Constitutions, Fish, Growth, Diversification, and More

Lecture at Fróðskaparsetur Føroya.

Abstract

This will be one of those talks where almost everything discussed is in the title. We begin in Russia whose resource-based economy has been stagnant since 2012. We move to Iceland whose no longer resource-based but still not well diversified economy has similarly been stagnant as the purchasing power of per capita GDP was lower in 2020 than in 2007. We compare Iceland with two rapidly growing countries that use the euro directly or indirectly: Ireland and the Faroe Islands. We pursue the comparison between Iceland and the Faroe Islands along three dimensions: Independence, monetary affairs, and their new constitutions, which remain to be ratified by the two oldest parliaments in the world. We then go on to briefly discuss Iceland after the 2008 crash, leaving it to the participants to judge the extent to which the discussion applies also to the Faroe Islands. We conclude by discussing the cross-country relationship between natural resource dependence and inclusive economic growth across countries and what needs to be done to avert trouble, which brings us back to our new constitutions and the need to promote economic diversification and democracy.