Development outside Nuuk requires political decisions

Economic Council's report for the first half of the year 2025 documents that urbanization and regional inequality is driven by strong economic forces and that it is not realistically to create the same opportunities in all municipalities and residences.

“Urbanization is a condition that also applies in Greenland", is the main message of the report section on settlement and regional conditions.

Economic Council's report for the first half of the year 2025 documents that urbanization and regional inequality is driven by strong economic forces and that it is not realistically to create the same opportunities in all municipalities and residences.

“Urbanization is a condition that also applies in Greenland", is the main message of the report section on settlement and regional conditions.

According to the report, the population is increasingly concentrated in the larger ones cities, especially in Nuuk. The development is linked to that of the labor market interior design, educational opportunities and access to health, culture and public service – conditions that are known from virtually all high-income countries.

Chairman of the Economic Council, Torben M. Andersen emphasizes that Greenland's large geography and small population amplify the consequences:

- When you don't have the opportunity to commute between residences and workplaces, the differences between the municipalities become clearer, and the migration patterns are becoming more important, he says.

Smallholder disadvantages are at the heart of inequality

The report points to small business disadvantages as a main explanation for it geographical inequality, which is also documented in Naalakkersuisoq for Finanser Múte Bourup Egede's (IA) response to Inatsisartut member Anders Olsen (S), where they economic and demographic inequalities are highlighted. It sounds the same Economic Council's report.

In municipalities and settlements with few inhabitants, the average costs are high because fixed costs for schools, healthcare, elderly care and utilities must be distributed on a limited population basis.

- It's not the municipal structure itself, which creates the problems. The challenge is that small units with few citizens and large distances have higher costs and fewer possibilities, says Torben M. Andersen.

Many municipalities and residential areas are vulnerable

The Economic Council's report shows that many residences – especially the smallest ones – in today are both economically and socially vulnerable. Eviction and a crooked age composition with more elderly people and fewer people in the workforce weakens the municipalities economic carrying capacity.

According to the chairman, vulnerability is closely related to lack business basis:

- Where fishing and catching opportunities have disappeared in, it is very difficult to develop an alternative business base. That is reflected directly in who moves - and who stays, says Torben M. Andersen.

Business is the prerequisite for development

The report states that the lack of a sustainable business base is the biggest challenge for residents in many municipalities. Where there is access to fishing, tourism or the possibility of mining, there are better conditions for local development. Elsewhere, the possibilities are far more limited.

- It's hard to discourage relocation if there are no real business opportunities. It is one pattern that you see globally, says Torben M. Andersen.

Political choices about distribution and responsibility

According to the Economic Council, the solutions are ultimately political. It matters about how much will be redistributed between the municipalities and how the support arranged. The report points out that support should be visible and have an active role aim linked to business and employment. Passive schemes can ensure the standard of living, but does not in itself create development.

- Redistribution is a political decision. The decisive thing is what goals you want to achieve and what responsibility comes with the means, says Chairman of the Economic Council.

Centralization and local responsibility

The report also highlights a potential in digitization and centralization of certain tasks to exploit economies of scale and free up resources. The point is not that everything should be centralised, but that one division of labor can make it possible to support development locally.

- If everything has to be solved locally, it will be very expensive, and the average standard falls. There is a need for a balance where some tasks are solved centrally, and others close to the citizens, so that the resources is used to create local development and jobs, says Torben M. Andersen and points out that local agency is crucial:

- Development does not succeed if it is only driven from above. Municipalities and residences must take ownership and take advantage of the opportunities that actually exist found locally, he says.

An inevitable political debate

The Economic Council concludes that the current settlement pattern cannot is maintained unchanged and that it is not realistic to offer the same opportunities in all municipalities. According to the chairman of the council, this makes the debate inevitable:

- The question is not whether political decisions must be made decisions, but which ones. It is political choices that determine how the development will be in the municipalities will look like in the future, says Torben M. Andersen.

He points at the same time that tax policy measures can also be included as a tool if one politically wants to support business development outside the biggest cities. The Economic Council has not analyzed concrete models, but Torben M. Andersen has emphasizes that there is international experience with geographical differentiated tax and subsidy schemes.

- However with the clear premise that they are arranged so that they actually support activity and settlement and not be misused through proforma addresses, he says.

Need for clear priorities

Naalakkersuisut have adopted business policies which point to development potential in others municipalities and outside Nuuk

- Tourism, raw material extraction and parts of fishing are professions that have their natural characteristics weight outside the capital, he says and explains that the challenge is not lack of political objectives, but that they are accompanied by clear priorities, responsibility and connection between business policy, tax policy and the overall distribution between the municipalities.