The economy of Greenland is characterized as small, mixed and vulnerable.

Greenland Greenland ( kl, Kalaallit Nunaat, ; da, Grønland, ) is an island country in North America that is part of the Kingdom of Denmark. It is located between the Arctic and Atlantic oceans, east of the Canadian Arctic Archipelago. Greenland i ...

's economy consists of a large

public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, inf ...

and comprehensive foreign trade. This has resulted in an economy with periods of strong growth, considerable inflation, unemployment problems and extreme dependence on capital inflow from the Kingdom Government. GDP per capita is close to the average for European economies, but the economy is critically dependent upon substantial support from the Danish government, which supplies about half the revenues of the Self-rule Government, which in turn employs 10,307 Greenlanders out of 25,620 currently in employment (2015). Unemployment nonetheless remains high, with the rest of the economy dependent upon demand for exports of shrimp and fish.

Historical development

Except for an abortive royal colony established under Major

Claus Paarss Major Claus Enevold Paarss (18 February 1683 – 26 May 1762) was a Danish military officer and official. Retired from service,Marquardt, Ole"Change and Continuity in Denmark's Greenland Policy"in ''The Oldenburg Monarchy: An Underestimated Emp ...

between 1728 and 1730, colonial Greenland was administered by companies under royal charter until 1908.

Hans Egede Hans Poulsen Egede (31 January 1686 – 5 November 1758) was a Dano-Norwegian Lutheran missionary who launched mission efforts to Greenland, which led him to be styled the Apostle of Greenland. He established a successful mission among the Inui ...

's Hope Colony was organized under the auspices of the Bergen Greenland Company prior to its bankruptcy in 1727; it was succeeded by the merchant Jacob Severin (1733–1749), the General Trade Company (''Det almindelige Handelskompagni''; 1749–1774), and finally the

Royal Greenland Trading Department The Royal Greenland Trading Department ( da, Den Kongelige Grønlandske Handel, KGH) was a Danish state enterprise charged with administering the realm's settlements and trade in Greenland. The company managed the government of Greenland from 177 ...

(KGH; 1776–1908). Early hopes of mineral or agricultural wealth were dashed, and open trade proved a failure owing to other nations' better quality, lower priced goods and hostility.Marquardt, Ole.
Change and Continuity in Denmark's Greenland Policy
in ''The Oldenburg Monarchy: An Underestimated Empire?''. Verlag Ludwig (Kiel), 2006. Kale, lettuce, and other vegetables were successfully introduced, but repeated attempts to cultivate wheat or clover failed throughout Greenland, limiting the ability to raise European livestock.Del, Anden.
''Grønland som del af den bibelske fortælling – en 1700-tals studie''
" Greenland as Part of the Biblical Narrative a Study of the 18th-Century" After government-funded whaling failed, the KGH eventually settled on maintaining the native Greenlanders in their traditional pursuits of hunting and whaling and enforced a monopoly on trade between them and Europe. Repeated attempts to open trade were opposed on both commercial and humanitarian grounds, although minor reforms in the 1850s and 60s lowered the prices charged to the natives for "luxuries" like sugar and coffee; transferred more of the KGH's profits to local communities; and granted the important

Ivigtut Ivittuut (formerly, Ivigtût) (Kalaallisut: "Grassy Place") is an abandoned mining town near Cape Desolation in southwestern Greenland, in the modern Sermersooq municipality on the ruins of the former Norse Middle Settlement. Ivittuut is one ...

cryolite Cryolite ( Na3 Al F6, sodium hexafluoroaluminate) is an uncommon mineral identified with the once-large deposit at Ivittuut on the west coast of Greenland, mined commercially until 1987. History Cryolite was first described in 1798 by Danish vete ...

concession to a separate company. During the years before World War I, the KGH's independence was curtailed and the company folded into the

Ministry of the Interior An interior ministry (sometimes called a ministry of internal affairs or ministry of home affairs) is a government department that is responsible for internal affairs. Lists of current ministries of internal affairs Named "ministry" * Ministr ...

Climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

, apparent since the 1920s, disrupted traditional Kalaallit life as the milder weather reduced the island's seal populations but filled the waters offshore with

cod Cod is the common name for the demersal fish genus '' Gadus'', belonging to the family Gadidae. Cod is also used as part of the common name for a number of other fish species, and one species that belongs to genus ''Gadus'' is commonly not call ...

.Nielsen, Finn.
Planned reforms in Greenland". ''Arctic'', Vol. 4, No. 1 (May 1951), pp. 12–17.
/ref> After World War II, reforms were finally enacted by the Danish Greenland Commission composed of

Greenland Provincial Council The Greenland Provincial Council ( da, Grønlands Landsråd) was the provincial government of Greenland between 1950, when it was formed from the union of the earlier North and South Greenland Provincial Councils, and 1 May 1979, when it was replac ...

members and Danish economists. The report outlined a program to end the KGH model and establish a modern

welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...

on the Danish model and supported by the Kingdom Government. The KGH monopolies were ended in 1950; Greenland was made an equal part of the Kingdom of Denmark in 1953 and

Home Rule Home rule is government of a colony, dependent country, or region by its own citizens. It is thus the power of a part (administrative division) of a state or an external dependent country to exercise such of the state's powers of governance wit ...

granted in 1979. The KGH had long opposed urbanization of the Kalaallit Greenlanders, but during the 1950s and 1960s the Danish government introduced an urbanization and modernization program aimed at consolidating existing settlements. The program was intended to reduce costs, improve access to education and health care, and provide workers for modernized cod fisheries, which were growing rapidly at the time. The program faced a number of problems including the collapse of the fisheries and the shoddy construction of many of the buildings, particularly the infamous Blok P, and produced a number of problems of its own, including continuing unemployment and alcoholism. Greenland left the European Economic Community in February 1985, principally due to EEC policies on fishing and sealskin. Most EU laws do not apply to Greenland; however, owing to its connection with Denmark, Greenland continues to enjoy preferential access to EU markets. In the same year, Greenland exercised its new control over the Royal Greenland Trading Company to reestablish it as KNI. Over the next few decades, divisions of the conglomerate were slowly spun off and competition within the Greenlandic economy somewhat increased. Following the closure of the Maarmorilik lead and zinc mine in 1990 and the collapse of the cod fisheries amid colder ocean currents, Greenland faced foreign trade deficits and a shrinking economy, but it has been growing since 1993.

Sectors of the economy

The Greenland economy is extremely dependent on exports of fish and on support from the Danish Government, which supplies about half of government revenues. The public sector, including publicly owned enterprises and the municipalities, plays the dominant role in the economy.

Governance

The largest employers in Greenland are the various levels of administration, including the central Kingdom Government in Denmark, the Local Greenland Self-Rule Government, and the municipalities. Most of these positions are in the capital

Nuuk Nuuk (; da, Nuuk, formerly ) is the capital and largest city of Greenland, a constituent country of the Kingdom of Denmark. Nuuk is the seat of government and the country's largest cultural and economic centre. The major cities from other coun ...

.Government of Greenland.
About Greenland: Resources and Industry
". Accessed 30 Apr 2012. In addition to this direct employment, the government heavily subsidizes other major employers in other areas of the economy, including

Great Greenland Great Greenland Furhouse is a tanning and production company that processes furs and sells clothing, fashion wear and other products made of Greenland fur and seal skin, located in Qaqortoq, south Greenland. The company operates based on a servic ...

's sealskin purchases,

Pilersuisoq Pilersuisoq is a chain of all-purpose general stores in Greenland, a major division of the state-owned KNI conglomerate. Like its parent company, it is based in Sisimiut (Holsteinsborg), the second-largest town in Greenland. Lars Behrendt is ...

's rural stores, and some of

Air Greenland Air Greenland A/S (formerly named Grønlandsfly), also known as Greenlandair, is the flag carrier airline of Greenland, owned by the Greenlandic Government. It operates a fleet of 32 aircraft, including 1 airliner used for transatlantic and ch ...

and Royal Arctic's regional routes.

Fishing industry

The second-largest sector by employment is Greenland's fishing industry. The commercial fishing fleet consists of approximately 5,000 dinghies, 300 cutters, and 25 trawlers. While

was formerly the main catch, today the industry centers on cold-water shrimp and

Greenland halibut The Greenland halibut or Greenland turbot (''Reinhardtius hippoglossoides'') belongs to the family Pleuronectidae (the right-eye flounders), and is the only species of the genus ''Reinhardtius''. It is a predatory fish that mostly ranges at dept ...

. The

fish processing The term fish processing refers to the processes associated with fish and fish products between the time fish are caught or harvested, and the time the final product is delivered to the customer. Although the term refers specifically to fish, in ...

industry is almost entirely centered on Royal Greenland, the world's largest retailer of cold-water shrimp.

Hunting and whaling

Whaling Whaling is the process of hunting of whales for their usable products such as meat and blubber, which can be turned into a type of oil that became increasingly important in the Industrial Revolution. It was practiced as an organized industr ...

and seal hunting were once traditional mainstays of Greenland's economy. Greenlanders still kill an estimated 170,000 seals a year and 175 whales a year, ranking them second and third in the world respectively. Both

whaling Whaling is the process of hunting of whales for their usable products such as meat and blubber, which can be turned into a type of oil that became increasingly important in the Industrial Revolution. It was practiced as an organized industr ...

and sealing have become controversial, limiting the potential market for their products. As such, the only seal tannery in the country

Qaqortoq Qaqortoq, formerly Julianehåb, is a city in the Kujalleq municipality in southern Greenland, located near Cape Thorvaldsen. With a population of 3,050 in 2020, it is the most populous town and the municipal capital in southern Greenland and the ...

is heavily subsidized by the government to maintain the livelihood of smaller communities which are economically dependent on the hunt.

Reindeer Reindeer (in North American English, known as caribou if wild and ''reindeer'' if domesticated) are deer in the genus ''Rangifer''. For the last few decades, reindeer were assigned to one species, ''Rangifer tarandus'', with about 10 sub ...

or caribou are found in the northwest of the island, while

muskox The muskox (''Ovibos moschatus'', in Latin "musky sheep-ox"), also spelled musk ox and musk-ox, plural muskoxen or musk oxen (in iu, ᐅᒥᖕᒪᒃ, umingmak; in Woods Cree: ), is a hoofed mammal of the family Bovidae. Native to the Arctic, ...

en are found in the northeast and at

Kangerlussuaq Kangerlussuaq (; ; da, Søndre Strømfjord), is a settlement in western Greenland in the Qeqqata municipality located at the head of the fjord of the same name. It is Greenland's main air transport hub and the site of Greenland's largest commer ...

. Because the muskoxen's natural range favors the protected Northeast Greenland National Park, it is a less common object of hunting than in the past. Polar bear and

reindeer hunting in Greenland Reindeer hunting in Greenland is of great importance to the Greenlandic Inuit and sports Hunting, hunters, both Residency (domicile), residents and tourists.KNI, the state-owned successor to the

Royal Greenland Trade Department The Royal Greenland Trading Department ( da, Den Kongelige Grønlandske Handel, KGH) was a Danish state enterprise charged with administering the realm's settlements and trade in Greenland. The company managed the government of Greenland from 177 ...

; its rural sales division

; or its daughter company which has been purchased by the Danish Dagrofa Pisiffik. The third major chain is the Brugsen association of

cooperative A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-contro ...

Mining

used to be the world's premier source of natural

, an important mineral in aluminum extraction, but the commercially viable reserves were depleted in the 1980s. Similarly, deposits of coal, diamonds, and many metals including silver, nickel, platinum, copper, molybdenum, iron, niobium, tantalum, uranium, and

rare earths The rare-earth elements (REE), also called the rare-earth metals or (in context) rare-earth oxides or sometimes the lanthanides (yttrium and scandium are usually included as rare earths), are a set of 17 nearly-indistinguishable lustrous silve ...

are known to exist, but not yet in commercially viable deposits. Greenland's Bureau of Minerals and Petroleum is working to promote Greenland as an attractive destination for prospectors. Improvements in technology and increases in mineral prices have led to some mines being reopened, such as the lead and zinc mine at Maarmorilik and the gold mine at Nalunaq. Greenland is expected to be one of the world's next great mining frontiers as global warming starts to uncover precious metals from the frozen surroundings. Substantial volumes of minerals are now within reach of geological land mapping technologies, according to research conducted by GlobalData, a natural resources business intelligence provider.

Energy

At 70%, Greenland has one of the highest shares of renewable energy in the world, mostly coming from hydropower. While the Greenland Home Rule Government has primary sovereignty over mineral deposits on the mainland, oil resources are within the domain of the Danish exclusive economic zone. Nonetheless, prospecting takes place under the auspices of NUNAOIL, a partnership between the two governments. Some geologists believe Greenland has some of the world's largest remaining oil resources: in 2001, the

U.S. Geological Survey The United States Geological Survey (USGS), formerly simply known as the Geological Survey, is a scientific agency of the United States government. The scientists of the USGS study the landscape of the United States, its natural resources, and ...

found that the waters off north-eastern Greenland (north and south of the Arctic Circle) could contain up to of oil, and in 2010 the British petrochemical company Cairns Oil reported "the first firm indications" of commercially viable oil deposits. Nonetheless, all six wells drilled since the 1970s have been dry. Greenland has offered eight license blocks for tender along its west coast by Baffin Bay. Seven of those blocks have been bid for by a combination of multinational oil companies and NUNAOIL. Companies that have participated successfully in the previous license rounds and have formed a partnership for the licenses with NUNAOIL are DONG Energy,

Chevron Chevron (often relating to V-shaped patterns) may refer to: Science and technology * Chevron (aerospace), sawtooth patterns on some jet engines * Chevron (anatomy), a bone * '' Eulithis testata'', a moth * Chevron (geology), a fold in rock ...

, ExxonMobil,

Husky Energy Husky Energy Inc. is a company engaged in hydrocarbon exploration, headquartered in Calgary, Alberta, Canada. It operates in Western and Atlantic Canada, the United States and the Asia Pacific region, with upstream and downstream business segm ...

, and

Cairn Energy Capricorn Energy PLC (previously Cairn Energy PLC) is a British oil and gas exploration and development company and is listed on the London Stock Exchange. Capricorn has discovered and extracted oil and gas in a variety of locations around the ...

. The area available known as the West Disko licensing round is of interest due to its relative accessibility compared to other Arctic basins, as the area remains largely free of ice and contains a number of promising geological leads and prospects from the

Paleocene The Paleocene, ( ) or Palaeocene, is a geological epoch that lasted from about 66 to 56 million years ago (mya). It is the first epoch of the Paleogene Period in the modern Cenozoic Era. The name is a combination of the Ancient Greek ''pal ...

era. Coal used to be mined at Qullissat but this has been suspended. Electricity generation is controlled by the state-owned Nukissiorfiit. It is distributed at 220 V and 50 Hz and sockets of Danish type K are used. Electricity has historically been generated by oil or diesel power plants, even though there is a large surplus of potential

hydropower Hydropower (from el, ὕδωρ, "water"), also known as water power, is the use of falling or fast-running water to produce electricity or to power machines. This is achieved by converting the gravitational potential or kinetic energy of a w ...

. Because of rising oil prices, there is a program to build hydro power plants. Since the success of the 1993 Buksefjord dam, whose distribution path to

includes the Ameralik Span the long-term policy of the Greenland government is to produce the island's electricity from renewable domestic sources. A third turbine at Buksefjord brought its capacity up to 45 MW in 2008; in 2007, a second, 7.2 MW dam was constructed at

Qorlortorsuaq Qorlortorsuaq is a village in the Nanortalik district, in the Kujalleq municipality in southern Greenland, located at the site of the largest waterfall A waterfall is a point in a river or stream where water flows over a vertical drop or a ...

; and in 2010, a third, 15 MW dam was constructed at

Sisimiut Sisimiut (), formerly known as Holsteinsborg, is the capital and largest city of the Qeqqata municipality, the second-largest city in Greenland, and the largest Arctic city in North America.The term 'city' is loosely used to describe any popula ...

. There is a plan for an

Aluminium smelter Aluminium smelting is the process of extracting aluminium from its oxide, alumina, generally by the Hall-Héroult process. Alumina is extracted from the ore bauxite by means of the Bayer process at an alumina refinery. This is an electrolyti ...

plant, which requires multiple large (total 600-750 MW) hydropower plants. Domestic heating is provided by electricity at locations where there is a hydro power plant.

Tourism

Tourism is limited by the short summers and high costs. Access is almost exclusively by air, mainly from Scandinavia and Iceland. Some tourists arrive by cruise ship (but they don't spend much locally, since the ship provides accommodation and meals). There have been tests with direct flights from the

US East Coast The East Coast of the United States, also known as the Eastern Seaboard, the Atlantic Coast, and the Atlantic Seaboard, is the coastline along which the Eastern United States meets the North Atlantic Ocean. The eastern seaboard contains the coa ...

from 2007 to 2008, but these were discontinued. The state-owned tourism agency Visit Greenland has the web addres
Greenland.com
Tourism increased significantly between 2010 and 2019, with the number of visitors increasing from 460,000 per year to 2 million. Condé Nast Traveler describes that high level as "overtourism". One source estimated that in 2019 the revenue from this aspect of the economy was about 450 million kroner (US$67 million). Like many aspects of the economy, this slowed dramatically in 2020, and into 2021, due to restrictions required as a result of the

COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...

; one source describes it as being the "biggest economic victim of the coronavirus". (The overall economy did not suffer too severely as of mid 2020, thanks to the fisheries.) Visitors will begin arriving again in late 2020 or early 2021. Greenland's goal is to develop it "right" and to "build a more sustainable tourism for the long run".

Agriculture and forestry

Agriculture is of little importance in the economy but due to

climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

in southern Greenland, the growing season averages about three weeks longer than a decade ago which has enabled expanded production of existing crops. At present, local production accounts for 10% of potatoes consumption in Greenland, but that is projected to grow to 15% by 2020. Similarly, it has enabled new crops like apples, strawberries, broccoli, cauliflower, cabbage, and carrots to be grown and for the cultivated areas of the country to be extended although even now only about 1% of Greenland is considered arable. Expanded production is subsidized by the government through purchase guarantees by the state-owned Neqi A/S grocery store chain. The only forest in Greenland is in the Qinngua Valley near

Nanortalik Nanortalik (), formerly Nennortalik, is a town in Nanortalik Island, Kujalleq municipality, southern Greenland. With 1,185 inhabitants as of 2020, it is the eleventh-largest town in the country. The name ''Nanortalik'' means "Place of Polar Bear ...

. It is protected and not used for timber production.

Animal husbandry

Animal husbandry consists mainly of

sheep Sheep or domestic sheep (''Ovis aries'') are domesticated, ruminant mammals typically kept as livestock. Although the term ''sheep'' can apply to other species in the genus '' Ovis'', in everyday usage it almost always refers to domesticated ...

farming, with free-grazing flocks. Modern sheep farming methods were introduced in the early 20th century, with the first farm built in 1906. The farms provide meat for local consumption and wool mainly for export. Some 20,000 lambs are slaughtered annually in

Narsaq Narsaq is a town in the Kujalleq municipality in southern Greenland. The name ''Narsaq'' is Kalaallisut for "Plain", referring to the shore of Tunulliarfik Fjord where the town is located. History People have lived in the area for thousands o ...

by the state-owned Neqi A/S. The lack of private land ownership rights on Greenland forces farmers to jointly agree to terms of land usage. In the south, there is also a small cattle farm. Reindeer herding has been introduced to Greenland in waves since 1952. Supervision by Scandinavian

Sami Acronyms * SAMI, ''Synchronized Accessible Media Interchange'', a closed-captioning format developed by Microsoft * Saudi Arabian Military Industries, a government-owned defence company * South African Malaria Initiative, a virtual expertise ...

ended in 1978 and subsequent results were dismal. Repeated attempts in mid-west Greenland in the 1980s and the 1990s failed due to the immobility of the herds, which destroyed their forage. In 1998, the remaining herd was sold to the Nuuk municipality and removed through hunting. At that point, only one Greenlander was still a deerherd; the rest about 20 people were still hired Norwegian Sami. Although the conclusion was drawn that reindeer herding was incompatible with the local culture, the southern herds continue to prosper. In 2008, there was still a strong herd at the Isortoq Reindeer Station maintained by the Icelander Stefán Magnússon and Norwegian Ole Kristiansen.

References

External links

*
Setting up a Business in Greenland
, from the Greenland Home Rule Government {{EU Dependent economies, state=collapsed