Economy & Infrastructure

The economic situation of the circumpolar Arctic is distinct among world regions. The formal economy is based on the large-scale exploitation of natural resources; however, traditional hunting and gathering, fishing, and animal husbandry also continue to be important to northern peoples. Arctic sub-regions depend strongly on their mother economies in the south, and the central governments of Arctic states support much of the overall consumption through transfer payments to local agencies and individuals. In general, the Far North plays an asymmetrical role in the world economy, exporting considerable quantities of raw materials and importing most of the finished products needed to meet internal demands. 

The development of roads, ports, railways, and other infrastructure in the Arctic has been closely intertwined with resource development. The harsh environment poses constant challenges for building and maintaining infrastructure, and the general sparseness of population has kept large-scale transportation networks to a minimum.

With the continued melting of polar sea ice, prospects are emerging for expanded navigation and the pursuit of new shipping routes between Europe and Asia through Arctic waters. This is expected to increase opportunities for offshore oil and gas development, marine shipping, and tourism, thus fueling economic growth. However, this expansion will be handicapped without considerable improvements marine support services and facilities. And, as rising temperatures accelerate the thawing of permafrost that underlies much of the Arctic, the costs to repair damage to buildings, roads, and other infrastructure will continue to escalate.