The following is a contribution to a thread on the Irish Economy Blog, comparing Iceland and ireland during the Great Recession.
Iceland’s total export value is split about 40% each between marine products and the aluminum industry, linked to its geothermal resources.
The biggest annual changes in exports in recent years have been in 2008.
The banking system collapsed early in Q4 2008.
In 2008, marine product exports jumped 33% in value on a volume rise of 13%. This was against a backdrop of global food prices rising to record levels.
Aluminum exports jumped 127% in 2008 and volume increased 71%. US giant, Alcoa, opened a new smelter in East Iceland in mid 2007.
Fish export volume fell 4% in 2009 but the export value jumped 22%; aluminum export volume rose 6% in 2009 but the value of exports fell 6%.
Fish export volume fell 5% in 2010 and the export value rose 5%; aluminum export volume rose 1% in 2010 and the value of exports jumped 30% - - the average aluminum price on the London Metal Exchange in 2010 rose 24%.
As for marine products in 2010, the movement of large shoals of mackerel north to cooler waters off Iceland and the Faroe Islands prompted both countries to unilaterally hike their catch quotas.
Iceland raised its 2010 quota from 2,000 tonnes to 130,000 tonnes and to 147,000 tonnes in 2011.
Without the mackerel windfall, the volume of its fish exports would have fallen more than 5% in 2010.
So the big export volume and value changes happened before the currency collapsed; the price of aluminum fell 40% in Q4 2008.
Paul Krugman identified six ’supertrading’ economies as existing in 1990 - - Belgium, Hong Kong, Ireland, Malaysia, the Netherlands and Singapore and the OECD added six more in 2000.
These economies are dependent on the “slicing up of the value added chain” on an international basis.
US multinationals based in Ireland mainly export to their units in other European countries, Exports to Asia are insignificant and short-term exchange rate movements would not impact supply decisions.
Iceland has an unemployment rate of 7% — almost half the Irish level - - and about 9,000 are employed directly in the fishing and aluminum industries.
This is only 5% of the total workforce.
The equivalent Irish ratio for the internationally tradeable goods and services sectors is almost 13%.