Iceland is volcanically and geologically active. The interior consists of a plateau characterised by sand and lava fields, mountains, and glaciers, while many glacial rivers flow to the sea through the lowlands. Iceland is warmed by the Gulf Stream and has a temperate climate, despite a high latitude just outside the Arctic Circle. Its high latitude and marine influence keep summers chilly, with most of the archipelago having a tundra climate.
According to the ancient manuscript Landnámabók, the settlement of Iceland began in 874 AD when the Norwegian chieftain Ingólfr Arnarson became the first permanent settler on the island. In the following centuries, Norwegians, and to a lesser extent other Scandinavians, emigrated to Iceland, bringing with them thralls (i.e., slaves or serfs) of Gaelic origin. The island was governed as an independent commonwealth under the Althing, one of the world's oldest functioning legislative assemblies. Following a period of civil strife, Iceland acceded to Norwegian rule in the 13th century.
The establishment of the Kalmar Union in 1397 united the kingdoms of Norway, Denmark, and Sweden. Iceland thus followed Norway's integration to that union and came under Danish rule, after Sweden's secession from that union in 1523. Although the Danish kingdom introduced Lutheranism forcefully in 1550, Iceland remained a distant semi-colonial territory in which Danish institutions and infrastructures were conspicuous by their absence.
Until the 20th century, Iceland relied largely on subsistence fishing and agriculture, and was among the poorest countries in Europe. Industrialisation of the fisheries and Marshall Plan aid following World War II brought prosperity, and Iceland became one of the wealthiest and most developed nations in the world. In 1994, it became a part of the European Economic Area, which further diversified the economy into sectors such as finance, biotechnology, and manufacturing.
Iceland has a market economy with relatively low taxes, compared to other OECD countries. It maintains a Nordic social welfare system that provides universal health care and tertiary education for its citizens.
Iceland ranks high in economic, political, and social stability and equality. In 2016, it was ranked as the 9th most developed country in the world by the United Nations' Human Development Index, and it ranks first on the Global Peace Index.