Arctic economy: What do the numbers tell us?
The Arctic’s economic potential, geopolitical climate, and investment prospects have drawn significant attention. At the same time, very little evidence is available on the size and trends of the regional economy. This is unsurprising, given that the information is difficult to consolidate from the various fragmented national systems that collect it.
The latest report, The Economy of the North – ECONOR 2025, was published in May. A flagship project of ECONOR, the Arctic Council’s Sustainable Development Working Group, has provided in-depth statistical insights into the social, demographic, and economic conditions across the circumpolar Arctic since 2006. This fifth edition builds on the foundations laid by the Arctic Human Development Report and Arctic Social Indicators.
The ECONOR reports offer detailed snapshots of Arctic economies at specific points of time. The analysis in this article fills this gap by pooling data from all five reports to track pan-Arctic economic trends from 2003 through 2022. It also examines key industries across the Arctic region and highlights emerging sectors that are reshaping the economic landscape.
To gauge the size of the Arctic economy, the report uses an economic indicator called Gross Regional Product (GRP). It is equivalent to GDP, but calculated at the regional level. The analysis combines the GRP from territories across the eight Arctic nations and adjusts the total using Purchasing Power Parity (PPP) to create a consistent comparison of economic output. Figure 1 demonstrates the Pan-Arctic GPR in billions of US dollars, adjusted by PPP over the years 2003 through 2022. The findings show the Arctic economy nearly tripled in size between 2003 and 2022, with its PPP-adjusted GRP growing to $666 billion from $225 billion.
Figure 1. Arctic Gross Regional Product, USD-PPP, billion, 2003-2022. Source: ECONOR I-V reports compiled by Alexandra Middleton
Outpacing the EU
This growth translates to a Compound Annual Growth Rate (CAGR) of 5.9%, a metric that smooths year-to-year volatility to reveal a steady growth trend. To put that in perspective, the rate is more than double the European Union’s 2.9% average during 2014-2024 and approaches the pace of high-growth economies like China (7.5%) and India (7.8%). A sustained growth rate of almost 6% points to profound economic transformation in the region, a pace that would be considered a boom in most developed nations. The expansion is driven by increased access to natural resources, the development of trading routes, and active investment support policies – particularly in the Russian Arctic region.
The Arctic economy remains dominated by Russia and the U.S. Russia’s economic presence has grown significantly, expanding its share to 67% from 62% between 2003 and 2022. During the same period, Alaska’s contribution declined to 10% from 14% (See Figure 2).
Figure 2. Share in Arctic Economy by Region, 2003 vs. 2022, %. Source: ECONOR I-V reports compiled by Alexandra Middleton
In stark contrast, the combined economic share of the Nordic Arctic states (Iceland, Norway, Finland, and Sweden) is rather small, collectively accounting for just 10% of the Arctic’s total economy in 2022
High Productivity
The Arctic share of the global economy, or worldwide GDP, serves as a critical metric of its economic weight and geopolitical significance. Comparing the region’s economic output to its population reveals its per capita productivity relative to the global average.
The Arctic’s share of global GDP has consistently been three to seven times greater than its share of the global population (See Figure 3). In 2022, the region generated 0.4% of the world’s economic output with only 0.1% of the global population, resulting in a productivity ratio of four.
Figure 3. Share of Arctic Economy in Global Economy, %, 2003-2022. ECONOR I-V reports compiled by Alexandra Middleton.
Despite strong absolute growth, the Pan-Arctic’s share of the global economy is unstable. It peaked at 0.7% in 2018 before dropping to 0.4% in 2022, even as its absolute GRP increased. This volatility suggests that the Arctic economy is tied to fluctuating global prices for the natural resources it exports.
This is a common challenge of a resource-based economy: Vulnerability to external market forces and global commodity cycles. The Arctic economy is characterized by a resource-extraction model, where industries such as oil, gas, and mining create value with low labor intensity. By comparison, Singapore exemplifies a knowledge-based model, achieving superior productivity and value from its human capital rather than natural assets, with a productivity ratio of six. The country has virtually no natural resources.
Extraction, Fisheries and Government Spending
Three industries dominate Arctic economies, with natural resources leading the charge across most territories Fisheries and government spending are extremely important in some regions.
Arctic Russia is the region that is most dependent on the extraction of natural resources. Primary production jumped from 50% of the regional output in 2002 to 60% in 2018, reaching 60.6% by 2022. Alaska follows a similar pattern: Petroleum and pipeline operations contributed 19% of the output in 2018, rising to 21.6% in 2022.
Northern Canada’s mining sector contributed 20.6% of the regional output in 2022, up from roughly 20% in 2017. Diamond mining has made Canada the world’s third-largest producer. Arctic Sweden’s mining share rose from 6.2% in 2015 to 10% in 2018, with Europe’s largest rare earth deposit discovered in Kiruna in 2023.
Fisheries drive the economies of coastal Arctic communities. On the Faroe Islands, this industry generated 19.2% of income in 2018, expanding to 28.7% by 2022. When measured as a broader cluster, fish products comprised 92% of commodity exports of the Faroe Islands in 2020. Greenland’s fisheries contributed 7% of output in 2012, with the cluster reaching 18.7% of total income by 2021. Shrimp alone accounted for 50% of the export value in 2006. Following global rising demand for fish products, Arctic Norway’s fisheries and aquaculture grew from 8.6% in 2015 to 11.1% in 2018, reaching 12.3% in 2022.
The public sector accounted for 35% of the output in Arctic Norway in 2018, 33.6% in Northern Canada in 2017, and 19.6% in Alaska as of 2022. In Northern Canada and Alaska, the government ranks as the largest or second-largest industry, sustained by federal transfers and defense spending.
Emerging Industries
Arctic economies are diversifying into emerging sectors. Tourism gained traction, reaching 8% of output in Iceland and 7% in Alaska by the mid-2010s. Arctic Finland’s manufacturing sector, led by metals, contributes 11.3% of the regional output.
New sectors – such as renewable energy and data centers – are taking root, particularly in Iceland and Norway, where abundant hydropower attracts energy-intensive operations. However, official statistics have yet to capture these emerging economic activities. The subsistence economy, including hunting, fishing, and gathering, remains economically and culturally vital for Indigenous communities, but goes largely unmeasured.
As Arctic economies evolve beyond their traditional pillars, better data collection will be essential to understand emerging trends such as data center creation and the true value of sustainable practices.
What’s next?
Examining past long-term trends helps us to consider different scenarios for Arctic development. For instance, Nordic Arctic’s economic future is being pulled in two dominating sectors. The first leads to a deeper reliance on the extractive economy, as the European Union sees the region as a source of critical minerals. The other path is paved with government spending, fuelled by the accelerating militarization of the High North.
The question is whether a third way exists. Can the Arctic forge a sustainable alternative based on innovation and knowledge-intensive value creation, or is its development destined to be defined by extractive industries and military budgets? Are there any alternatives to leverage in innovation and knowledge-intensive value creation?
Answering these questions determines Arctic resilience and attractiveness. The chosen trajectory will shape the region’s investment climate, demographic future, and community well-being.
Understanding the Arctic’s future requires a focus that transcends pure economics. The central challenge for policymakers is to ensure that demographics and community resilience are treated as primary metrics of success, embedding these human factors into strategic decision-making.
Alexandra Middleton is a researcher specializing in sustainability, corporate social responsibility, and Arctic business development. With a doctorate in Economics and Business Administration from the University of Oulu, she has published extensively on climate change accountability and sustainable development in the Arctic. Currently, she a Fulbright Arctic Initiative Scholar for 2024-2026. She has been active in popularizing science through her Arctic Highlights newsletter.
