In Iraq, how could the standard of living improve while maintaining good relations with their neighbors and the world community? How can Iraq maximize profits for exports, minimize costs for imports while using environmentally sound practices?

There is no secret to improving the standard of living of the population of Iraq. Ethnic and religious enmities have to be put aside in favor of stabilizing the country politically so that the nation's economy can grow, and there must be a political system free of the kind of corruption endemic to much of the more recently decolonized world.
For many decades, until the U.S. invasion in 2003, Iraq was ruled by the country's minority Sunni population. The majority Shi'a were repressed while their resources were used by the ruling regimes to benefit the Sunni minority. In the meantime, the Kurdish population in the north, as with the Kurdish populations in neighboring Syria, Iran and Turkey, sought independence from Arab dominance. In addition, Iraqi society is riven with tribal and clan rivalries that were largely kept under control when the late and enormously brutal dictator Saddam Hussein was in power.
The invasion of Iraq by the United States removed Saddam Hussein, his family (his two sons were notoriously sadistic), and his tribe from power and attempted to replace it with a democratic system. Democracy in a country in which the majority of people have been repressed by a hostile religious minority (the Sunni-Shi'a divide is the cause of enormous bloodshed throughout much of the Muslim world) may seem like a good idea, but in Iraq it did not work as hoped. Suddenly in power, the majority Shi'a sought to marginalize the now-defeated Sunnis, and the result was civil war, with the added complication of the growth of terrorist organizations like al Qaeda and, now, the Islamic State.
All of this history is given because, when discussing a subject like the standard of living in Iraq, it would folly to pretend that all of these problems did not exist. They do exist, and, until at least some of them are resolved, improving the life of the average Iraqi citizen will remain problematic. This is not to say that there have not been improvements in some areas. The economically (due to vast oil deposits and refining and shipping assets) vital southern region of Iraq has enjoyed some stability, which has allowed for economic growth, which has improved the standard of living for many people. In the north, under the protection of the United States since the 1991 conflict (the United States drove Iraqi military forces out of Kuwait, which it had invaded), the Kurdish population has enjoyed considerable autonomy and, with it, economic growth, peace and stability.
The Kurdish model is important in the context of improved standards of living in at least portions of Iraq. Because Iraqi Kurdistan has been largely peaceful, the Kurdish population there was able to establish functioning political and economic systems. That is the key to Iraq as a whole. It must have political stability provided by a government that enjoys legitimacy among the entirety of the population. It must have an economy open to foreign investment, and it must be as free from corruption as possible. Then, Iraq can better exploit its vast oil and gas reserves, as well as diversify its economy so that it is less dependent upon frequently volatile oil prices.
The key to minimizing costs for imports while maximizing profits from exports, once the above conditions are met, involves establishment of free trade agreements among other nations. If one uses Singapore as a model, enormous economic growth can result from a free trade system free of corruption. If incoming goods are not taxed via tariffs, and if outgoing goods are competitive in terms of quality and price, then the objectives should be met, with the concomitant growth in gross domestic product such practices usually achieve. The key, then, is equitable distribution of revenue and a practical utilization of that revenue for the common good, as in infrastructure improvements.