Industrial Policy
Iceland's Industrial Policy is a 10-year growth plan, outlining how public authorities will work together with businesses and society at large to create value
A targeted industrial policy enables the government to coordinate public actions toward the business sector and provides predictability for investment.
The policy builds on an analysis of key focus areas and challenges.
Future vision
Value creation is driven by diversified exports based on innovation and the sustainable use of resources. Productivity is high, international competitiveness is strong, and diverse job opportunities are available throughout the country. Greenhouse gas emissions from export sectors are among the lowest in the world.
Main objective
Robust growth in exports driven by high-productivity industries.
The core elements of the industrial policy consist of policy priorities divided into two categories:
- General policy priorities that support the policy’s main objectives of export growth, international competitiveness, and increased domestic productivity.
- Specific priorities for export sectors, laying the foundation for how the government intends to support growth and increased productivity.
The policy clearly commits to co-ordinated actions to strengthen infrastructure, promote science and innovation, enhance skills and education in line with the needs of industry, simplify regulation and increase the competitiveness and resilience of Icelandic businesses. These are general policy priorities, all of which contribute to achieving the policy’s vision of growing productivity, improved international competitiveness and a diverse labour market throughout the country.
To implement these priorities, specifically timed two-year action plans will be defined and published separately. The first such action plan covers the years 2026–2027 and is published in tandem with the policy.
Follow-up on the industrial policy and its actions will be co-ordinated across ministries under the leadership of the Prime Minister’s Office. In addition, an independent five-member Industrial Policy Council has been appointed. The Council advises the government on the design and implementation of the policy and monitors progress toward its objectives and its indicators. However, responsibility for the policy and its actions rests with the government.
Iceland’s Industrial Policy – A Growth Plan to 2035 is the result of extensive consultation with business and industry and other stakeholders that began in the autumn of 2025. The government intends to continue this dialogue in the further development of the policy and its action plans.
The first action plan for the Industrial Policy covers a two-year period, 2026-2027. The intention is to introduce a new comprehensive action plan approximately every two years to ensure the effective implementation of the Industrial Policy. The Ministerial Committee on Economic Affairs and an independent advisory Industrial Policy Council will oversee the implementation of the action plans.
The government’s first action plan under the Industrial Policy sets out 35 measures to follow up on its priorities and objectives. As the measures fall under the responsibility of ten ministries, successful implementation requires cross-sector collaboration and co-ordination action across policy domains.
Structured around four priority areas, the action plan groups 7–10 measures under each. Within each priority area, the measures are designed to collectively advance the achievement of its objectives.
Development of the measures drew on extensive stakeholder consultation. Feedback was actively sought on proposed measures when the draft Industrial Policy for Iceland was published on the government’s consultation portal towards the end of 2025
This Industrial Policy builds on a background analysis of economic and business developments over the period 2010–2024. The analysis identifies the core priorities and structural challenges that this policy is designed to address.
In summary, the key focus areas and challenges are as follows:
- Per capita GDP growth has been very limited over the past five years and weaker in Iceland than in its main comparison countries. Reversing this trend is urgent and requires a renewed focus on productivity-led growth.
- Living standards in Iceland depend on export performance. The export base remains relatively limited in scope. It is therefore essential to foster strong growth in a greater variety of export industries, particularly those not reliant on finite natural resources. At the same time, safeguarding the competitiveness of existing export sectors and their continuous development remains critical.
- Iceland currently benefits from high labour force participation and a favourable demographic structure. However, these conditions cannot be expected to persist indefinitely, underscoring the need to strengthen long-term productive capacity.
- Growth driven primarily by population expansion places significant pressure on public services and core infrastructure. It is therefore important to ensure that industrial development proceeds in balance with infrastructure capacity and environmental sustainability.
- Capital assets per-full time position equivalent in the Icelandic economy has declined. Removing barriers, providing a favourable operating environment and ensuring stability are essential for further investment in the economy.
- Electricity generation has expanded only slowly in recent years. Addressing constraints here is urgent to secure sufficient energy for value creation and the green transition.
- While the share of graduates from higher education is broadly comparable to that in peer countries, the proportion of graduates in STEM fields is significantly below average. Expanding STEM education is vital to support the growth of knowledge- and technology-intensive sectors and to enhance innovation capacity.
The Industrial Policy Council operates independently and provides advice in connection with the formulation and follow-up of the government’s industrial policy. The Council works with an inter-ministerial working group on proposals for shaping the employment policy and advises the Prime Minister, the Cabinet committee on economic affairs, and the government on priorities and implementation of the policy.
The Council was appointed in September 2025.
Members of the Industrial Policy Council:
- Robert-Jan Smits, Chair
- Gylfi Zoëga, Professor of Economics at the University of Iceland
- Nana Bule, Advisor
- Pétur Þ. Óskarsson, Managing Director of Business Iceland
- Tanya Zharov, Deputy CEO of Alvotech
A draft of Iceland’s Industrial Policy to 2035, together with a background analysis, was published on the Government’s consultation portal on November 14, 2025. The deadline for submitting comments was December 9, 2025. A total of 84 submissions were received.
The Prime Minister’s Office hosted a morning meeting on the development of a new employment policy on Thursday, September 4, 2025, at Hilton Nordica. Prime Minister Kristrún Frostadóttir, Nana Bule, advisor at Goldman Sachs and board member of, among others, the Novo Nordisk Foundation and Carbfix, and Sveinbjörn Finnsson, adviser to the government, delivered presentations at the meeting. These were followed by discussions and questions from the audience, with Prime Minister Kristrún Frostadóttir responding alongside Minister of Industries Hanna Katrín Friðriksson and then Minister of Social Affairs and Housing Inga Sæland.
The policy initiative for Iceland’s Industrial Policy to 2035 was published on the Government’s consultation portal on August 11, 2025. The deadline for submitting comments was August 27, 2025. A total of 77 submissions were received.
The Prime Minister’s Office hosted a morning meeting on the government’s employment policy on Tuesday, January 13, 2026.
The Prime Minister discussed the policy direction, and Mariana Mazzucato delivered a keynote address on the global context of employment and economic policies. Mazzucato is a professor at University College London (UCL), where she is the founder and director of the UCL Institute for Innovation and Public Purpose.