Chapter 7: Regional perspective on the economy
GDP in the Nordic countries grew by 3.5% between 2021 and 2022. However, the per capita GDP in the Nordic Region was much higher than the EU average – $80,406 compared to $57,098, with Norway having by far the highest figure. Intra-regional inequality quantified by Gini coefficient is growing in the Nordic countries, both between and within regions. While Denmark’s urban regions have higher growth in per capita GDP, the regional patterns in other Nordic countries are less related to urbanisation, e.g. Finland’s northern and less populated regions have the highest growth. Throughout this period, Sweden and Greenland had the highest levels of income inequality, Norway and the Faroe Islands the lowest, with Denmark, Finland and Åland in the middle. Research has argued that the high Gini coefficient in Greenland reflects both the small size of the population and the relatively large proportion employed in the informal economy and that the increase in inequality in Sweden was due to the diminished significance of social transfers within the working-age population and the resulting decrease in relative income levels experienced by the lowest quintile.
The highest municipal income disparities were observed in the capital city regions of Denmark, Finland and Sweden, each of which had Gini coefficients around 0.6. These municipalities also have some of the highest income levels in their respective countries. Data on territorial GHG (greenhouse gas) emissions from 1990 to 2021 was collated for each Nordic country. While emissions have surged in Iceland, a contrasting macro trend is evident in Denmark, Finland, and Sweden, where reductions have been consistently observed, the pace of which has been accelerating since 2010. Norway initially registered an increase, but it started to taper off in 2020. All the Nordic countries have exceeded the EU’s overall climate goals, with several of them on track to achieve carbon neutrality between 2035 and 2045.
Chapter 8: Business perspective on the economy
This section adopts a business-level perspective to analyse important economic, social and environmental indicators. SMEs form the backbone of the Nordic economy, comprising about 90% of companies and over half of people in work. Innovation measured by expenditure on both R&D and non-R&D innovation by SMEs shows regional variations. While urban regions have higher concentrations of SMEs involved in product innovation, more non-urban SMEs are involved in process innovation than in product innovation in the Nordic Region. The rate of business bankruptcies is a core indicator of the robustness of the economy from a business perspective and also since Nordic and international businesses have been impacted by the COVID-19 pandemic and rising inflation in recent years. Despite challenges during the COVID-19 pandemic, the Nordic countries fared relatively well in terms of bankruptcy rates. However, when job-retention schemes ended, the number of bankruptcies went up, as did inflation and interest rates.
Territorial GHG emissions vary at regional level because the countries and regions have different resources, energy mixes and production structures and, therefore, different emission patterns and climate goals. From 2017 to 2021, the Nordic regions cut their per capita GHG emissions by 11.3% on average, with an overall average fall of 8.7% over the same period. This trend is evident in Denmark, as well as in southern Sweden and southern Finland – densely populated areas that have taken steps toward expanding district heating and reducing carbon intensity. In regions historically reliant on fossil fuels for heat and power, emissions have continued to fall. Regardless of past trends, coal, oil and gas are still major components of primary energy consumption structures in the Nordic countries. Even if significant progress has been achieved in terms of generating renewable energy, substantial decarbonisation challenges remain in all of the Nordic countries because of fossil-based energy mixes (Sweden, Finland and Denmark), oil production (Norway) and industrial processing (Iceland)..
Chapter 9: Household perspective on the economy
This section looks at economic, social and environmental indicators from a household perspective. As far as purchasing power is concerned, Norway still has the highest income, although the differences between the countries have changed. Since 2015, Denmark has had a steady increase in household income, while Finland, Sweden and Åland have seen no increase – and in the last year, even a decrease – in purchasing power. The Faroe Islands and Greenland were slightly higher, reaching the level of Finland in 2022. Iceland’s purchasing power increased in 2022 but was still at the lowest level among the Nordic countries. All the Nordic countries have cut their consumption-based emissions significantly by around 30–50% since 2000. The results also show significant variations between municipalities when it comes to the composition of emission sources. Urban municipalities have a higher-than-average carbon footprint due to air travel, people in rural areas use more cars, and in the northern part of Sweden, a larger proportion of the emissions is caused by heating. The highest carbon footprints are in urban municipalities, followed by those with high levels of tourism, while the lowest are in municipalities within commuting distance of a small town.