Op-ed: Arctic Report Shows Region's Economic and Social Transformation
Alexandra Middleton is a researcher at the University of Oulu. She is currently working on the Business Index North project and presents some of the project's more recent findings in this op-ed. (Photo: University of Oulu)
In an era of misinformation, reliable data are crucial for understanding the Arctic complex economic and geopolitical landscape. The BIN-Arctic project’s recent report Arctic value creation, Employment, and Investments serves as a reliable source providing a comprehensive pan-Arctic perspective on key economic and social indicators, writes researcher Alexandra Middleton in this op-ed.
This is an opinion piece written by external contributors. All views expressed are the authors' own.
This report by a team of Arctic researchers examining the economic and social conditions across 22 Arctic regions from eight Arctic countries offers valuable insights for investors and policymakers.
The report analyzes demographic trends, employment patterns across various sectors, gross value added (GVA), investment levels, and income inequality, highlighting regional disparities in economic performance and the challenges of balancing economic development with social sustainability.
Demographic Trends and Inequality
The Arctic presents a diverse demographic landscape, with some regions experiencing significant population growth, while others face decline. For instance, Iceland and Yukon have seen their populations grow by approximately 20% over the last decade, whereas the Russian Arctic is experiencing a shrinking population.
This decline is largely attributed to an aging population and outward migration of young adults, a trend observed across most Arctic regions. Income inequality is also a pressing concern in the Arctic, particularly in regions with economies that focus on natural resource extraction.
Resource-dependent economies in the Arctic, such as Yamal-Nenets and Alaska, face high levels of income inequality. This presents a significant challenge in ensuring that economic growth translates into broad-based prosperity and avoids exacerbating social disparities.
An aging population and outward migration of young adults.
Arctic Economic Landscape
Arctic economic transformation is creating a stark contrast between mineral-rich territories and traditional industrial regions. To assess the economic health of the Arctic, this report utilizes Gross Value Added (GVA), a key metric that captures the value generated by various sectors within regions.
Canada's northern territories are emerging as growth leaders, with Nunavut and Yukon experiencing significant GVA gains driven by growth in mining and expanding public services. This contrasts sharply with Alaska, where GVA is declining due to weakening in its traditional economic pillars, notably oil and gas
The Nordic Arctic region has exhibited divergent growth trajectories. While Sweden's Upper Norrland region has demonstrated economic growth thanks to the construction boom and industrial expansion, Norway's Arctic regions of Nordland and Troms and Finnmark have witnessed a downturn, especially in Northern Norway's traditionally strong sectors such as transportation, business services, and construction.
Investment patterns reveal Russia's influence on Arctic development. The country accounts for 50-60% of all Arctic investments, with most capital flowing into resource extraction and transportation infrastructure.
Alaska maintains its position as the second-largest investment destination, although its focus remains narrowly concentrated in oil and gas.
The Nordic Arctic region has exhibited divergent growth trajectories.
How to use report: Greenland’s example
The report provides valuable data for decision-making and policy formulation in the Arctic region. Of particular interest is the analysis of Greenland's economic and social development, given the recent geopolitical attention to the island.
Recent data from the BIN-Arctic project report have painted a mixed picture. Greenland's population, though small at roughly 56,000, has shown modest growth.
Tourism is growing, as reflected in the notable expansion of the accommodation and food services sector. Investment, primarily in fisheries, surged by 14.7% between 2017 and 2021, the highest growth rate among the Arctic regions. However, it is important to note that this growth builds on the lowest investment base in the Arctic regions.
Infrastructure development is underway, and a new airport in Nuuk is envisioned as a hub for international travel.
While its traditional fishing industry remains vital, the island is seeking to diversify its economy and capitalize on emerging opportunities in tourism and resource development.
The economic future of Greenland hinges on balancing traditional industries with new opportunities.
Sustainable development, including responsible resource management and environmental protection, is crucial for long-term success. The island’s strategic location and potential for growth make it an intriguing player in the evolving Arctic economy.
Arctic Divide
This uneven development pattern suggests that the Arctic economic future may be increasingly divided between resource regions and areas struggling to find new growth drivers in a rapidly changing climate and economic landscape.
By providing granular data on economic and social trends and highlighting the critical need for diversification, this report serves as a valuable tool for policymakers, investors, and communities seeking to build a sustainable and equitable future for the Arctic.
The report's interactive PowerBI function further enhances its accessibility and utility for all stakeholders.
