Economic challenges and population decline threaten Nordic Arctic development

As the northern Arctic region faces an era of rapid transformation, experts are sounding the alarm on demographic and economic challenges that could hinder its development. The North Calotte region, encompassing northern parts of Finland, Sweden, and Norway, is grappling with population decline, migration, and uneven investment growth, all of which pose serious obstacles to sustainable economic progress.

In a lecture at the Arctic Frontiers Abroad Conference in Oulu, Finland, titled ‘Investment and Business Opportunities in the Northern Parts of Finland, Sweden and Norway’, Andrey Mineev, a Ph.d, Researcher at the High North Center for Business outlined the core issues facing the region. While investment growth in sectors such as renewable energy, mining, and manufacturing remain promising, Mineev stressed the need to address underlying demographic shifts.

“We observe a significant population decline in these northern regions, especially outside of major cities with universities,” Mineev stated. “This trend could undermine future business and investment opportunities if left unaddressed.”

According to the latest data, population decline in the northern Arctic is starkly more pronounced than in other parts of these countries. Ph.d, Oulu Business School Assistant Professor at the Department of Economics, Accounting and Finance Alexandra Middleton, who joined Mineev in the presentation, highlighted the gravity of the situation.

“The big cities that have university centers are growing—Luleå, Umeå, Tromsø, Bodø, Oulu, and Rovaniemi—but the rest, all these smaller municipalities, are shrinking,” she said.

Middleton added that the region’s working-age population is diminishing, with the only growing demographic being people aged 60 and older.

“It’s a worrying sign,” she said, “because this decline in the youth and working-age population threatens the region’s long-term sustainability. The only cohort that is ever growing is the aging population of people over 60 years old.”

Migration is exacerbating the problem, with many young people and families moving south to larger urban centers.

“We observe north-to-south migration outflows,” Middleton explained. “The increase in population only happens in big cities with universities, where innovation and jobs are created.”

These demographic trends raise a critical question for policymakers: How can the region attract new talent and reverse the current migration patterns?

“Should we just accept this situation—the growing urban-rural divide where only university centers are growing and the periphery is shrinking?” Middleton said. “Or should we make more strategic decisions around migration policies, housing, and job creation to make these regions attractive to newcomers?”

The pair also expressed concern about the region’s reliance on traditional industries, such as mining and manufacturing. To secure its economic future, they argue, the region must embrace a knowledge-based economy, leveraging its strengths in sectors like space technology, information communication technology, and circular economy innovation.

However, the demographic and migration issues must be resolved for this transition to succeed.

“People are the heart and core of any development,” Middleton said. “Without a strong, skilled workforce, none of these industries can thrive.”

As the world becomes more connected and reliant on renewable energy and technological innovation, the Arctic has the potential to become a hub for these sectors. But without addressing the demographic decline and the migration outflows, the region risks losing its competitive edge.

“We need to take these challenges seriously and consider different scenarios for the future,” Mineev concluded. “The decisions we make today will shape the economic trajectory.”