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Greenland’s Economy
In Perspective for Future
Endevours
The presentation
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Introduction
Colonial period
Home rule
Current situation
Future endevours
Introduction
• 57,000 scattered in the worlds largest
island
• Small market and small labour force
• Block grant and mainly fishing industry
• Low production level
Colonial period
• Colonization in 1721
• 1774 Danish state to over and established
Kongelige Grønlandske Handel (KGH)
• Monopoly of all trade from and to
Greenland
• All important decisions were made in
Copenhagen
• One-price system – goods sold same price
all over Greenland
Colonial period
• Boom in fishing industry in early 1900s
• In second world war USA was protector of
Greenland
• Cryolite production – material used in
aluminium production
• Goods from USA
• After WWII the connection with Denmark
re-established
Colonial period
• G50 modernization of Greenland economy
• G60 industrialization of Greenland
economy
• Positive and negative effects
Home rule
• 1971 Greenland gain the rights of 12 nautical
miles
• Disapperiance of cod that led to shrimp fishing
• Increase of block grant in that period
• Majority in Denmark voted for to join EEC
despite the Greenland reluctance
• EEC grants oil companies to explore the fishing
ground off west coast of Greenland
• 70 procent vote for Home rule
Home rule
• KGH is taken over by Home rule and
renamed to KNI
• Lead and zink mining in Maarmorilik
• Canada became leading nation in shrimp
fishing in 1998
• TAC system was introduced
• 30 per cent employment and over 90 per
cent of the export.
• Main actor Royal Greenland
Current situation
• Public sector – same principles as the
scandinavian countries
• 80 per cent of GDP
• Large publicly owned enterprises – 2/3 of
the economy is publicly owned
• Concentration in certain economic
activities – fishing, construction, extraction
of raw materials and transport
Current situation
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Main key figures
Area
2,166,086 km2
Population
56,615 (2011)
GDP
11 billion DKK
Disposable GNI
14.7 billion DKK
Inflation rate
1.4 percent (2009-2010)
Labour force
34,041 (2011)
Unemployment rate
1,350 persons on average or 4.0
percent
2,429 persons affected on
average per month (2010)
Exports
1,923 DKK million (2009)
Imports
3,669 DKK million (2009)
Balance of trade
-1,745 DKK million
Block grant
3,495 DKK million (2010)
Current situation
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90 per cent of trade with Denmark and Sweden
2 per cent with Canada and USA
85 per cent of exports are from fishing industry
Real growth in GDP around 1.0 - 2.5 per cent
Unemployment stayed roughly the same level
Budget deficit has been controlled around 260 to
210 million DKK
Current situation
• Challenges for Greenland is the control of
budget deficit as efforts to improve
education, health sector and labour market
• Another challenge is reduction of
dependency on imported labour force
through education
• Political will for privatization through
entrepreneurship and innovation
Current situation
• Advantages of being small is flexibility and easy
administration
• In Greenland the main advantage is profitable
unilateral and bilateral agreements
• Geographical position is an advantage
• The yearly transfer of block grant from Denmark
shields Greenland economy from external
fluctuations
• Self-Government legislation freezes the block
grant
Mitigating the negative impacts and
maximizing the positive impacts
• Attempt to diversify the economy
• Mineral resource development
• Half of mineral resource activity income that exceeds 75
mill DKK will go to Denmark and half to Greenland
• Main economic part of states that companies applying
for license in Greenland have to be economically strong
to fit all the requirement, have to prioritize local
workforce, have to prioritize local enterprise and if
possible lay the processing of extracted minerals locally
• And finally make sure these projects, that usually
characterized as mega-project, are social and cultural
sustainable for the Greenlandic people
Mitigating the negative impacts and
maximizing the positive impacts
Challenges and vulnerabilities stated are:
• Language
• Small and scattered population
• Small communities
• One stringed economy
• Limited experience in mineral sector
• And other national and local
characteristics
Mitigating the negative impacts and
maximizing the positive impacts
• Social impacts assessment
• Gathering information for Bureau of
Mineral and Petroleum to assess
• Making plans for Benefit and Impact Plan
• Licensee, Municipality and the
Government sign the Impact Benefit
Agreement that also consist of monitoring
plan and evaluation plan