Competition for North Arctic Region Warming Up

The ‘North Arctic Region’ generally encompasses the Lapland area of Finland, Sweden, parts of Norway and Russia, though its geographic boundaries vary somewhat depending on who’s doing the defining.

Regardless of exactly where its borders lie, the region is fast establishing itself as an exciting cross-border economic geography, and it’s beginning to attract billions in investments from governments - most aggressively, China - and the private sector. In fact, over the next 10-15 years, the Lapland area of northern Finland projects 14-15 billion euros in industrial investment. Over that same period, industrial investment is expected to reach 120-130 billion euros in the European High North.


Stereotypes are shattering; The Arctic is more than reindeer and sub-zero temperatures. Paraphrasing an adage from the American West’s gold rush days, ‘there’s gold in them thar snowdrifts’.

4 factors driving North Arctic’s economic awakening:

  1. Geography – Literally at the top of the world, the North Arctic Region sits as the hub of potential shipping routes through the North Pole that would vastly reduce the cost and time required to transport goods between nations, enabling Chinese ships to unload cargo bound for the west coast of the U.S. in Alaska, for example.
  2. Climate Change – Melting ice is ushering in a new era of commerce and economic prosperity in the Arctic, not only opening the shipping lanes mentioned above (commerce facilitated by Scandinavian-manufactured ice-breaking vessels) and expanding rail access but opening previously inaccessible areas to tourism, mineral mining, and oil & gas exploration.
  3. Infrastructure Investment – Over the next 10 to 20 years the region will invest billions of dollars in new ports and rail lines, which will not only facilitate commerce but expand opportunities for the region’s manufacturing and raw materials production industries, along with downstream service providers, such as engineering, supply, and maintenance businesses.
  4. Technology – The region boasts an established technology infrastructure, globally connecting once-remote areas that were left out of the new economy. Finland is fast approaching 95 percent of the population having access to fixed high-speed broadband, and Lapland entrepreneurs are quickly earning a reputation as “tough as ice” business developers.  

The North Arctic Region is rich in natural resources, driving an economy based on the primary metals, paper and pulp, oil and gas, mining, and wind and bio-energy industries. With its limited population base it’s not an ideal location for operations requiring 500 employees or more; However, it presents an opportunity for small and medium-sized enterprises that service those vertically integrated primary industries, upstream and downstream.  Finland also has a tremendous entrepreneurial ecosystem, particularly in its robust tech sector, which is one of the best in the world.  

Arctic Business Forum 2018

Recently, I had the opportunity to join government, business leaders, and investors from 20 nations at the annual Arctic Business Forum in Kemi, Finland. Among many topics, the group discussed the region’s global competitiveness, concerns about sustainability, the region’s growth roadmap, R&D investments, workforce development, and strategies for communicating the region’s business case to foreign direct investors. That last topic – using external marketing to actively seeking foreign investment – represents a significant departure in thinking for the region, which traditionally has been very insular and focused on retaining and growing its economy from within.

One of the ‘a-ha’ moments at the forum for me was when I learned about China’s financial interest in the region. Over the last 10-15 years, China has invested billions of dollars in the Lapland area, in large part directing those funds to mineral exploration and mining. China is aggressively pursuing deeper bilateral economic relations and cooperative projects with Finland, and Chinese interests are heavily investing in everything from Finnish energy technology to tourism.

Another revelation was the working relationship and the degree of mutual-reliance and cross-border cooperation between the region and Russia. It makes sense from both parties’ perspectives, of course – they each border the arctic circle – but it’s easy to forget, watching our news and considering our adversarial relationship with Russia, how closely linked, economically, that part of the world is. The need for limited resources requires the North Arctic Region to maintain healthy ties with Russia, accepting the good with the bad.    

Certainly, there are skeptics, those who question the cost and long-term viability of building hundreds of miles of rail lines through permafrost, who envision ice encroaching on or closing shipping lanes and trapping ships, and who question long-term environmental impact and sustainability. Reasonable reservations all, but one thing is certain: global organizations are always seeking talent, resources, and opportunities, and the North Arctic Region, which has largely remained off the radar, is about to have its time in the spotlight.

Robert Hess
Vice Chairman, Global Strategy Team Leader

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