and the Economic Institute at the University of Iceland (2009); Meltdown Iceland: Lessons on the World Financial Crisis from a small bankrupt island, by Roger Boyes (2009); information from the World Economic Forum; and information from a recent report from the European Commision on European Economic Forecast in Autumn 2010, as well as publically available material on the Program 20/20 in Iceland via www.island.is Also, there is information that is based on a discussion in a seminar on Competitiveness andProfessor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop, the 20/20 program, held at the University of Iceland Dec. 8, 2010.Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  2. 2. Overview: • The collapse of the financial system in 2008... • The situation in Iceland in 2009... • The idea of Strategy 20/20 is put forward... • The Strategy 20/20 Program is defined... • The scope of the Strategy 20/20 Program... • The pillars of the Strategy 20/20 Program... • The intentions of the Strategy 20/20 Program... • The timeline of the Strategy 20/20 Program... • The activities of the Strategy 20/20 Program... • The process and outcomes of the Program... • Some learning points...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  3. 3. Iceland´s Financial Collapse in 2008 (1) • After an economic upsving and enourmous expansion of private banks, in Iceland and mainly abroad, sparked by internationalisation of several Icelandic companies – the banks collapsed in October 2008... • This collapse must be considered in the context of the Global Financial Crisis... ...in that sense the banks suffered from an international system failure... • But it has been revealed that the banks and some of the most aggressive companies had been run and expanded in a very irresponsible and unsustainable manner... • ...“God Bless Iceland”... The Prime Minister said on national television in October 2008...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  4. 4. Iceland´s Financial Collapse in 2008 (2) • Assets of the banking sector had been 1xGDP in 2000, 8xGDP in 2006 and ended in 10xGDP in 2008... • The Central Bank had mainly focused on fighting inflation, (interest rates from 5.3% in 2003 to 15.25% in 2007)... • Warnings came... Iceland was vulnerable and attacked... • ICESAVE’s “We make a clear difference”... ...ended with the British authorities activation of the Anti-Terrorism, Crime and Security Act of 2001 against the Icelandic Banks... • Public demonstrations then led to the fall of the government and elections... ...but political unstability has remained... • Iceland reluctantly adopted an IMF program to reestablish international credibility and to get loans...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  5. 5. Iceland´s Financial Collapse in 2008 (3)• The Icelandic State (re)established small domestic banks (over a weekend) to prevent a nationwide caos...• The currency (ISK) did over time decrease severly (50%)...• Inflation had increased sharply and remained high for a considerable time... (18,6% at its peak, January 2009)• Economic activity and domestic demand dropped sharply (...leading to a fall in real GDP of 6,8% in 2009)• An asset price bubble did burst and asset prices melted...• Many companies lost ground due to the fall of the banks, now either bankrupt or in the process of being refinanced...• The accumulated assets in the Icelandic Pension system are now more important than ever...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  6. 6. The situation in Iceland in 2009 • More people were moving abroad than to the country... ...both of foreign and Icelandic origin... ...working abroad... • Unemployment had become a serious problem... ...in July 2009 the unemployment reached 10% at its peak (7,2%) • Many families and many SME´s were due to the asset meltdown and the inflation and forex development in a huge debt-crisis... (2010: Relief package aims to help around 60.000 people and about 7000 SME’s) • The economy had contracted severly, the financial sector was small, the building sector stood still, estate markets were frozen, investment was down (50%) and consumption was severly diminished (16%)...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  7. 7. The Strategy 20/20 idea put forward • Iceland and the Icelandic People had been hit badly... ...the financial collapse had led to recession and political turmoil... ...what could be done about it... • One of the ideas that was in the air in the Spring of 2009 was to establish a project or program that would focus on the Competitiveness of Iceland and ways to increase the prosperity of Iceland... ...this idea was plugged and promoted especially within the Socialdemocratic Party (S)... ...it was taken up in the agenda of the New (S-LG) Government along with many other ideas... • The 20/20 idea was adopted but probably not in the way that the idea generators had worked for...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  8. 8. Why be concerned about Iceland’s Competitiveness?• As well known - a study of a nations competitiveness both reveals the particular situation of the country in question and that understanding can open up for possibilities to enable and enhance the value creation in that country - leading to increased prosperity in the country... – Iceland’s rank on the World Economic Forum list (more than130 nations) • 2006-2007 14. place • 2007-2008 23. place Iceland’s Competitiveness has • 2008-2009 20. place deteriorated considerably in the last years... • 2009-2010 26. place • 2010-2011 31. placeProfessor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  9. 9. The Strategy 20/20 Program defined • In the S-LG Government agenda a progressive plan should be developed – taking the following into account: – First, the PM ministry will mobilize and lead a collaborative effort that will develop regional progressive plans for all parts of Iceland in order to strenghten the basis for employment and industrial activity as well as quality of life in the future, especially obtain and put forward a joint vision. The goal is also to integrate the public plans for development of infrastructure (roads, harbours, airports; communication), tourism and remote areas, as well as plans for enlargement of the activitites of the local municipalities. Also as part of this effort for integration of plans all other public plans should be included, including plans for developing certain areas or clusters.Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  10. 10. The Strategy 20/20 Program defined • In the S-LG Government agenda a progressive plan should be developed – taking the following into account: – Second, within this project was also an effort to develop a new holistic employment and industrial policy, based on equality and ethics with a focus on sustainability and green industrial development. – Third, it should be considered how competitive the Icelandic industries were in international comparison • At this point ((2009) and maybe still) many and among them leading politicians in Iceland were very sceptical to concepts like competitiveness and internationalization – the orientation was inbound rather than outbound...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  11. 11. The Strategy 20/20 Program defined• A steering group was appointed under leadership of Dagur Eggertsson, vice chairman of the Social Democratic Party active in the municipal government of Reykjavik...• Also in the group were four ministers of the Government of Iceland, two representatives from local and regional municipal authorities in Iceland and in the beginning of the project the rector of the University of Reykjavik...• Working with the steering commitee were staff from the office of the Prime Minister of Iceland. The group appointed a project coordinator, a consultant from the company Expectus...• Now in the end of the program, I am told that close to 200 people have as volunteers been involved in the work and around 800 people have taken part in the many activities held in the name of the project...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  12. 12. The scope of the 20/20 Program• The Strategy 20/20 Program became already from the start somewhat of an all-inclusive program based on volunteers...• The choice of the people in the steering group clearly indicated both a wide scope and high ambitions...• The program was devided into three pillars: – Progressive plan 2010... ...including central integration of public plans and reorganization of public service, reporting on demarkated regions, arranging open meeting in regions and a closing conference... – A vision and employment/industrial strategy... ...including status reporting, scenario planning, grassroot national assembly, conferences and collective work towards a joint agreement on a strategy proposal... – Competitiveness... ...including studies and information gathering on what determines national competitiveness, reporting on Iceland’s WEF ranking, expert group studies and recommendations...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  13. 13. The Pillars of the 20/20 Program Steering Commitee Adv. Council Project Groups Project Groups Project Groups Get an overview Iceland 2009 What determines of different plans Status Report nat. competitiveness The country A conference devided in regions Scenarios on WEF ranking Reorganization National Expert groups of public service Assembly studies Progressive plans Employment/ Recommendations for regions Industrial Policy Proposals This picture is taken from the Proposal to the Parlament, document 476. Translation of headings to english is done by RSS.Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  14. 14. The intentions of the 20/20 Program• To have the Icelandic Parlament agree on that the Government of Iceland would develop a Progressive Plan...• The main aim would be industrial development and prosperity in the society... ...for a leading position...• A special focus would be on Iceland’s Competitiveness in the long term... ...investment in HC, Infr, Ed, Inno, Env, Soc.• Special employment/industrial policy... ...diversity, equality, business ethics, green industries and sustainability...• Integration of public investment plans and reorganization of central public service and develpment of regional service... ...for efficiency and increased cooperation across sectors...• Focus on the country and regions...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  15. 15. Some of the Providers to the Program• The Social Science Institute at the University of Iceland and The Economic Institute at the University of Iceland provided a 2009 Status Report...• The Innovation Center Iceland was involved and assisted in the development and conduct of the Program...• The Center of Strategy and Competitiveness, at the Universty of Iceland was assigned a temporary role in helping the expert groups to find relevant information and material on competitiveness. The Center also provided some secreterial assistance to the Program.• The Government, via different ministries, was intended to be in the lead in many activities...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  16. 16. The timeline of the 20/20 Program... ...until May 2010... June October - November January - March The program is informed The project group on Regional “national February - April about the the plans for a Developing Employment assemblies” held in 8 Regional status grassroot (ant) inittiated and Industrial Policy different regions of reports provided national assembly appointed Iceland (70-150 by Expectus May participants in each) Expert group June September October - January January conference on key The steering Project and expert groups Project & expert groups Conference on str. issues for committee on competitiveness on competitiveness future issues for Iceland’s appointed appointed (ir)regular meetings Ind. and Society Competitiveness June May 2009 2010 June October December February July - August April The steering Scenario Iceland 2009 The Strategy Conference on Conference on committee´s status report 20/20 project reorganisation Planning the results of the first meeting is presented presented in of public service sessions regional assemblies the Parlament June September November January February Iceland 2009 Conference on The ants Strategy assembly Student‘s status report competitiveness National Assembly with ministers clusters projects is asked for and WEF ranking (1200 participants) and key players introduced (world café approach)Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  17. 17. The activities of the 20/20 Program• There was a big emphasis on mobilizing very many people on a voluntary basis in a steering group, advisory council, project groups, expert groups, conference- workshops, regional workshops, national meeting...• The program was connected to and apparantly made as some kind of an umbrella for reconsidering the national investment plans as well as reorganizing the public service – with public administrators working on that...• Project coordination was in the hands of a consultant, the consulting company did also prepare regional status reports and did some international comparisons...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  18. 18. The process and outcomes of the Program...• In the beginning of the Program there were both interest and support. Many people joined in on a voluntary basis and took on roles but when it came to the actual work many did not attend meetings or deliver...• Some formally abandoned the Program, others more or less dissappeared, others staid on and did their piece...• The work of the Program went on as can be seen in the timeline, intensified by the work of Expectus and the staff...• The outcomes of the Program, apart from the more or less successful mobilization of people, the wide scope and the many steps completed in the process are two final documents: a) Report with the results of the Program, and b) Proposal based on the results...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  19. 19. The timeline of the 20/20 Program June January - March October - November The program is informed Regional “national The project group on February - April about the the plans for a assemblies” held in 8 Regional status Developing Employment grassroot (ant) inittiated different regions of and Industrial Policy reports provided national assembly appointedIceland (70-150 by Expectus May participants in each) Expert group June September October - January January conference on key The steering Project and expert groups Project & expert groups Conference on str. issues for committee on competitiveness on competitiveness future issues for Iceland’s appointed appointed (ir)regular meetings Ind. and Society Competitiveness June Des 2009 2010 June October December February November - December July - August The steering Scenario Iceland 2009 The Strategy Conference on Final report from The committee´s status report 20/20 project reorganisation Steering Commitee Planning first meeting is presented presented in of public service and a strategy sessions the Parlament proposal to the June September November January April Government Iceland 2009 Conference on The ants Strategy assembly Conference on status report competitiveness National Assembly with ministers the results of the is asked for and WEF ranking (1200 participants) and key players regional assemblies (world café approach)Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  20. 20. Learning points – so far... • The 20/20 Program was both for good and for bad pushed as a Income and activity driven intermediate organisations voluntary relations driven activity...The Private Sector The Public Sector • The Program was expanded during A: B: the process, despite obvious lack of Companies Government resources and often very mixed * driven commitment by participants... * Relations intermediate organisations The Program suffered due to lack • of resources and it seems that it C: was not ranked high in order of Stake driven Policy drivenintermediate organisations NGO’s/nonprofit organisations intermediate organisations priority by many stakeholders... Analytical model based on work from • Some of the activities do not seem © Runólfur Smári Steinþórsson,1995. The Third Sector relations driven, but rather more public or even politically driven... Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop, Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  21. 21. Learning points – so far... • The 20/20 Program was put forward as a proposal in Parlament Income and activity driven intermediate organisations but has not been taken to votes...The Private Sector The Public Sector • There are many things that indicate A: B: that the Program’s development Companies Government has somewhat been of an * driven emergent nature... * Relations intermediate organisations The Program’s leader actually said • in September 2009 that a Program C: like this was doomed to be a Stake driven Policy drivenintermediate organisations NGO’s/nonprofit organisations intermediate organisations failure... Analytical model based on work from • A question arises – was the © Runólfur Smári Steinþórsson,1995. The Third Sector Program intended more as a process than producer of results... ...or... Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop, Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010
  22. 22. Concluding remarks• The Strategy 20/20 Program is one of many activities and projects that the Government of Iceland has initiated in the aftermath of the collapse of the banks and the crisis...• It is fair to say that the Government of Iceland has been in the last two years more or less in the role of fighting fires and dealing with one crisis after another...• This study of the Strategy 20/20 Program has just been started, it is a part of a wider research project that aims to uncover the initiatives and activities that together reveal the path that Iceland is and has been on towards enhancing it´s competitiveness...• The Ultimate Goal is to be able to contribute more to that development...Professor Runolfur Smari Steinthorsson Presentation at the MOC Network Cluster Research Workshop,Iceland – In Search of a Path for Comptetitiveness Harvard Business School, Hawes 102, Dec 12, 2010

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