The Nordic Tiger — Imagined Economic Miracle

Abstract

In the decades straddling the new millennium, Icelanders experienced two consecutive cycles of credit-driven boom and bust. The high-tec industry grew rapidly in the 1990s with, for example, the establishment of numerous internet and bio-tec companies, which emerged as the new vehicle into the future. For a while, the newly established internet company Oz became one of the wealthiest in the country even though we were never really sure of the value of its products. Most of these new companies, constituting what was referred to as Iceland’s new economy, were, however, washed away when the dot.com bubble burst at the turn of the century and capital inflow ceased. It was not long, however, before the next bubble — the banking bubble, starting in 2003, which proved to be one of the fastest growing in world history.