Experiments in research policy. Iceland, with its free-market approach to funding basic research in the natural sciences, may be an interesting testing ground for EU research policies.

Abstract

Iceland is a unique place. The island is a chunk of volcanic rock in the middle of the Northern Atlantic Ocean, and very little of the land is suitable for farming. But the island lies amidst some of the richest fishing grounds in the world that have provided Icelanders with a reliable food source since the first settlement of Scandinavian Vikings in the 9th and 10th centuries. And they have learned to turn the volcanic nature of their country to their advantage: a multitude of hot springs provides geothermal energy for heating and many hydroelectric power stations produce an abundance of electricity used for aluminium smelting. Icelanders are unique too. Most of today's population of 270 000 are descendants of the early settlers and obsessed with their history. Extensive family records allow the pedigree of most Icelanders to be traced back to the early settlers from whom they stem. In 1996, these records formed the basis of a now growing biotech industry when deCODE was established to use them together with genetic information to identify genes that cause disease. Today, Iceland has 10 biotech companies, two pharmaceutical and another two medical technology companies, some of them world leaders in their specific field. > Iceland is a unique experiment in how to create a knowledge‐based economy from a small infrastructure This recent development of a high‐tech industry is common to many small countries. But Iceland is a unique experiment in how to create a knowledge‐based economy from a small infrastructure. While countries such as Finland, Ireland or Estonia have used public funds to invest heavily in basic research and education, the Icelandic government has taken a different approach to make the best use of its resources. The government stresses co‐operation of academia with industry, concentrates much of its funds on applied research …