Iceland is one of the richest countries in the world. The nation's large economy is built, in particular, on the back of rich natural resources like the fishing grounds around the country, hydro-electric power and geothermal energy. The nation is a welfare state, with a mixed economy, and private enterprise blooms.
Economic growth was at an average around 5% from 1996 to 1999. That economic growth is nearly twice as fast as the rate which has been experienced by the world's industrial nations over the same period. Purchasing power has increased considerably since 1995, which is an increase of about four times that of nations comparable to Iceland. The Icelandic economy is very dependent on the fishing industry, with fish products the most significant national export, making up about 70% of all its exports.
Only about 5% of Icelanders make their living from agriculture, the largest part of which involves livestock farming. New farm enterprises have developed in recent years, such as fur farming, fishing farming, and forest cultivation. The proportion of the work force in industry has grew steadily throughout the twentieth-century, especially in the food industry, construction industry and large scale industry. Software enterprises have also developed substantially, and attempts have been made to create a greater variety of occupations, including moves (which are hotly contested) to increase large scale industry.
For a long time, the inflation rate was a problem in Iceland. In the last decade, particular emphasis was laid on creating stability in economic affairs. The result of these steps has been positive and the inflation rate has been 1.5 to 2.5% in recent years. However, there are indications that economic conditions are becoming worse.
The employment situation is good and employment opportunities are varied. The United Nations recently undertook a detailed investigation of the standard of living in various nations. Iceland was in fifth position on its list.
Despite the stable growth in the people's prosperity, many are of the view that all are not benefiting equally from it. The national cake is not evenly divided, with disadvantaged groups such as the old and handicapped getting a small share. There are many things in the society which indicate that the gap between rich and poor is increasing.
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