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Greenland’s Economy

Greenland’s Economy. In Perspective for Future Endevours. The presentation . Introduction Colonial period Home rule Current situation Future endevours. Introduction. 57,000 scattered in the worlds largest island Small market and small labour force

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Greenland’s Economy

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  1. Greenland’s Economy In Perspective for Future Endevours

  2. The presentation • Introduction • Colonial period • Home rule • Current situation • Future endevours

  3. Introduction • 57,000 scattered in the worlds largest island • Small market and small labour force • Block grant and mainly fishing industry • Low production level

  4. Colonial period • Colonization in 1721 • 1774 Danish state to over and established Kongelige Grønlandske Handel (KGH) • Monopoly of all trade from and to Greenland • All important decisions were made in Copenhagen • One-price system – goods sold same price all over Greenland

  5. Colonial period • Boom in fishing industry in early 1900s • In second world war USA was protector of Greenland • Cryolite production – material used in aluminium production • Goods from USA • After WWII the connection with Denmark re-established

  6. Colonial period • G50 modernization of Greenland economy • G60 industrialization of Greenland economy • Positive and negative effects

  7. Home rule • 1971 Greenland gain the rights of 12 nautical miles • Disapperiance of cod that led to shrimp fishing • Increase of block grant in that period • Majority in Denmark voted for to join EEC despite the Greenland reluctance • EEC grants oil companies to explore the fishing ground off west coast of Greenland • 70 procent vote for Home rule

  8. Home rule • KGH is taken over by Home rule and renamed to KNI • Lead and zink mining in Maarmorilik • Canada became leading nation in shrimp fishing in 1998 • TAC system was introduced • 30 per cent employment and over 90 per cent of the export. • Main actor Royal Greenland

  9. Current situation • Public sector – same principles as the scandinavian countries • 80 per cent of GDP • Large publicly owned enterprises – 2/3 of the economy is publicly owned • Concentration in certain economic activities – fishing, construction, extraction of raw materials and transport

  10. Current situation Main key figures

  11. Current situation • 90 per cent of trade with Denmark and Sweden • 2 per cent with Canada and USA • 85 per cent of exports are from fishing industry • Real growth in GDP around 1.0 - 2.5 per cent • Unemployment stayed roughly the same level • Budget deficit has been controlled around 260 to 210 million DKK

  12. Current situation • Challenges for Greenland is the control of budget deficit as efforts to improve education, health sector and labour market • Another challenge is reduction of dependency on imported labour force through education • Political will for privatization through entrepreneurship and innovation

  13. Current situation • Advantages of being small is flexibility and easy administration • In Greenland the main advantage is profitable unilateral and bilateral agreements • Geographical position is an advantage • The yearly transfer of block grant from Denmark shields Greenland economy from external fluctuations • Self-Government legislation freezes the block grant

  14. Mitigating the negative impacts and maximizing the positive impacts • Attempt to diversify the economy • Mineral resource development • Half of mineral resource activity income that exceeds 75 mill DKK will go to Denmark and half to Greenland • Main economic part of states that companies applying for license in Greenland have to be economically strong to fit all the requirement, have to prioritize local workforce, have to prioritize local enterprise and if possible lay the processing of extracted minerals locally • And finally make sure these projects, that usually characterized as mega-project, are social and cultural sustainable for the Greenlandic people

  15. Mitigating the negative impacts and maximizing the positive impacts Challenges and vulnerabilities stated are: • Language • Small and scattered population • Small communities • One stringed economy • Limited experience in mineral sector • And other national and local characteristics

  16. Mitigating the negative impacts and maximizing the positive impacts • Social impacts assessment • Gathering information for Bureau of Mineral and Petroleum to assess • Making plans for Benefit and Impact Plan • Licensee, Municipality and the Government sign the Impact Benefit Agreement that also consist of monitoring plan and evaluation plan

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