Abstract
The article, written from a post-financial crisis vantage point, applies Katzenstein's democratic corporatist model to the case of Iceland, and asks if it overlooks an essential message from theory, namely that small states need an external protector in order to survive, economically and politically. The article claims that the model convincingly made the case for how small states can buffer from within but fails to grasp their need for external shelter to cope with risk. In a financialised world economy, small states need economic and political shelter in order to prevent risk from spiralling out of control and they need support in order to clean up after a crisis.
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Notes
The dispute is centred on the retail creditors of the Icelandic bank, Landsbanki which offered online savings accounts under the Icesave brand in Britain and the Netherlands. Landsbanki was placed into receivership by the Icelandic government early in October 2008. As a result, more than 400,000 depositors with Icesave accounts were unable to access their money for at least 6–8 weeks, that is, until the governments of Britain and the Netherlands guaranteed them access to their money. On the other hand, deposits in Iceland were guaranteed by the Icelandic government from the beginning and generally available.
In 1990–2000, average annual FDI flows were US$ 64 million inward and 75 million outward. In 2007, these figures had become US$ 3,078 million and US$ 12,127 million, respectively (UNCTAD, 2008). As a percentage of Island's GDP, inward FDI flows in 1990 were 2.3 per cent of GDP and outward flows 1.2 per cent of GDP. In 2007, FDI flows were 61.5 per cent inward and 127.3 per cent outward. In total, outward Iceland's FDI flows accounted for 0.6 per cent of world total FDI flows in 2007.
On the other hand, a number of European states formally made their concerns about the potential Russian influence in Iceland known to the Icelandic government. This was at least the case of France, Poland and all the other Nordic states.
Marine products in total export of goods accounted for 57 per cent in 2005, 75 per cent in 1980 and 91 per cent in 1960.
For instance, the Danish Foreign Service handled Iceland's external relations until 1940 – despite foreign affairs being in the hands of the Icelandic government – due to the non-existence of a foreign service in Iceland.
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Thorhallsson, B. Domestic Buffer Versus External Shelter: Viability of Small States in the New Globalised Economy. Eur Polit Sci 10, 324–336 (2011). https://doi.org/10.1057/eps.2011.29
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DOI: https://doi.org/10.1057/eps.2011.29