Economic Council’s Mid-2025 Report: Urbanization and Inequality in Greenland
In its mid-2025 report, the Economic Council outlines how robust economic forces drive urbanization and exacerbate regional inequalities across Greenland. The findings suggest it may be unrealistic to expect uniform opportunities across all municipalities and residential areas. “Urbanization is a reality in Greenland, too,” the report emphasizes in its section on settlement trends and regional disparities.
As the population increasingly gravitates toward larger cities like Nuuk, the report correlates this pattern with job availability, educational opportunities, and access to essential services—factors that resonate across high-income nations globally.
Torben M. Andersen, Chairman of the Economic Council, underscores the impact of Greenland’s vast geography combined with its sparse population: “Without the ability to commute between homes and workplaces, disparities among municipalities become even more pronounced, and patterns of migration gain importance,” he notes.
Disadvantages for Small Businesses at the Core of Inequality
The report identifies the limitations faced by small businesses as a key reason behind geographical inequities. This was echoed in a recent response from Naalakkersuisut’s Finance Minister Múte Bourup Egede to Inatsisartut member Anders Olsen, who highlighted the pressing economic and demographic inequalities. According to the Economic Council, small municipalities struggle with disproportionately high average costs for vital services like education and healthcare, as these fixed costs are distributed across a limited number of residents.
“It’s not inherently the municipal structures that create the problems; rather, the small size and considerable distances between communities mean higher costs and fewer options,” asserts Andersen.
Vulnerability of Smaller Municipalities
The findings reveal that many smaller towns and settlements are facing both economic and social vulnerability. Issues such as outmigration and an aging population, coupled with a dwindling workforce, significantly undermine these municipalities’ financial viability.
“The vulnerability is closely related to the absence of a solid business foundation,” explains Andersen. “When fishing and hunting opportunities diminish, developing alternative economic pathways becomes exceedingly challenging. This trend directly influences migration patterns—who leaves and who stays.”
The Importance of Business Development
The report posits that the lack of a sustainable economic base presents the greatest obstacle for many communities. Where opportunities in fishing, tourism, or mining exist, local development thrives; elsewhere, prospects remain bleak. “Without viable business opportunities, it’s difficult to stem the tide of relocation—this is a pattern we see globally,” notes Andersen.
Political Choices and Responsibilities
Ultimately, the report argues that solutions to these issues lie in political action. It challenges policymakers to consider how resources are redistributed among municipalities and emphasizes that support should be tangible and aimed at fostering business and employment. “Redistribution is a political choice. What is critical is establishing clear goals and understanding the responsibility that accompanies funding,” adds Andersen.
Balancing Centralization with Local Autonomy
At the same time, the report highlights the potential benefits of digitization and centralization for certain tasks. This approach could optimize resource use and improve efficiency without necessitating comprehensive centralization. According to Andersen, “If every challenge must be resolved locally, costs can soar, dragging down overall standards. A balance is needed—centralizing certain functions while empowering local solutions is vital for fostering community development and job creation.”
An Essential Political Conversation
The Economic Council concludes that the existing settlement pattern is unsustainable, reiterating that uniform opportunities cannot be provided across all municipalities. This reality necessitates a robust political debate. “It’s not a matter of whether political decisions need to occur but rather which decisions will shape the future of municipal development,” states Andersen.
He also suggests that tax policy could serve as a tool for incentivizing business growth outside major urban centers. While the Economic Council has yet to analyze specific models, Andersen points to international examples of geographically differentiated tax and subsidy schemes as frameworks worth consideration—provided they are carefully designed to support genuine economic activity and discourage exploitation.
The Need for Clear Priorities
Naalakkersuisut’s current business policies indicate a vision for economic growth beyond Nuuk. “Industries like tourism, resource extraction, and selective fishing are naturally suited to thrive outside the capital,” Andersen notes. However, the challenge lies not in the absence of political will but in ensuring that these objectives are accompanied by clear priorities and coherent strategies that align business policy with tax law and equitable resource distribution across municipalities.