The Icelandic economic collapse: how to overcome constraints associated with smallness?

In: European political science: EPS ; serving the political science community ; a journal of the European Consortium for Political Research, Band 12, Heft 3, S. 320-332

Abstract

The article identifies a number of fundamental flaws concerning the Icelandic government's economic handling and administrative working practices, which contributed to the scale of the 2008 crash. At the same time, it argues that the authorities altogether failed to take account of the risk associated with the country's small size during the Icelandic 'outvasion'. It claims that small-state studies need to move back to the basics and consider the original small-states literature, such as the small domestic market, the use of a small currency and the weaknesses associated with a small public administration, in order to fully understand the reasons for the Icelandic economic meltdown. A small state needs to acknowledge its limitations and take appropriate measures to compensate for them. Adapted from the source document.