Vermont isn’t as small as it seems. Yes, it’s the second least populated state. Yes, it has the sixth-smallest land mass of all US states. (Though at least it’s bigger than New Hampshire.)
And yes, it has the smallest economy of all the states. Our $30 billion gross domestic product trails Wyoming, the next smallest on the list, by $10 billion.
But on a per-capita basis, Vermont’s GDP ranks 32nd in the US, between Indiana and Georgia.
And compared to all other countries in the world, Vermont’s GDP is the 97th largest out of the 194 ranked nations – exactly in the middle of the pack.
Our GDP is slightly less than Bahrain’s. The comparison seems unfair – they have oil, we have maple syrup, they have aluminum exports, we have craft beer.
However, there are lessons to learn from Bahrain. A decade ago, they made a strategic decision to diversify their economy. Now Bahrain has the “first post-oil economy in the Persian Gulf.” Banking and tourism have become powerful economic engines for the nation.
And even though Bahrain has twice Vermont’s population, women make up just 19% of its labor force, vs. Vermont’s 62.5% female labor force participation. To increase economic productivity, Bahrain is actively encouraging greater female participation in government and economy.
That could work for Vermont, too. According to Change the Story, if Vermont women chose business ownership at the same rate as men, it would result in more than 10,500 new businesses in the state.
Iceland provides a different point of comparison. Our economy is about 1/3 larger than Iceland’s, and we have twice their population.
But both Iceland and Vermont have world-renowned, thriving arts and music scenes. Both are cold much of the year. Burlington’s average temperature is 45°F, while Reykjavík’s is about 43°F (though Reykjavík is much further north).
Both Vermont and Iceland saw an 80% decline in dairy farms since 1980. Tourism is critical to both of our economies (more on that below).
Vermont can feel isolated, but it’s nothing compared to Iceland. Iceland has great air service, but it’s still a subarctic island with tricky weather that frequently cancels those flights. (Never mind the volcanos.)
In 2008, Iceland’s economy suffered proportionally the world’s biggest financial collapse. But its economy is now rapidly accelerating.
While its core economic exports of fishing/marine products and aluminum are up since 2008, its true growth comes from a massive tourism boom. This boom is somewhat difficult to manage. However, Iceland is using the income from tourism to stabilize its economy and make strategic investments in renewable energy and software and technology.
Bahrain and Iceland are not perfect analogs for Vermont. Many Vermonters would probably prefer less government involvement in our state’s economic growth.
However, like Vermont, both have geographical challenges, natural resources that need careful management, and small populations. Like Vermont, they both faced a need to grow their economies against challenging trends.
Vermont has advantages over both of those countries. A big one is simply being part of the United States, hours from New York, Boston, and Montreal. Another is our potential for an even larger, more vibrant tourism market. Truly there is no place like Vermont. Paradoxically, perhaps the best way to keep it that way is to look to outside examples for paths of sustainable growth.
Thanks for reading – and here’s to a great week!