Economic Policy in the Years Around 2000

Arctic economic policies are under change. There are two major trends. Firstly, people living in the Arctic have increasing influence on decision making. As a consequence, there are more players in Arctic policies, which creates a new structural frame for Arctic policy. Secondly, Arctic economies and societies are becoming more involved in international and global development. Especially globalism, characterized by simultaneity, pluralism, mobility and bypassing of rules, and institutions, has and will have an enormous impact on Arctic policies, as Arctic policy has been characterized by opposite factors up till now.

State power as well as market power will still have a strong influence on Arctic economy, but there will be more room for partnership models, alliances, and ventures.

The strongest Arctic economies of Alaska and Iceland are in a position to further increase their strength. Economic growth, employment, and foreign trade are increasing. The diversification is augmented. Price stability is under pressure, but without danger of exploding. Income inequality is growing in Alaska. In Iceland, education policy has always had a strong position, but this position is being further stressed. Alaska is enjoying the privileges of oil economies.

In the north of Sweden and Finland, forestry and mining are facing stiff competition due to the opening of Russia with lower wages and less regulation and rules for production. It requires still more income transfer from the state to the northern societies. The societies have difficulties in diversification and adjustment.

Norway, including the northern counties, still has regional development and regional policy as a priority. Economic growth is high, mainly based on the fact that Norway is the second largest oil exporter in the world. Fisheries are still the main income source in the North, but the economic policy is to diversify the economy.

The north of Norway, Sweden, Finland, and the Kola Peninsula of Russia have initiated regional cooperation, the Barents Sea Region. How successfully it will develop is difficult to predict as the Russian economy is volatile. This holds true for both the formal and informal economy. The Russian formal economy is measured by gross domestic product of the same size as the economy of the Netherlands and is extremely vulnerable to investment turbulence. Regionalization can create economic growth, but Murmansk still has a specific position in Russia based on the old economy being the military base for the Russian fleet. Furthermore, the territory also holds a strong position due to the rich occurrence of minerals.

At the opposite end of the Russian Arctic, Chukotka has also tried to evolve regional links both to Alaska and to the South, but the low resource level makes it difficult. Arctic Russia is still heavily influenced by the transition from a command to a market economy. The price subsidy to transport has disappeared and so have the fixed prices. The new institutional setup has not yet been established and the set of laws that characterizes a modern market economy is not yet in place. The economic position as well as the economic policy are rather chaotic.

Greenland obtained Home Rule in 1979. Until the mid-1980s, most efforts were aimed at in the transfer of the Danish state institutions to Greenland and to the Home Rule authorities. Then the political economic strategy was presented: the economy should be diversified. The economy should not only be based on fisheries, but also mining, secondary production, and tourism should be developed as pillars of the Greenlandic economy. This strategy has not yet transformed the economy. More foreigners are interested in having licenses and in introductory mining activities. However, no mining in Greenland has taken place since the Blue Angel zinc and lead mine in Maarmorilik closed down in 1990. Secondary production has not changed much. The real barrier to development is the high transportation cost among the 18 Greenlandic municipalities. Tourism has until now added more cost than incomes to the Greenlandic economy. During the last few years, economic policy has changed toward more weight on education policy.

Lise Lyck

See also Economic Development Further Reading

Agreement-in-Principle Between the Inuit of the Nunavut Settlement Area and Her Majesty in Right of Canada, Ottawa: Department of Indian and Northern Development, 1990

Dickerson, Mark, O., Whose North? Political Change, Political Development, and Self-Government in the Northwest Territories, Vancouver: University of British Columbia Press, 1992

Lyck, L., Erhvervsvilkar i Gr0nland, Copenhagen: Nordic Press, 2001

Lyck, L (editor), Greenland and Arctic Political Issues,

Copenhagen: Nordic Press, 2001 Osherenko, G. & O. Young, The Age of the Arctic, Cambridge and New York: Cambridge University Press, 1989

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