Navigating Global Transitions in European Arctic Regions

1. Assessment & Recommendations

Socio-economic trends and policy frameworks in the NSPA

The Northern Sparsely Populated Areas (NSPA) of Finland, Norway, and Sweden present a unique blend of challenges and opportunities shaped by geographic, demographic, and economic contexts. Characterised by remote locations, harsh climates, and sparse populations, these regions are showing adaptability and proving to be strong innovators. Despite facing significant challenges, such as climate change, demographic shifts, and the geopolitical tensions triggered by Russia's invasion of Ukraine, the NSPA demonstrate that remote, sparsely populated areas can achieve positive socioeconomic outcomes. For example, over 2001-20, The NSPA region experienced an aggregate GDP per capita growth of 30% (1.35% annually), surpassing non-NSPA regions: 18% growth (0.85% annually), OECD non-metropolitan near a small FUA (NMR-S) regions: 25% growth (1.12% annually) and OECD non-metropolitan remote (NMR-R) regions: 15% growth (0.69% annually). This growth is influenced by initiatives such as smart specialisation, digitalisation, and efforts to improve regional attractiveness. These measures contribute to economic development, diversification, and resilience, providing insights for other rural areas within the OECD.

A central factor that has fuelled the performance in NSPA region is the focus on green technologies and sustainable resource management, which align local development with global sustainability goals. For example, Finnfjord AS located in northern Norway, is recognised as one of the world's most energy-efficient and environmentally friendly producers of ferrosilicon. Investments in clean energy, circular economies, and green innovation reduce reliance on traditional production technologies, while supporting global climate targets. Moreover, the NSPA’s commitment to navigating both green and digital transitions – particularly in response to unpredictable challenges like geopolitical instability – demonstrates their adaptability and foresight. By integrating sustainability and digitalisation into their strategies, the NSPA show how rural areas can be drivers on environmental sustainability and technological advancement.

The analysis undertakes a diagnosis in population trends, economic competitiveness, infrastructure, transition to a green economy and governance. These are summarised next.

Population dynamics and policy

Population dynamics

NSPA regions have lower populations on average when compared to other benchmark regions and are experiencing a long-term decline. In 2022, the average NSPA population was 2.5 times lower than in non-NSPA regions and one-third lower than OECD NMR-S regions. Between 2001 and 2022, the NSPA population decreased by nearly 2% (-0.01% annually on average), while non-NSPA regions grew by 12% (0.76% annually) and OECD NMR-S and non-metropolitan near a mid-size/large FUA (NMR-R) regions grew by 10% overall (0.31% annually) and 8% (0.43% annually), respectively. Only 46% of NSPA regions experienced population growth over this period, compared to 89% of non-NSPA regions. The largest decline was in South Savo (-0.81% annually), while Northern Ostrobothnia (0.49% annually) recorded the highest growth. These trends highlight a growing regional disparity, with NSPA struggling to maintain its population base.

The NSPA has also undergone significant demographic shifts, particularly within its working-age population, reflecting an overall trend toward an aging workforce. However, compared to other benchmarks, the region maintains a relatively stable base of younger workers, which could benefit long-term labor sustainability. The older working-age group (50-64) has grown from 30% to 32%, aligning with trends in other benchmark regions: OECD NMR-S (25% to 31%), OECD NMR-R (26% to 32%), and non-NSPA regions (28.9% to 29.4%). Meanwhile, the prime working-age group (35-49) declined from 33% to 29% between 2003 and 2022, mirroring similar trends in non-NSPA regions (32% to 31%) and OECD NMR-R (33% to 30%). Notably, the young working-age group (20-34) was the only cohort to experience absolute growth in the NSPA, rising from 27% to 30%, surpassing non-NSPA regions (30% to 31%). In contrast, OECD NMR-S and NMR-R regions saw declines in this group, from 32% to 28% and 30% to 28%, respectively.

This demographic shift has been accompanied by a sharp rise in the elderly dependency ratio (EDR). In 2002, NSPA and non-NSPA regions had nearly identical ratios, with around 26 people aged 65+ per 100 working-age individuals (15-64). Over time, however, the NSPA aged more rapidly, with an average annual growth of 2.4%, reaching 42% in 2022. Non-NSPA regions saw a slower increase (1.7% annual), ending at around 37%. The elderly population (65+) has increased at a faster rate in NSPA than in non-NSPA regions. Within NSPA, Kainuu (Finland) recorded the highest increase (+3.41%), while Jämtland Härjedalen (Sweden) had the lowest (+1.21%). By comparison, the median increase in non-NSPA regions was 1.45%.

The NSPA faces a declining population and rapid ageing, both of which are more pronounced than in non-NSPA regions. This dual combination can reinforce a negative cycle posing long-term sustainability challenges for the region.

Addressing demographic challenges

Demographic dynamics in the NSPA present a critical challenge to its economic, social, and fiscal resilience, demanding targeted and innovative solutions. These regions face a combination of ageing populations, declining birth rates, and significant youth outmigration, which strain local labour markets, reduce the taxbase, and can hinder the development potential of the NSPA. The shrinking workforce impacts productivity and weakens the financial capacity of municipalities, limiting their ability to fund and deliver essential public services. This fiscal pressure creates a negative feedback loop, as reduced service quality can further diminish the attractiveness of the region for both potential residents and investors.

Addressing these challenges requires multifaceted strategies, including incentivising young professionals by making quality housing available, competitive wages, and enhanced quality of life measures including quality services and cultural and recreational opportunities. Immigration policies should seek to attract foreign works with the skills that are needed in sectors of demand. Attracting skilled workers can help revitalise local economies and expand the tax base. Furthermore, better aligning education and vocational training with regional economic needs will retain a higher share of the local youth. Prioritising family-friendly policies, such as accessible childcare and flexible working conditions, can help support population growth and reduce barriers for working-age families. These efforts must also account for the inclusion of marginalised communities, ensuring that solutions address social cohesion and economic equity across the NSPA.

Economy, competitiveness, and policy

Economic outlook

The NSPA region recorded a higher GDP per capita (USD 41 284) in 2020 than the average of NMR-S and NMR-R regions, but lower than in nationally. This figure however remains below the non-NSPA average. Within the NSPA, Norrbotten (Sweden), Nordland, Troms, and Finnmark (Norway) had the highest GDP per capita, whereas South Savo, North Karelia, and Kainuu (Finland) the lowest. Between 2001 and 2020, GDP per capita in the NSPA grew 1.35% annually, outpacing the rates in non-NSPA regions (0.85%), OECD NMR-S (1.12%), and OECD NMR-R (0.69%).

Labour productivity in the NSPA in 2020 (USD 79 000) was below non-NSPA regions (USD 82 000). The annual average increase over 2008-20 was lower (0.46%) than in non-NSPA regions (0.56%). Productivity gains were primarily driven by within-sector improvements rather than resource reallocation between sectors. The sector with the highest productivity growth over 2008-20 include:

• Agriculture, Forestry, and Fishing (+50%), largely due to declining employment alongside increased gross value added.

• Professional Services (+42%), reflecting the OECD-wide shift toward a service-based economy.

• Mining (+37%), driven by shifts in labour and capital, with increases in both employment and gross value-added.

Conversely, productivity declined most in:

• Manufacturing (-73%), reflecting a structural shift away from the sector.

• Public Administration (-56%), due to rising employment and reduced public expenditure per worker, highlighting the high cost of service delivery in sparsely populated areas.

Non-NSPA regions experienced similar trends but with varying intensities, including stronger growth in mining and ICT and a less pronounced decline in the public sector (-9%).

The analysis suggests that the NSPA region has outperformed other rural OECD regions in GDP and productivity growth, yet sectoral shifts, regional inequalities, and structural challenges persist. Addressing these issues through targeted economic and labour policies will be crucial for inclusive and sustainable regional development.

Competitiveness, innovation, and trade

Firms in the NSPA region face competition at both national and international levels. Regional governments have implemented strategies to foster innovation and entrepreneurship, particularly among SMEs, which dominate the NSPA economy. Smaller firms (1–9 employees) make up 85% of all businesses in NSPA, comparable to non-NSPA regions (86%) and OECD NMR-R (87%) and NMR-S (89%) regions. However, these firms contribute only 28% of total employment in NSPA—higher than non-NSPA regions (21%) but lower than OECD NMR-R (33%) and NMR-S (32%) regions. This suggests the presence of a more fragmented distribution of firms with more limited employment capacity. Firm density in NSPA is lower than in non-NSPA regions, with 21 smaller firms per 1 000 individuals compared to 24 per 1 000 in non-NSPA. Larger firms (10+ employees) follow a similar trend, with a slightly lower density difference of 0.3 firms per 1 000 individuals.

Despite a relatively strong innovation ecosystem, NSPA lags behind non-NSPA regions. In 2020, NSPA recorded 106 patent applications per 1 million individuals, lower than non-NSPA regions (159) but significantly higher than OECD NMR-S (46) and NMR-R (21) regions, reflecting its relatively advanced high-tech innovation compared to similar regions. Innovation performance in NSPA has grown marginally, with patent applications increasing from 102 per 1 million individuals (2011-15) to 104 (2016-20), while non-NSPA regions saw a decline from 205 to 188. OECD NMR-S regions remained stable (50), whereas NMR-R regions declined (26 to 24). These trends highlight the need for continued efforts to foster innovation diffusion and address disparities within NSPA, particularly between urban, university-driven innovation and rural, incremental entrepreneurship.

Although geographic challenges faced by NSPA regions, sparse population and a remote location, continued to impact trade connectivity, it has been catching up in recent years. In 2020, total export values reached approximately USD 2 billion, lower than non-NSPA regions (USD 5.5 billion) and OECD NMR-S regions (USD 2.6 billion). This figure however is comparable to OECD NMR-R regions. Despite lower export values, NSPA has experienced robust growth in exports, increasing by 21% over 2015-20 – outpacing non-NSPA (10%), OECD NMR-S (9%), and OECD NMR-R (4%) regions. The compound annual growth rate for NSPA (3.3%) nearly doubled that of non-NSPA (1.7%) and was significantly higher than OECD NMR-S (1.5%) and NMR-R (0.7%) regions. Additionally, NSPA maintains a higher trade surplus than non-NSPA regions, indicating that exports significantly exceed imports. However, challenges related to regional data accuracy, headquarter bias, and intermediary trade companies complicate precise trade balance assessments.

Competitiveness through economic diversification and workforce development

The economic competitiveness of the NSPA depends on its ability to transform its production from traditional primary sectors including forestry, fishing, and mining, towards innovative, high-value economic products and processes. This shift is essential for ensuring long-term regional sustainability, economic diversification, and alignment with national and international policy priorities on innovation, environmental responsibility, and economic resilience. This task necessitates fostering innovation and entrepreneurship, particularly in industries such as renewable energy, ICT, biotechnology, and cold-climate technologies. Leveraging the region's competitive advantages, that include the presence of natural resources and geographic position, can attract investment and stimulate the growth of knowledge-intensive industries. Collaborative partnerships with universities, research institutions, and incubators are essential for creating an entrepreneurial ecosystem that supports start-ups and SMEs in these emerging fields. Targeted public and private investment, alongside tailored venture capital initiatives, can enable the development of competitive local industries while encouraging job creation.

A key pillar of competitiveness is aligning workforce development with the needs of these evolving economic sectors. The NSPA faces significant challenges in terms of labour shortages, particularly in specialised and high-skill industries, which are exacerbated by demographic decline and outmigration. Addressing these gaps requires the implementation of tailored educational programmes and vocational training that equip local populations with the skills demanded in growing sectors. Expanding partnerships between industry and educational institutions can ensure that curricula remain aligned with market demands. Simultaneously, policies to attract and retain talent, such as scholarships, mentorship programmes, and professional networks, can help reverse the trend of youth outmigration and bring fresh energy to the workforce. Additionally, targeted immigration strategies, including international recruitment and integration programmes, can further address labour shortages and support economic growth. Finally, promoting gender equity and workforce inclusivity can unlock untapped potential within the region.

Strategic infrastructure and policy

Accessibility to markets and connectivity

The NSPA region faces significant accessibility challenges due to its vast geography and dispersed population. These difficulties manifest both in physical and digital infrastructure, affecting residents’ access to essential services, economic opportunities, and overall quality of life.

Physical accessibility: distance and transportation limitations

A key indicator of accessibility is the drive time to the nearest large city, which may influence access to employment, education, and healthcare. Compared to non-NSPA regions, the NSPA has fewer large urban centres, resulting in longer travel distances and logistical barriers that hinder mobility and economic efficiency. The region’s heavy reliance on road transport exacerbates these challenges. With limited railway infrastructure, roads serve as the primary mode of transport, yet they are often narrow, requires updating, and prone to congestion. These deficiencies restrict passenger mobility, disrupt freight movement, and reduce economic productivity while increasing environmental impact.

Although drive-time data provides valuable insights into car travel, it does not fully capture the region’s transportation dynamics, and air travel remains a critical link for many remote NSPA communities. Many residents rely on regional airports for access to essential services, business opportunities, and long-distance travel, making aviation infrastructure a key component of connectivity in the region.

Digital accessibility: internet infrastructure and regional disparities

Improved digital infrastructure can help mitigate physical accessibility constraints in NSPA regions, but disparities in internet access and quality persist. Rural areas often lack reliable internet, and available speeds tend to be lower than in urban areas.

According to OECD estimates from Q4 2023, the national average fixed broadband download speeds were approximately 140 Mbps in Norway and Sweden and 105 Mbps in Finland (OECD, (forthcoming)[1]). Progress in NSPA regions varied, with disparities decreasing in most but not all regions. Among the 14 NSPA regions, seven recorded user-reported internet speeds above their national averages in Q3 2023. The highest positive deviations were observed in Central Ostrobothnia (13.3%), Northern Ostrobothnia (13.2%), Troms and Finnmark (11.4%), Lapland (8.5%), Kainuu (5.9%), and Pohjois-Savo (5.6%). Conversely, seven regions lagged behind their national benchmarks, with the largest negative gaps in South Savo (-29.8%), Västerbotten (-27.5%), Norrbotten (-16.6%), Jämtland Härjedalen (-14.1%), Västernorrland (-8.9%), North Karelia (-7.0%), and Nordland (-1.1%).

Despite an overall trend of narrowing disparities, four of the six regions with below-average speeds in Q4 2021 saw their gaps widen further: South Savo (7.7 percentage points), North Karelia (4.7 percentage points), Norrbotten (3.0 percentage points), and Västerbotten (2.6 percentage points).

Fixed broadband speeds have improved across OECD, NSPA, and non-NSPA regions. Between Q4 2021 and Q3 2023, speeds increased by 15% in NSPA regions, 17% in non-NSPA regions, 35% in OECD NMR-R regions, and 40% in OECD NMR-S regions. However, relative growth was lower in NSPA regions, as areas with initially slower speeds – such as OECD NMR-R and NMR-S – had more room for improvement. A similar trend emerged at the national level: Finland’s speeds rose by 30%, while Sweden and Norway, starting from higher baselines, saw smaller increases of 12% and 11%, respectively – both below the OECD average.

Connectivity as a catalyst for regional integration

Connectivity is essential for unlocking the economic and social potential of the NSPA, integrating it into national and global networks, and overcoming the isolation imposed by its geographic and demographic characteristics. Enhanced physical infrastructure – spanning road, rail, air, and maritime networks – is crucial for improving market access and facilitating the seamless movement of goods, services, and people. Enhancing transportation corridors and expanding regional connections will help expand commuting flows improve labour market integration, making it easier for workers to access job opportunities. This is crucial for tackling demographic shifts and workforce shortages. Investments in transport systems must also emphasise sustainability, incorporating green solutions such as electrified railways and low-emission public transit systems that align with the region’s broader climate goals.

Digital connectivity is equally critical for regional integration. Further, expanding access to high-speed broadband and 5G networks can bridge the digital divide and support remote economic activities such as telemedicine, e-learning, and remote work. This digital infrastructure is particularly important for smaller, isolated communities where physical connectivity remains a challenge. By fostering digital inclusion, the NSPA can promote entrepreneurship, attract investments in ICT and digital services, and enhance the delivery of public services. Additionally, robust digital infrastructure facilitates cross-border collaboration, facilitating Finland, Norway, and Sweden to jointly develop research and innovation projects. This strengthens regional co‑operation and enhances their integration into global digital networks, driving economic and technological growth.

Cross-border co‑operation on infrastructure development amplifies the impact of connectivity improvements and strengthens regional integration. Collaborative initiatives, such as shared transport projects and joint digital infrastructure investments, can help address common challenges and capitalise on shared opportunities. The harmonisation of policies and standards across borders will ensure the more seamless movement of goods and people while fostering economic synergies and cultural exchange. By prioritising both physical and digital connectivity, the NSPA can reduce geographic barriers, enhance regional cohesion, and position itself as a vital contributor to the broader Nordic and European economies.

Green transformation and policy

The shift to a green economy

The NSPA regions have a relative abundance in natural resources, positioning them well for progress in the green transition. With nature conservation as a core value, these regions have made significant efforts in reducing greenhouse gas (GHG) emissions and transitioning to renewable energy. Production-based statistics indicate that from 1970 to 2022, GHG emissions per capita in the NSPA regions declined from 14 to 10 tons of CO₂ equivalent. This reduction surpasses that of OECD NMR-S regions, where emissions remained stable at 12 tons per capita, and OECD NMR-R regions, where the decline was minor, from 19 to 18 tons per capita. However, the progress in NSPA regions has been slower than in non-NSPA regions in Finland, Norway, and Sweden, where emissions were halved from 12 to 6 tons per capita over the same period.

Despite relatively higher per capita emissions, total emissions in the NSPA regions remain lower than in non-NSPA regions. In 2022, the regional average emissions in the NSPA stood at 3.26 tons of CO₂ equivalent, compared to 4.32 tons in non-NSPA regions. However, while non-NSPA regions have reduced their emissions over time, the NSPA regions have experienced an increase. In 1970, NSPA regions emitted 2.89 tons of CO₂ equivalent per region, which rose to 3.26 tons in 2022. In contrast, emissions in non-NSPA regions fell from 4.93 to 4.32 tons per region. This indicates that while per capita emissions have decreased, total regional emissions in the NSPA have risen, whereas they have declined in non-NSPA regions.

The NSPA regions stand out in their adoption of renewable energy, demonstrating a high degree of sustainability in electricity production. In 2019, 99% of electricity production in the NSPA was generated from renewable sources, significantly higher than the 77% share in non-NSPA regions. This figure is also above the levels observed in OECD NMR-S (72%) and NMR-R (70%) regions. The high integration of renewable electricity in the NSPA regions highlights their progress in the green transition and suggests that other regions could draw insights from their experience in adopting renewable energy.

Overall, the NSPA regions have made significant progress in reducing GHG emissions per capita and expanding renewable energy use. However, the rise in total regional emissions, in contrast to the declining trend in non-NSPA regions, remains a key issue. This underscores the need for a deeper understanding of the factors contributing to increased emissions at the regional level.

Driving the green transition and equity

The green transition in the NSPA is a pivotal opportunity to drive economic transformation while ensuring equity and inclusivity in its implementation. This transition, rooted in decarbonisation and the adoption of renewable energy technologies, leverages the NSPA's abundant natural resources, such as wind, minerals, hydroelectric power, and bio-based materials. However, achieving these objectives requires policies that balance environmental sustainability with social justice, ensuring that community are not left behind. The green transition must address structural disparities, providing equitable benefits to all stakeholders, including marginalized groups and Indigenous peoples.

Decarbonising industries, such as mining, forestry, and steel production, is central to the green transition. Investments in technologies like green hydrogen, carbon capture and storage, and advanced biofuels can significantly reduce emissions while maintaining economic competitiveness. These industries must also adopt practices that minimise their environmental footprint. At the same time, polices need to ensure that the economic benefits of this transformation—such as job creation in green technology sectors—must also reach regions and communities where they are being produced. Ensuring that affected communities, particularly those reliant on traditional industries, are supported through retraining programmes and economic diversification initiatives will be critical to achieving a just transition.

Equity in the green transition requires the inclusion of Indigenous communities and other underrepresented groups in decision-making processes. The Sámi people, as stewards of traditional lands and resources, hold valuable knowledge that can enhance sustainable practices in areas such as land use, reindeer herding, and biodiversity conservation. Policies must respect Indigenous peoples’ rights by ensuring that land-use planning and resource management are conducted with their active participation and consent. By incorporating their perspectives, the NSPA can align environmental objectives with cultural preservation, strengthening social cohesion and long-term sustainability.

Finally, the green transition must be supported by inclusive financial and policy mechanisms to address disparities in access to resources and opportunities. Investments in green infrastructure, such as energy-efficient housing and low-carbon transport systems, should also reach underserved areas and communities, ensuring equitable access to the benefits of sustainability. Furthermore, participatory governance models, where local stakeholders play a central role in planning and implementation, can foster trust and community buy-in. By aligning green economic strategies with equity-focused policies, the NSPA can lead a transition that not only achieves environmental goals but also promotes a more inclusive, resilient, and fair society.

Inclusive governance and community participation

Inclusive governance and community participation are foundational to the supporting of a sustainable and resilient development model in the NSPA. The multilevel governance structure in Finland, Norway, and Sweden offers a unique opportunity to involve diverse stakeholders in shaping regional policies. Local and regional governments, operating with varying degrees of autonomy, play a crucial role in strategic planning and the delivery of essential services adapting to the specific needs and priorities of their communities. These efforts can be enhanced by participatory processes that actively engage residents, businesses, academic institutions, and civil society organisations. Such inclusion ensures that development priorities reflect the region's diverse needs and aspirations, fostering trust and long-term commitment to policy outcomes.

A hallmark of governance in the NSPA is the integration of Indigenous peoples’ rights and voices, particularly those of the Sámi people. The Sámi Parliaments in each country act as representative bodies that advocate for Indigenous rights and interests, trying to influence policies on land use, cultural preservation, and sustainable development within national legal frameworks and political dynamics.

Policies must continue to strengthen these institutions, ensuring that Sámi perspectives are not only included but prioritised in regional decision-making. Collaborative governance models that involve Indigenous peoples’ representatives in land-use planning, resource management, and green transition projects ensure alignment between environmental and cultural objectives. This approach respects Indigenous peoples’ rights while enabling the NSPA to benefit from traditional ecological knowledge that can enhance sustainability efforts.

Transparency and accountability are essential for building trust between communities and policymakers. Effective participatory governance—through public consultations, citizen assemblies, and digital platforms for feedback—can strengthen community engagement and improve the legitimacy of policies. For example, involving local stakeholders in the design and implementation of infrastructure projects can help addressing concerns related to environmental impact, land use, and social equity. By embedding these practices into decision-making, the NSPA can foster a culture of shared responsibility, ensuring that communities have a meaningful role in shaping regional development.

Fair and effective financial mechanisms are crucial for inclusive governance. Local governments fund public services and development projects through a mix of municipal taxes, national subsidies, and European Union funds. However, differences in fiscal capacity between regions can lead to uneven service delivery and infrastructure development.

To mitigate these disparities, equalisation mechanisms and targeted funding programmes should focus on underserved areas, ensuring that all communities- regardless of their size or economic resources-—have the opportunity to contribute to and benefit from regional growth.

Unlocking the NSPA’s potential

Unlocking the full potential of the NSPA requires a comprehensive and integrated approach that leverages the region's unique assets while addressing its persistent challenges. Central to this transformation is the ability to harness the region’s competitive advantages—such as its rich natural resources, strategic Arctic location, and strong tradition of governance—while mitigating barriers related to geographic isolation, demographic pressures, and labour market gaps.

Economic diversification and innovation are critical drivers of the NSPA’s potential. The region’s transition to a knowledge-driven and green economy must be supported by targeted investments in research and development, particularly in sectors like renewable energy, cold-climate technologies, and sustainable resource management. Collaboration between governments, universities, and private enterprises can create innovation hubs that stimulate entrepreneurship and attract global attention. By fostering a robust ecosystem of small and medium-sized enterprises (SMEs) and start-ups, the NSPA can help local economies to adapt to global trends and disruptions.

Realising this potential also requires policies that prioritise inclusive growth. The success of the NSPA depends on its ability to create opportunities for all communities, particularly those facing structural disadvantages such as more remote locations or limited access to infrastructure and services. A focus on participatory governance, equitable resource allocation, and cross-border co‑operation can ensure that regional development is both inclusive and sustainable.

By aligning these efforts with the broader objectives of the European Green Deal and Arctic strategies, the NSPA can enhance its role in promoting sustainable and inclusive development, ensuring the region remains both competitive and liveable for future generations.

Recommendations

This section provides actionable policy recommendations to help guide the NSPA regions through global megatrends, transitions and economic shocks. The recommendations are derived by combining quantitative diagnosis and analysis with qualitative analysis that undertook field visits to all 14 NSPA regions. In line with the chapters of this report, the recommendations are structured in four thematic areas that are critical to the NSPA’s socio-economic development (Table 1.1).

• Sustainable development in the context of demographic change

• Competitiveness and connectivity

• Green transition and environmental challenges

• Multilevel governance and cross-border co‑operation

Recognising the need for a holistic, integrated, and tailored approach, recommendations need to align policy response across levels of government, countries, and the 14 NSPA regions. In addition to these recommendations, the regional reports contain tailored made recommendation for each of the NSPA regions. The recommendations are therefore organised and categorised at different geographic scales and for different policy constituencies as follows (Table 1.2):

• 11 Recommendations for the NSPA regions as a whole

• 8 Recommendations common to Finland, Norway and Sweden (national level)

• 3 Recommendations for the European Union

• 29 Recommendations for Finland and the Finnish NSPA

  • National level (14)

  • National and regional (NSPA) levels (3)

  • Regional (NSPA) level (12)

• 33 Recommendations for Norway and the Norwegian NSPA

  • National level (17)

  • National and regional (NSPA) levels (3)

  • Regional (NSPA) level (13)

• 31 Recommendations for Sweden and the Swedish NSPA

  • National level (12)

  • National and regional (NSPA) levels (12)

  • Regional (NSPA) level (7)

Table 1.1. Four main thematic areas of policy recommendations for NSPA

Thematic Area	Recommendations
Addressing demographic challenges	Actionable guidelines to adapt and mitigate demographic shifts.
Competitiveness and connectivity	Policies promoting enhanced economic competitiveness and improved connectivity, both digital and physical.
Green transition and environmental challenges	Approaches for fostering green economic transition, mitigating environmental issues, and responding to climate change challenges.
Multilevel governance and cross-border co‑operation	Emphasis on strengthening governance structures and promoting cross-border collaboration and foresight for regional development.

Source: Author’s elaboration

Table 1.2. Policy recommendations for the NSPA, countries and regions

Level	Number of Recommendations	Areas of Focus
NSPA regions as a whole	11	Overarching recommendations applicable to all NSPA regions.
Finland, Norway, and Sweden	8	Policy actions common to Finland, Norway, and Sweden at the national level.
European Union	3	Recommendations for the EU, considering the broader NSPA regional and economic context.
Finland and the Finnish NSPA	29
National level	14	Finland-specific national policies.
National and regional levels	3	Policies applicable at both national and regional (NSPA) levels.
Regional level	12	Recommendations specific to the Finnish NSPA regions.
Norway and the Norwegian NSPA	33
National level	17	Norway-specific national policies.
National and regional levels	3	Policies applicable at both national and regional (NSPA) levels.
Regional level	13	Recommendations specific to the Norwegian NSPA regions.
Sweden and the Swedish NSPA	31
National level	12	Sweden-specific national policies.
National and regional levels	12	Policies applicable at both national and regional (NSPA) levels.
Regional level	7	Recommendations specific to the Swedish NSPA regions.

Source: Author’s elaboration

Recommendations for the NSPA as a whole

Demographic challenges should support core services in smaller local labour markets. National governments should offer practical guidance, clear policy frameworks, and targeted financial support to help smaller municipalities improve service delivery. However, regional governments should take the lead in implementing and managing core public services in these areas, tackling challenges like as high transportation costs, difficulties in attracting skilled professionals, and limited economies of scale. This approach allows national oversight to support regionally tailored solutions that effectively address local needs.

Encourage “smart shrinking” for viability. For municipalities facing depopulation, national and regional governments should support a “smart shrinking” approach. This means providing financial and logistical support to help these communities adapt in a sustainable way, managing population decline while maintaining essential services and ensuring long-term viability.

Enhance inter-municipal collaboration. Strengthen collaboration between municipalities by expanding programmes that enable share services, pool labour resources, and co‑ordinated regional development. In cases where municipalities are not geographically close, use remote delivery mechanisms to ensure efficient service delivery and maintain regional connectivity.

Foster flexible workforce development and enhance elderly workforce participation. Workforce development programmes should prioritise flexibility, equipping residents with both job-specific skills for long-term careers and transferable skills that allow for smooth transitions between occupations. This ensures workers remain adaptable to shifting job markets and changing economic conditions. Simultaneously, policies should encourage greater participation of older workers by revising employment regulations and supporting employer practices such as job sharing, workplace adaptations, expanded part-time opportunities, flexible scheduling, and targeted incentives to retain experienced workers. These measures will help address demographic challenges and keep older workers engaged in the economy.

Attract and retain workers through lifestyle and housing improvements. To make NSPA regions more attractive to residents and potential newcomers, it is essential to ensure affordable housing and a high quality of life. This requires a comprehensive housing strategy focused on affordability and liveability. Key actions include providing incentives for the construction and renovation of affordable homes, streamlining zoning and regulatory processes to accelerate housing development, and fostering collaboration with private developers and local governments to expand housing supply. Additionally, targeted marketing campaigns aimed at former residents, tourists, and immigrants will showcase the region’s opportunities and lifestyle benefits, reinforcing both population retention and growth.

Competitiveness

Strengthen entrepreneurship and SME support. Expand targeted programs to support entrepreneurship and the growth of SMEs, focusing on access to financing, mentorship, and market expansion. Encouraging innovation-driven enterprises and fostering collaboration between local businesses and research institutions can help diversify the economy, create sustainable job opportunities, and enhance community resilience.

Support productivity-enhancing firms. Economic development strategies should prioritise firms that can increase productivity, as rising labour costs from workforce shrinkage will require greater competitiveness. Tailor regional policies to support firms in enhancing efficiency and innovation, rather than offering broad, sector-specific support. This approach will help local economies remain competitive in the face of demographic challenges.

NSPA co‑operation

Enhance co‑ordination and strategic alignment in Nordic co‑operation. To effectively address current and future challenges faced by the NSPA, it is crucial to promote a higher level of co‑ordination across Nordic co‑operation initiatives. Strengthening co‑ordination among the NSPAs in their participation in cross-border and transnational initiatives is key to fostering synergies and ensuring that these efforts are aligned with the region's strategic priorities. A central component of this effort is the creation of a more effective co‑ordination platform for the NSPA, building upon the existing NSPA Network. This platform should facilitate dialogue and collaboration among regional actors, including local governments, municipalities, and national authorities, while also promoting a unified regional voice at both national and international levels. To further strengthen collaboration, joint co‑operation projects should be designed with strategic alignment across Finland, Norway, and Sweden. One potential measure is the establishment of an NSPA committee for regional co‑operation, supported by a permanent secretariat. This framework would ensure that projects are not only strategically aligned but also address long-term development needs in a coherent manner.

Improve understanding and learning of the benefits of Nordic co‑operation for the NSPA. A comprehensive monitoring and evaluation exercise should be conducted to assess the benefits of Nordic cross-border and transnational co‑operation for the NSPA. This analysis will provide factual evidence on how existing Nordic co‑operation bodies and initiatives have contributed to regional development. Based on this data, the NSPA will be better positioned to engage in future co‑operation initiatives and make informed decisions on the design of strategies, programmes, and projects. Understanding the benefits of Nordic collaboration will empower regional actors to actively participate in and shape future cross-border initiatives.

Facilitate regional co‑operation on strategic infrastructure and defence. Promote east-west regional co‑operation by addressing shared challenges and opportunities through investments in strategic infrastructure. In particular, for border regions or those with military presence, it is essential to replicate successful frameworks such as Troms, Nordland, and Finnmark’s "Defence Forum." These models improve co‑ordination with military activities and help leverage associated benefits, such as shared resources and enhanced security. This collaboration should also encompass critical infrastructure projects, which are vital for the economic and social well-being of the region.

Strengthen NSPA foresight capacity through regional collaboration and intelligence networks. Build foresight capacity at the local level is crucial to address regional disparities and promote inclusive development. This requires equipping civil servants and local institutions with the skills and resources to integrate future considerations into policy analysis and decision-making. A practical approach is "learning-by-doing," where hands-on experience fosters anticipatory thinking and proactive planning. Developing regional foresight intelligence with a spatial lens is also essential for strengthening cross-regional collaboration. This involves gathering and analysing data on local and global trends to assess their impact on regional co‑operation and cross-border initiatives. Special attention should be given to shared challenges, such as labour market integration, digital connectivity, and infrastructure development, particularly in rural areas. Additionally, identifying joint opportunities in areas like renewable energy, tourism, and natural resource management can help drive collaborative regional initiatives. To support this effort, establishing joint NSPA foresight hubs or networks is key. These hubs could be integrated into existing educational institutions or formed as collaborative networks focusing on tracking and analysing trends at global, national, and local levels. They would provide actionable insights to shape long-term strategies and identify immediate opportunities. Moreover, these hubs could serve as early warning systems for emerging challenges, ensuring that regions remain resilient and adaptable in an evolving landscape.

Recommendations common for Finland, Norway and Sweden (national level)

Sustainable development during demographic change

Integrate local labour market assessment and support. Conduct comprehensive assessments of local labour markets in small and isolated communities, focusing on their future potential. National governments should support capacity-building initiatives and foster collaboration between regions on key issues like connectivity, digitalisation, and skills supply. This initiative should be implemented through Nordregio to ensure coherence and efficient resource allocation across NSPA regions.

Develop innovative service delivery models. Allow regions and municipalities more autonomy in determining public service delivery methods, focusing on achieving desired outcomes instead of prescriptive approaches. For instance, successful models like Västerbotten's rural healthcare delivery should be scaled across the NSPA regions to promote innovation in service provision.

Foster outcome-based governance in public services. Continue devolving public service responsibilities to regional and municipal levels, ensuring these transfers include the necessary fiscal capacity. Implement outcome-based evaluations to assess performance and incentivise local innovation in service design and delivery. This approach will empower local governments while maintaining accountability for results.

Enhance supplemental funding for isolated municipalities. Provide targeted funding to municipalities facing high public service delivery costs due to demographic shifts. This supplemental funding should help mitigate challenges in education, healthcare, and other essential services caused by high unit service costs due to small populations and geographic isolation.

Enhance transport infrastructure investments. Prioritise investments in east-west transport infrastructure to better connect NSPA regions with both external and internal markets. This includes developing roads, air connections, and grid interconnections. Also, continue enhancing North-South connectivity within the region to improve overall competitiveness and address national security concerns.

Co‑ordinate energy grid development. Develop a co‑ordinated energy transmission strategy that balances east-west and north-south interconnections. This strategy should aim to enhance energy resilience, improve load balancing, and foster economic integration within the NSPA, ensuring energy security for all regions.

Implement tax credits to address living costs. Introduce a lump-sum tax credit for NSPA residents to help alleviate high living costs. This measure would support lower-income households and incentivise workforce participation, particularly in areas with high cost-of-living disparities.

Disaggregate sectors’ statistics reporting. Improve data collection by disaggregating e.g. agricultural statistics into distinct sectors: Farming, Fishing, and Forestry. This will enable better identification of economic strengths and opportunities specific to different NSPA regions, helping to unlock the potential of local renewable resources.

Recommendations for the European Union

Competitiveness and connectivity

Promote smart Arctic innovation hubs and platforms. To foster sustainable development and resilience in the Arctic, it is crucial for the EU to invest in the creation of smart Arctic innovation hubs and platforms. Key actions may include: (i) Develop guidelines for smart, climate-resilient infrastructure using renewable energy and smart grid technologies, supported by pilot programmes involving public and private sectors. (ii) Encourage the creation of Arctic-specific technologies by providing financial incentives to businesses and research institutions, particularly those utilising local resources like forestry by-products and mining residues. Support circular economy models in Arctic industries to ensure environmental and economic benefits. (iii) Promote the creation of Digital Twin technology to enhance resource management and territorial planning in the Arctic. Pilot projects should focus on urban planning, energy management, and environmental monitoring using real-time simulations tailored to Arctic conditions. (iv) Establish platforms for sharing best practices, data, and research among stakeholders (governments, businesses, and academia) to promote innovation, regional co‑operation, and digital transformation in the Arctic. These platforms should link Arctic stakeholders with broader EU innovation networks.

Green transition and environmental challenges

Support green and just transition policies for marginalised communities. To ensure that the transition to a sustainable, low-carbon economy is both effective and equitable, it is essential to develop policies that support marginalised communities and prioritise inclusivity. Key actions include deploy targeted financial instruments to support marginalised communities by earmarking funds for local renewable energy projects, energy-efficient housing, and climate adaptation. Expand microfinance and low-interest loan programs to enable community investments in clean energy. Simplify funding applications and provide technical assistance to reduce barriers to access. Prioritise outcome-based grants that promote job creation, skills training, and local business growth in the green sector. Guarantee equitable fund distribution through quotas or priority access for disadvantaged groups, ensuring resources reach those most in need.

Multilevel governance and cross-border co‑operation

Support Arctic geopolitical resilience and energy security. In light of growing geopolitical challenges, including the impact of Russia’s invasion of Ukraine, it is crucial to strengthen the Arctic's energy resilience and security. Actions may include: (i) Prioritise investments in renewable energy projects tailored to the Arctic’s unique environmental conditions, such as wind, hydro, and bioenergy to increase energy self-sufficiency. (ii) Promote cross-border energy partnerships, particularly within the NSPA to enhance energy security and resilience. This includes facilitating shared energy infrastructures, such as regional electricity grids and interconnectors, to improve flexibility and reliability. (iii) Focus on the development of advanced energy storage technologies—such as batteries, hydrogen storage, and other innovative solutions—to ensure reliable energy supply during disruptions, particularly in periods of geopolitical instability. (iv) Support the alignment of energy policies and investments in shared infrastructure among Finland, Norway, and Sweden. Encourage trilateral co‑operation to streamline policy frameworks, co-invest in infrastructure projects, and address energy challenges while ensuring resilience against geopolitical pressures and climate change.

Recommendations for Finland and the Finnish NSPA

National level

Competitiveness and connectivity

Increase SME access to digital and green technologies. Recognising the transformative potential of digital and green technologies, the Finnish Ministry of Economic Affairs and Employment and the Ministry of Trade and Industry could establish specialised innovation hubs to support SMEs in adopting these technologies. These hubs would provide resources, expertise, and networking opportunities in fields like advanced digital tools and sustainable practices. Economic incentives such as tax credits, grants, and regulatory frameworks should encourage SME adoption of digital and green innovations. The goal could be to support the digital and green transformation of 100 SMEs by 2030, positioning Finland as a leader in sustainable business innovation. Expected outcomes may include establishment of digital and green technology support centres (e.g. innovation hubs, green tech parks), introduction of new regulations on tax incentives for digital transformation investments, development of sustainable business certification programs for SMEs.

Incentivise R&D in renewable energy sectors. The Ministry of Economic Affairs and Employment could implement targeted incentives to boost R&D in renewable energy, particularly in bioenergy and wind energy. Using a mix of supply-side instruments (e.g. grants, tax credits) and demand-side instruments (e.g. public procurement for green innovation), the goal could be to increase renewable energy R&D projects by 25%. This would position Finland as a hub for sustainable energy solutions, advancing both technological innovation and energy independence. Expected outcomes may include creation of new tax credits and grants for renewable energy R&D, establishment of public-private partnerships for green R&D initiatives, regional funding schemes supporting sustainable energy projects.

Foster cross-sectoral innovation linkages. To enhance innovation capabilities, the Finnish Funding Agency for Innovation (TEKES) could spearhead the creation of cross-sectoral partnerships that bring together Finnish industry associations, regional clusters, and SMEs. These partnerships would focus on developing new clusters in emerging industries such as green energy, bioeconomy, and digital technologies. A systemic policy mix combining innovation clusters, tax incentives, and regulatory support for public-private partnerships would be required. A target could be the development of 10 new cross-sectoral partnerships by 2030. Expected outcomes may include formation of sectoral clusters (e.g. green energy, bioeconomy), launch of cross-sectoral innovation voucher schemes to support SME collaboration, establishment of regional co‑ordination committees for multi-industry projects.

Green transition and environmental challenges

Support high value biorefining and circular bioeconomy. Finland should encourage the production of advanced bio-based materials such as biodegradable plastics, nanofibers, and food additives from forestry biomass. Investments in decentralised, small-scale biorefineries could complement larger facilities and boost local value creation, strengthening Finland’s bioeconomy. This effort would contribute to sustainable growth, creating new markets for green technologies. Expected outcomes may include increased production and commercialisation of bio-based materials, investment in small-scale, decentralised biorefineries, strengthened local value creation and job opportunities in the bioeconomy sector.

Accelerate the deployment of smart grid technology. To enhance energy efficiency and distribution reliability, Finland should invest in the development and deployment of smart grid infrastructure, with a particular focus on rural and remote areas. Smart grids would enable better integration of renewable energy sources and improve energy access, addressing issues like energy poverty and regional disparities. Expected outcomes may include deployment of pilot smart grid projects in rural and remote areas, improved energy access and reliability for underserved communities, enhanced integration of renewable energy into the grid.

Leverage mining and resource-based industries for green transition. Finland’s critical minerals, especially in East and North Finland, should be maximised for the growing demand in the battery and renewable energy industries. Sustainable mining practices should be implemented to minimise environmental impact, while also developing local expertise in mineral processing and green technology. Expected outcomes may include development of sustainable mining practices, increased local expertise in mineral processing, strengthened linkages between the mining sector and green technology industries.

Invest in digital solutions for circular economy practices. Finland should promote the use of digital technologies to optimise resource efficiency across industries, particularly through data analytics and high-performance computing (e.g. the LUMI Euro-HPC in Kainuu). Digital tools can play a key role in enhancing waste-to-value systems, especially in regions like Northern Ostrobothnia, by connecting SMEs with circular production networks. Expected outcomes may include increased adoption of smart manufacturing and digital tools for resource optimisation, development of waste-to-value systems linking SMEs with circular economy networks, growth of regional digital ecosystems focused on circular economy practices.

Strengthen industry-academia collaboration. To stimulate innovation and support the green-digital transition, targeted programmes should be developed to link industries, particularly in forestry and tech sectors, with research institutions. Cross-regional networks, such as North Karelia’s bioeconomy ecosystem and Kainuu’s CEMIS-Centre for Measurement and Information Systems, should be strengthened to foster collaboration and drive innovation in key sectors. Expected outcomes may include enhanced collaboration between industry and academia, development of new joint research projects in key sectors, strengthened ecosystems for green and digital innovation.

Multilevel governance and cross-border co‑operation

Foster cross-border initiatives in green technology with other NSPA regions. Business Finland could co‑ordinate an NSPA-wide Green Technology Taskforce, collaborating with counterparts in Norway and Sweden to share resources and expertise. Through a systemic policy mix, cross-border grants and shared innovation hubs could be used by regional governments and the respective Ministries of Foreign Affairs to align their efforts to pool resources and expertise. A potential goal to be achieved could be the launch of three joint green technology initiatives, promoting shared growth and resilience in the NSPA region. Some of the expected outcomes of this sub-goal could be the: formation of an NSPA-wide Green Technology Taskforce, cross-border grant programs to support shared green tech projects, development of joint innovation centres focusing on circular economy practices.

Consolidate ongoing territorial reforms into an integrated governance system. Finland should further integrate ongoing territorial reforms into a co‑ordinated regional governance system that promotes decentralised decision-making. This approach will enhance policy efficiency and effectiveness at the local and regional levels, with continuous monitoring and impact assessments to adapt reforms to specific regional contexts. Expected outcomes may include more effective and integrated regional governance systems, continuous monitoring and adaptation of reforms, improved alignment of local and national policies.

Develop a partnership approach to intergovernmental co‑operation. The ongoing reforms provide an opportunity to move away from sectoral, siloed approaches and foster more collaborative intergovernmental partnerships. By facilitating better co‑ordination between key ministries at the regional level, a partnership-based approach can better address local development needs and challenges. Expected outcomes may include strengthened intergovernmental co‑ordination for local development, enhanced collaboration between ministries and regional authorities, more efficient implementation of regional development projects.

Support innovation in governance through experimentation and monitoring. Finland should adopt a more experimental and flexible approach to governance, allowing for innovation in policy implementation. This includes utilising a "sandbox" approach where local governments can experiment with reforms, supported by robust monitoring and evaluation systems to facilitate ongoing learning and adaptation. Expected outcomes may include greater openness to policy experimentation and innovation, enhanced local government involvement in governance processes, continuous learning and adaptation based on real-time feedback.

Co‑ordinate a strategic action for local development along the border with Russia. Following the Russian aggression against Ukraine, there is a need for co‑ordinated action to address the local impacts on the Finnish NSPA regions bordering Russia. A regional development strategy tailored to these areas should be developed, involving collaboration between local authorities and the central government to ensure a unified response. Expected outcomes may include co‑ordinated regional development strategies for areas impacted by the border situation, enhanced local government support in response to geopolitical challenges, strengthened cross-border co‑operation in security and local development.

Strengthen the role of the regions in the management of the European Cohesion Funds. Regional authorities should play a more active role in determining priorities for the management and distribution of EU and national funding, particularly in areas related to green and digital transformation. This decentralisation would ensure that regional needs are better addressed, and that funding is used more effectively to support local initiatives. Expected outcomes may include enhanced regional involvement in EU funding decision-making, improved alignment of EU funds with regional priorities, increased effectiveness of regional projects funded by EU resources.

National and regional (NSPA) levels

Competitiveness and connectivity

Expand broadband access in rural and remote areas. To address digital divides, the Ministry of Transport and Communications could oversee the implementation of government-subsidised broadband expansion programs, with a goal of 95% broadband coverage in rural areas. This sub-goal would involve public-private partnerships with telecom providers and local governments, leveraging subsidies for telecom investments. The funding needed to implement this sub-goal could partially come from the EU Digital Europe Programme to ensure comprehensive digital access across the region. Some of the expected outcomes of this sub-goal could be the: increase in public-private partnerships for broadband expansion, new broadband coverage targets within regional regulations, establishment of rural digital equity programs to ensure equal access.

Improve east-west transport connectivity. Upgrading transport infrastructure is essential for integrating the NSPA region with national and international markets. The Finnish Transport Infrastructure Agency could collaborate with regional transport authorities and construction firms to secure EU funding (i.e. structural funds) for critical road and rail infrastructure projects. Possible policy instruments contributing to this sub-goal could rely on regulatory and economic instruments such as public procurement for infrastructure projects, and the EU Connecting Europe Facility co‑ordination. This sub-goal would target regional transport authorities, construction firms and local (i.e. municipal) governments, requiring the co‑ordination among these. This upgraded transport infrastructure could have a positive impact on existing logistical challenges, reducing transit times, and improving the overall economic integration of Finnish NSPA regions. Some of the expected outcomes of this sub-goal could be the: launch of regional transport committees to monitor infrastructure progress, development of cross-border transport regulations and frameworks supporting public procurement for innovation, creation of regulatory guidelines for infrastructure sustainability in remote regions.

Support digital transformation in traditional sectors. Recognising the transformative potential of digitalisation for manufacturing industries, forestry and tourism, Business Finland, the Finnish Agency for Rural Affairs and the Ministry of Finance could implement targeted training and resource support for these sectors. This sub-goal would mobilise local vocational training centres and technology providers, in addition to SMEs and family firms. A potential target could be that 60% of SMEs in these traditional sectors would adopt digital tools, fostering their competitiveness and internationalisation. In addition to training programs, other economic incentives, including innovation vouchers and digital transformation grants, could be provided to ease this transition. Some of the expected outcomes of this sub-goal could be the: implementation of SME digitalisation training programs, creation of technology adoption networks for traditional sectors (e.g. tourism, forestry), introduction of public grants and innovation vouchers for digital tools in traditional industries.

NSPA level

Competitiveness and connectivity

Facilitate collaboration between SMEs, universities, and research institutions. To drive cross-sectoral innovation, Finnish Regional Councils could establish regional innovation hubs to connect SMEs with academic and research institutions. These hubs could be supported through voluntary collaborative frameworks and financial incentives, such as innovation vouchers, and would serve as key platforms for enhancing knowledge exchange and fostering the commercialisation of research outputs. This approach aims to create a foundation for sustainable regional growth, with a target of establishing at least three fully operational innovation hubs by the end of 2030. Key outcomes of this initiative could include: (i) the creation of innovation hubs or competence centres focused on SME collaboration; (ii) the establishment of formalised networks between academia and industry (e.g. advisory committees, joint R&D consortia); (iii) the development of regional guidelines to standardise SME-university partnerships. Currently, Regional Councils lack the legislative authority to grant innovation vouchers. Amending the Regional Development and Financing Act would enable them to provide direct financial support to businesses. This is especially relevant given the discontinuation of Business Finland's innovation vouchers. Empowering Regional Councils in this way would strengthen their role in supporting business and RDI co‑operation, aligning with Finland’s upcoming reforms, including the transition from ELY Centres to “Elinvoimakeskus” (EVK) networks and the establishment of employment areas starting in January 2026.

Develop sustainable forestry and land use practices. With an emphasis on sustainability, the Finnish Forest Centre could implement pilot projects promoting sustainable land use and forestry practices for SMEs. Supported by regulatory frameworks (e.g. sustainability standards) and economic incentives (e.g. subsidies, grants), this program could ensure that 50% of forested areas adopt sustainable practices. The implementation of this sub-goal would require the involvement of forestry associations, local governments and landowners, in addition to sectoral SMEs. Some of the expected outcomes of this sub-goal could be the: introduction of regional forestry sustainability standards and certifications, creation of forestry management guidelines and training programs, establishment of sustainable land use committees involving key stakeholders.

Green transition and environmental challenges

Enhance renewable energy diversification and capacity expansion. Prioritise the development and deployment of onshore and offshore wind farms, coupled with large-scale solar photovoltaic (PV) investments. Address radar compatibility issues for wind power through targeted technological and policy solutions. Focus on integrating renewable energy projects near consumption points to reduce transmission losses.

Promote low-carbon transport solutions. Expand electric vehicle (EV) charging infrastructure, introduce incentives for EV adoption, and integrate hydrogen fuel technologies and biogas for heavy transport. Support public transport and shared mobility options through subsidies and improved regional connectivity to reduce reliance on fossil fuels in transportation.

Ensure early and inclusive community engagement. Develop frameworks for involving local populations in planning and decision-making processes for green energy projects. Foster trust through transparent communication and by ensuring tangible local benefits, such as revenue-sharing schemes and job creation tied to renewable energy installations.

Protect biodiversity and indigenous peoples’ livelihoods. Implement policies to balance industrial development with the preservation of biodiversity and the rights of indigenous communities. Support reindeer herders and other traditional livelihoods through compensation schemes and skill-building programs tailored to emerging green industries.

Multilevel governance and cross-border co‑operation

Invest in skills and capacity for policy development at all levels. The transition to new forms of governance resulting from the reforms implemented in recent years necessitates the development of autonomous regional authorities endowed with substantial capacity and skilled staff. This requires the implementation of a more strategic and long-term competence development strategy, accompanied by the allocation of dedicated resources, at the municipal and regional levels (Regional Councils, Wellbeing Counties and employment regions).

Promote horizontal strategic co‑operation across the Finnish NSPA. The evolving contexts necessitate the development of novel approaches and solutions for regional and local development. It is imperative to enhance the efficacy of collaboration between NSPA regions, as some challenges cannot be addressed through isolated efforts. The regional development strategy of each NSPA should be articulated in a manner that is mutually reinforcing with those of neighbouring regions, thereby facilitating critical mass and leveraging existing common assets. Furthermore, the exploration of innovative solutions and co‑ordinated governance mechanisms is essential to facilitate such collaboration.

Stimulate innovation through new and stronger synergies between local actors. New innovation pathways must be pursued through increased collaboration through public-private partnerships, supported by the public sector. This can be achieved through the so-called triple helix dynamic, which involves testing new approaches, building on existing assets and local potential.

Break new ground in local governance through institutional innovation. It is recommended that new methods of service delivery and promotion of growth in the Finnish Arctic regions be explored, particularly with a view to leveraging innovation in the provision of local public services with a view to maintaining or even enhancing the high quality of these services.

Develop new visions and perspectives for international co-operation. The Finnish NSPAs, with their extensive experience in cross-border co‑operation, are well-positioned to address the challenges arising from Russia's invasion of Ukraine. To boost regional competitiveness and economic integration, it is crucial to leverage geographical advantages, establish stable trade links, and foster innovation networks. This requires a rethinking of international co‑operation strategies, focusing on new territorial co‑operation programmes that build resilient trade relations and innovation hubs. Key stakeholders, including the Finnish NSPA Regional Councils, the NSPA Network, and the Ministry of Economic Affairs and Employment, should lead the development of European Territorial Co‑operation programmes to meet the region's evolving needs.

Manage the geopolitical risk across the region. In addition to the aforementioned point, it would be recommended to establish a task force across the NSPA with the objective of navigating and mitigating geopolitical risks, thereby ensuring economic stability and regional security in collaboration with the national government.

Recommendations for Norway and the Norwegian NSPA

National level

Competitiveness and connectivity

Support SMEs in green and digital innovation. Recognising the need for digital transformation, Norway’s Ministry of Trade, Industry, and Fisheries could establish regional innovation support centres, for example, in maritime and green technology, to guide SMEs through digital and sustainable practices. In addition to SMEs, vocational training centres and technology providers could also be participating in this initiative. Economic incentives, including innovation vouchers, and soft instruments, such as training programs could be used to reach this sub-goal. A potential target to be achieved could be to help 50 SMEs adopt green and digital solutions, promoting sustainable economic growth. Some of the expected outcomes of this sub-goal could be the: creation of innovation support centres with a focus on green and digital technology, regulatory incentives and subsidies for green business practices among SMEs, new training and mentorship networks for SMEs in digital transformation.

Foster cross-sectoral partnerships between large firms and SMEs. By encouraging collaboration between SMEs and larger firms, the Research Council of Norway and Innovation Norway could aim to create cross-sectoral partnerships between SMEs and large firms in R&D. With public procurement and tax incentives supporting this collaboration, three partnerships per cluster could be aimed at by 2030, strengthening Norway’s NSPA regions in green technology and maritime innovation. Some of the expected outcomes of this sub-goal could be the: establishment of partnership frameworks and joint R&D programs, launch of a collaborative funding scheme for SME-large firm partnerships, development of industry-specific committees to oversee cross-sector partnerships.

Increase investments in renewable energy projects. To support Norway’s green transition, the Norwegian Water Resources and Energy Directorate could develop public-private partnerships to scale-up wind and hydroelectric projects. Through the provision of economic incentives (i.e. grants, subsidies) and the implementation of public procurement for innovation, energy companies and R&D institutions could participate in renewable energy production in the region. A potential target could be to have an increase of 30% in renewable energy production by 2027, supporting both local sustainability and energy security. Some of the expected outcomes of this sub-goal could be the: creation of public-private renewable energy task forces, introduction of renewable energy production guidelines and tax incentives, development of funding programs for sustainable energy projects.

Develop cross-border green technology initiatives with Finland and Sweden. To enhance cross-border collaboration, Innovation Norway could form an NSPA Green Innovation Taskforce with Finnish and Swedish counterparts, including industry clusters and research institutes. Systemic instruments such as cross-border funding and the development of shared infrastructure projects could be used with the ambition of launching two joint projects by 2030, aiming at fostering shared innovation in sustainable energy, driving regional economic and environmental goals. Some of the expected outcomes of this sub-goal could be the: formation of an NSPA Green Innovation Network, joint funding mechanisms for cross-border green projects, launch of shared infrastructure and resources for green technology.

Green transition and environmental challenges

Scale up renewable energy investments. With Nordland already achieving 100% renewable energy in electricity production and Troms and Finnmark nearing this milestone (88.15% renewables), the region should expand investments in hydropower and wind energy. Addressing seasonal energy deficits—an energy surplus in summer and a deficit in winter—requires developing additional renewable projects and balancing energy needs with biodiversity preservation. Regional efforts must also focus on integrating energy policies across municipalities to enhance land use planning and avoid conflicts.

Enhance low-emission transportation systems. Transportation is a major source of greenhouse gas emissions, and transitioning to low- and zero-emission options is critical. The electrification of ferries, such as hydrogen-based solutions for maritime routes like the Bodø-to-Lofoten ferry, must accelerate. Urban centres like Tromsø are leading the way with electric buses and zero-growth targets in car usage. Expanding these initiatives to rural and regional transport systems will require investments in hydrogen and EV infrastructure, as well as long-term standardisation efforts for extended transport routes.

Strengthen energy infrastructure and smart grids. Northern Norway must modernise its energy grid to address increasing energy demands driven by electrification and industrial growth (e.g. green steel, battery production). Smart grids can reduce inefficiencies and facilitate energy storage and transmission. The planned pilot project on Senja Island is an excellent starting point, combining smart grids with renewable energy applications for fishing and residential use. Scaling these systems across the region will support the transition to a sustainable and resilient energy future.

Advance green hydrogen production and utilisation. Green hydrogen, derived from renewable energy, and blue hydrogen, utilising carbon capture, present significant opportunities in the region. With suitable climatic conditions, expertise, and access to storage facilities, Finnmark is a natural site for hydrogen development. Tromsø, as a hub for research and innovation, can lead the phase-in of hydrogen solutions for both offshore and onshore applications. These initiatives should be supported by strategic investments in infrastructure and partnerships to position Northern Norway as a leader in hydrogen energy exports.

Strengthen industrial collaboration and workforce development. A shortage of skilled workers in emerging green industries like hydrogen and renewable energy poses a significant challenge. Universities and vocational institutions should collaborate with the private sector to develop tailored programs and training. Partnerships should also focus on increasing patent intensity and innovation indices in the region, aligning workforce skills with the demands of green industrial development.

Promote innovation in aquaculture. The salmon farming industry in Norway is one of the most advanced globally, leveraging novel technologies like offshore and onshore systems to reduce the environmental impact of traditional open-pen methods. To maintain this leadership, Northern Norway should continue to develop sustainable production methods, such as cell-based seafood technologies. Regulatory frameworks that encourage growth while minimising environmental degradation are critical to ensuring a balance between economic expansion and ecological protection.

Implement inclusive governance for green transitions. Economic benefits from the green transition must be equitably distributed. Indigenous and marginalised communities should receive targeted support to build capacity and participate in new economic opportunities. Programmes that foster cultural and social inclusion will help ensure a fair and sustainable transition, addressing the socio-economic disparities that often arise during periods of rapid change.

Integrate indigenous cultural interests. Indigenous peoples’ culture and traditional livelihoods are deeply connected to the natural environment and face threats from industrial expansion. Policies must safeguard and promote Sámi heritage through inclusive planning and economic initiatives. This includes supporting Indigenous peoples’ enterprises that incorporate traditional knowledge into green transition projects and ensuring cultural considerations are prioritised in energy and industrial development plans.

Multilevel governance and cross-border co‑operation

Consolidate recent local, regional and rural reforms by supporting them through an integrated and co‑ordinated system of regional and local governance. The objective of greater localisation of state policy through its agencies offers a good opportunity to consolidate an inter-institutional local partnership approach and co‑operation, both vertical and horizontal. With regard to the NSPAs and their specificities, it is recommended to adapt the reforms to these specific contexts in order to ensure effective place-based policy making.

Strengthen co‑ordination between national and regional development strategies. Vertical integration of policies is considered to be mutually beneficial for the government and the regions and to make the policy framework more coherent. Complementary horizontal policy integration is sought by further supporting and incentivising co‑operation between the three NSPAs.

Improve the co‑ordination of the policies of the different ministries in the territories. The recommendation is to facilitate the co‑ordination of actions of key ministries and agencies within the Norwegian NSPA by directly involving their local governments and embedding their specificities. In addition, mechanisms for involving national sectoral ministries in regional and rural development planning and decision-making should be strengthened.

Encourage innovation in governance, enabling conditions and policy delivery instruments. It would be beneficial to utilise existing local partnership experience as a platform for the creation of pilot and case studies of novel collaborative governance strategies across diverse governmental levels, with the active involvement of regional stakeholders. Where feasible, this could be achieved through the implementation of the sandbox approach to governance innovation.

Strengthen cross-border and transnational co‑operation between the three NSPA countries. It is recommended that the government reinforce the political action and resources allocated to supporting and opening new spaces for Nordic co‑operation between the NSPAs in the three countries. In doing so, consideration should be given to the emerging common defence interests and the opportunities presented by Finland and Sweden's association with NATO.

National and regional (NSPA) levels

Competitiveness and connectivity

Boost broadband penetration in rural and remote areas. The Norwegian Communications Authority, in partnership with telecom providers and local governments, could implement government-funded broadband projects to expand broadband access to achieve 90% coverage. By awarding subsidies and implementing public-private partnerships, this initiative could aim to improve digital connectivity, enabling remote communities to participate in the digital economy. A potential means to implement this sub-goal could be the EU Digital Europe Programme. Some of the expected outcomes of this sub-goal could be the: enhancement of subsidy programs for telecom providers, creation of digital inclusion committees to oversee rural connectivity goals, introduction of local regulations for telecom investment incentives.

Strengthen transport infrastructure to improve east-west connectivity. To support trade and regional integration, the Norwegian Public Roads Administration could focus on developing strategic infrastructure projects in road and rail. These improvements could directly enhance logistical efficiency, reduce travel times, and support the growth of local industries while integrating them into broader markets. Regional governments could introduce regulatory incentives and public procurement initiatives to encourage construction companies to achieve this goal. Expected outcomes may include: the implementation of regulatory guidelines for cross-border transport projects, the creation of a regional transport advisory board for infrastructure oversight, and the launch of public procurement frameworks for sustainable transport solutions.

Support digitalisation among local SMEs. With a focus on providing digitalisation grants for SME transformation in maritime and energy sectors, Innovation Norway could interact with regional SME clusters and technology providers. Through economic incentives (i.e. digitalisation grants) and regulatory incentives, a potential target to be achieved could be that 80% of targeted SMEs are expected to adopt digital solutions, significantly enhancing their productivity and competitiveness. Some of the expected outcomes of this sub-goal could be the: establishment of digital training centres and technology partnerships for SMEs, provision of digitalisation grants and innovation vouchers for technology adoption, development of formalised networks to facilitate SME digital growth.

NSPA level

Competitiveness and connectivity

Develop cluster projects in high-potential sectors. Innovation Norway could lead efforts to enhance regional clusters in sectors like maritime, mining, and aquaculture. Through financial incentives such as grants and loans, and cluster-building as a systemic policy instrument, five sectoral clusters could be strengthened or scaled-up in prioritised sectors. The stakeholders required for the effective implementation of this sub-goal are local industry associations and R&D institutes. These clusters would be expected to facilitate knowledge-sharing, support new business ventures, and improve market competitiveness. Some of the expected outcomes of this sub-goal could be the: establishment of sector-specific clusters (e.g. aquaculture, maritime technology), implementation of standardised guidelines for cluster development, launch of sector-focused cluster funding and innovation support programs.

Encourage sustainable practices in forestry and fisheries. The Norwegian Forest Owners Association could launch a certification program and resource management programs promoting sustainable forestry and fisheries. Regulatory instruments (i.e. certifications) and soft instruments (i.e. training programs) could be used to reach forestry companies, local governments and industry associations. A potential target could be to aim for 70% of industry compliance by 2030. Some of the expected outcomes of this sub-goal could be the: establishment of sustainable resource management certifications, creation of training programs for sustainable practices in key industries, development of regulatory frameworks for forestry and fisheries sustainability.

Green transition and environmental challenges

Develop and implement regional climate resilience strategies. Northern Norway faces significant climate vulnerabilities, including impacts on agriculture, coastal industries, and traditional livelihoods. The region should implement targeted strategies to enhance resilience, such as fortifying essential services, mainstreaming climate considerations in municipal planning, and integrating climate adaptation efforts into sectoral policies. For example, the "Se Nord" plan and participation in the EU’s "mission climate adaptation" project could be scaled to address sector-specific challenges more comprehensively.

Support emerging green industries. The region’s Smart Specialisation Strategies have identified potential growth sectors, including battery production, green steel, and hydrogen. Leveraging comparative advantages such as abundant natural resources, low power costs, and Arctic conditions, these industries can provide a foundation for sustainable economic development. Co‑ordinating investments in these sectors while ensuring alignment with global sustainability goals will foster long-term regional competitiveness.

Expand green tourism initiatives. Northern Norway’s spectacular Arctic coastal landscapes and cultural heritage present opportunities to strengthen eco-friendly tourism. The pandemic and geopolitical issues have significantly impacted the sector, particularly in remote areas like Eastern Finnmark. Strategies should focus on creating diverse, year-round tourism offerings that encourage longer stays, reduce the dependency on cruise traffic, and integrate sustainability into every aspect of tourism development. This will require investment in infrastructure, promotion of small local businesses, and environmental stewardship.

Resolve land use conflicts through enhanced planning. Industrial activities, Indigenous reindeer herding, biodiversity preservation, and recreational uses often conflict in Northern Norway. Resolving these conflicts requires updated spatial plans, which many municipalities currently lack due to resource and expertise shortages. Targeted capacity-building efforts, combined with streamlined licensing processes, can ensure land use planning addresses diverse stakeholder needs while facilitating sustainable development.

Advance just transition principles in smart specialisation strategies. Integrating responsible research and innovation principles into Smart Specialisation Strategies ensures that the green transition is not only economically viable but also socially inclusive and environmentally sustainable. These principles should guide decision-making to prevent unintended consequences, such as exacerbating inequality or undermining traditional livelihoods.

Multilevel governance and cross-border co‑operation

Build capacity for better local policies. It is recommended that a competence development strategy be designed to address training and capacity-building measures. These can be more effectively organised not individually, but as a co‑operation between municipalities and regions, based on a structured training needs analysis and leveraging on the wealth of initiatives at the local and regional level on skills development for local officers in the Norwegian NSPA regions.

Open local strategies and planning tools to new challenges such as population decline. The conventional approach to development planning and strategies, which has historically prioritised growth and expansive development, must be reoriented to address the present reality of population decline in NSPA. This necessitates a shift towards sustainable land use, scalable infrastructure and service provision that is responsive to changing demographics. The objective is to ensure that the region is adequately prepared to navigate both current challenges and future opportunities.

Promote horizontal strategic co‑operation across the Norwegian NSPA. Although the challenges faced by the NSPA have a number of specificities, they also exhibit many commonalities. Consequently, the development of regional strategies should be pursued through a process of linkages with other regions, with a view to establishing new forms of collaboration and governance.

Strengthen local partnerships for innovation. The ongoing structural reforms provide an opportunity for institutional innovation and the testing of new solutions. This requires the building and maintenance of strategic synergies between public and private actors, or even the invention of new forms of public-private partnerships. Furthermore, it necessitates the experimentation with new ways of delivering services and the promotion of development in the Arctic regions.

Expand international co‑operation. The ongoing conflict between Russia and Ukraine has resulted in the suspension of numerous cross-border programmes and projects with Russian partners. This has had a particularly pronounced impact in Eastern Finnmark. In light of this, it is imperative that the international co‑operation of NSPA regions undergoes a comprehensive rethinking and reorientation. This should be done in a way that capitalises on geographical advantages to foster the development of robust trade links and innovation networks.

Manage geopolitical risk across the region. This point is supplementary to the preceding one and proposes the constitution of a task force across the NSPA with a view to navigating and mitigating geopolitical risks, thereby ensuring economic stability and regional security. This would be achieved through co‑operation between the regions and the national government.

Recommendations for Sweden and the Swedish NSPA

National level

Competitiveness and connectivity

Enhance SME digital and green innovation capacity. The Swedish Agency for Economic and Regional Growth could provide support for SMEs in digital and sustainable practices by launching training programs for SMEs, either by providing grants or through regulatory support (e.g. standards for green practices). A potential target could be to match 100 SMEs with their corresponding technology providers, to integrate digital tools and sustainable practices, advancing the region’s competitiveness in high-growth sectors. Some of the expected outcomes of this sub-goal could be the: creation of digital innovation centres focused on SME transformation, regulatory support for green innovation and tax incentives, new funding mechanisms for digital and sustainable tech adoption in SMEs.

Support cross-sectoral partnerships. By developing joint R&D initiatives in ICT, bioeconomy, and forestry, the Swedish Research Council could strengthen cross-sectoral collaboration. Through a mix of systemic policy instruments such as tax incentives and public-private partnerships, regional clusters, universities and research institutes could be mobilised to foster synergies between diverse industries, promoting resilience in Sweden’s NSPA regions. A potential target could be to establish three new R&D partnerships across industries by 2030. Some of the expected outcomes of this sub-goal could be the: establishment of multi-industry clusters and partnership frameworks, launch of cross-sectoral innovation funds for R&D partnerships, development of cross-sector co‑ordination guidelines.

Support digital transformation in local industries. The Swedish Agency for Economic and Regional Growth could implement digital training programs and offer grants for SMEs in key sectors like tourism, forestry, and mining. By bringing together SMEs and technology providers, it could be possible to bring digital adoption to 80% of targeted SMEs, improving their productivity and adaptability in a rapidly digitising global market. Some of the expected outcomes of this sub-goal could be the: establishment of industry-specific digital training programs, provision of digital transformation grants for key sectors, creation of digital adoption benchmarks for traditional industries.

Green transition and environmental challenges

Reinforce local, regional, and national power grids. Build and upgrade power supply infrastructure, focusing on smart grids to address capacity limitations and to optimise energy distribution. East-west power line reinforcements should also be prioritised to match emerging industrial demands.

Decarbonise high-emission sectors. Facilitate the transition of the steel and metal-processing industries to low- or zero-carbon technologies. Support innovations in carbon capture and storage (CCS) and expand funding mechanisms for these green initiatives.

Expand renewable energy sources and diversify the energy mix. Increase investments in wind, solar, and hydrogen energy, along with smaller-scale renewable sources like geothermal and tidal energy. This will enhance energy security and diversify energy production, reducing dependency on current technologies such as hydropower.

Establish risk sharing facilities for large industrial investments in small community settings. Sweden's green industrialisation in northern municipalities has imposed significant financial and social challenges on local governments. These municipalities bear substantial costs for infrastructure and services to support new industries and workers, while the majority of tax revenues flow to the national government. To promote equitable development and sustainable growth, the Swedish government should establish national-level risk-sharing mechanisms. Such a system would ensure a fair distribution of financial risks and rewards between the national and local governments, supporting municipalities hosting large industrial investments.

Compensate local communities for industrial and renewable energy development. Introduce benefit-sharing models, such as reinvestment of wind farm or industrial profits into local development funds earmarked for community services, schools, and infrastructure projects.

Multilevel governance and cross-border co‑operation

Leverage the adopted territorial reform to enhance a more integrated and co‑ordinated system of regional and local governance with clear responsibilities and mandates between the levels and authorities. Conduct a structural evaluation of the regional reform currently in place, focusing specifically on lessons learned from its implementation across the NSPA regions. The goal is to assess the reform’s effectiveness, identify areas for improvement, and determine whether further consolidation or adaptation is necessary. The analysis should include: (i) an evaluation of the effects and the long-term viability of the reform; (ii) a review of lessons learned from the NSPA experience, gathering feedback from each region on factors such as economic development, infrastructure, service delivery, social cohesion, and environmental sustainability. Based on the evaluation’s findings, adjustments may be required by expanding or refining certain aspects of the reform, or tailoring it more closely to the specific needs of each region.

Recalibrate fiscal equalisation and enhancing NSPA attractiveness. To promote long-term economic development and sustainability in Sweden's NSPA, a recalibration of the fiscal equalisation system is essential, taking into account that the local and regional level not able to tax the natural resources that are exported from the regions, complemented by measures that directly address the region's specific challenges. The current fiscal equalisation mechanism, while designed to ensure equitable public services, creates distortions that discourage population retention and regional growth in the NSPA. A revised formula should reflect the unique demographic and economic characteristics of these regions, including a more favourable sparsity calculation to provide better fiscal terms for northern municipalities. In addition, a structured revenue-sharing model for industries such as natural resource extraction and energy production should be implemented. This model would ensure that municipalities hosting these industries receive a fair share of the economic benefits through exploitation fees or taxes, particularly for raw materials and energy exports. Expanding on existing initiatives like wind turbine levies, the policy should encompass a broader range of energy and raw material sectors to directly benefit local communities.

Support innovation in governance to create better conditions for local development. The regional reform has constituted a significant opportunity for innovative governance practices between local, regional and national government in Sweden. In the NSPA, this offers a window of opportunity for experiments that could prove beneficial in further consolidating regionalisation in the northernmost regions. Such consolidation could also be facilitated by testing EU cohesion innovative instruments (e.g. Integrated Territorial Investments) and the wider adoption of the Community Led Local Development approach.

Evolve the role of the regions in the future management of the European Cohesion Funds. The EU Cohesion Funds in Sweden are managed by a centralised authority at the ministerial level, with only partial devolution of implementation to the regional level. It would thus be advisable to consider a further move towards a fully regional approach to EU cohesion funds for the next programming period after 2027. This transition would prompt the regions to collaborate closely with the municipalities in order to facilitate a unified, concerted action. This would entail conferring full decision-making power on the regions, in particular the NSPA, not only in the implementation phase but also in the initial stages of programming.

National and regional (NSPA) levels

Competitiveness and connectivity

Create partnerships between SMEs and universities. Sweden’s innovation agency (Vinnova), could establish regional innovation hubs that connect SMEs with local academic institutions, relying on regional SME associations as intermediary organisations facilitating these partnerships. By creating voluntary collaborative frameworks and providing financial support such as innovation vouchers, these hubs could enhance knowledge transfer and accelerate commercialisation within key sectors. A potential target could be to count with five operational innovation hubs by 2030. Some of the expected outcomes of this sub-goal could be the: establishment of regional innovation hubs to support SME-academia collaboration, development of guidelines for SME engagement in university-led projects, introduction of innovation vouchers for research collaboration.

Expand high-speed broadband in remote areas. The Swedish government, through the Swedish Post and Telecom Authority (PTS), in collaboration with local governments and telecom providers, could intensify efforts to ensure comprehensive high-speed broadband coverage in the NSPA, particularly in the most remote and underserved areas. The focus must shift to bridging the connectivity gap in the areas that are economically unviable for commercial investment but critical for regional equity and inclusion. This effort could involve funding broadband expansion projects through partnerships between the PTS, local governments, and telecom providers, emphasising targeted interventions for the most challenging areas. Public-private broadband expansion partnerships would play a key role in driving this transition towards full digitalisation. This can be pushed forward by the establishment of rural broadband coverage targets, integrated within regional and national policies, the creation of robust public-private partnerships to facilitate broadband infrastructure expansion, and the introduction of targeted rural digital literacy programmes to enhance digital inclusion and utilisation of broadband services.

Enhance east-west transport corridors. The Swedish Transport Administration could lead efforts to develop transport projects improving connectivity across Sweden’s NSPA regions, focusing on essential east-west links. Construction companies and regional governments could be mobilised through public procurement initiatives. This sub-goal project could leverage EU funds from the Connecting Europe Facility to upgrade road and rail infrastructure, enhancing economic activity and regional integration. Some of the expected outcomes of this sub-goal could be the: development of infrastructure guidelines for cross-border transport, creation of transport investment programs leveraging EU funds, launch of inter-regional transport committees.

Invest in the missing links and bottlenecks regarding the North-South corridors. Address the deficiencies in the north-south transport corridors to align with EU TEN-T (Trans-European Transport Network) standards and enhance national competitiveness. These corridors are vital for linking Swedish industries to EU markets but face significant challenges, including missing links, outdated rail infrastructure, and poorly maintained roads. Key issues such as low-speed rail segments, limited freight capacity, and substandard road conditions threaten Sweden's ability to meet the EU's 2030 completion deadline. While the north-south corridors should remain the primary focus, enhancing north-south routes will strengthen regional connectivity and support industries dependent on both domestic and international markets.

Incentivise renewable energy and green R&D. The Swedish Energy Agency, in co‑operation with energy firms and R&D institutions could establish grants and tax incentives and define a set of regulatory incentives to stimulate R&D in bioenergy and wind energy. Through this sub-goal Swedish NSPA could aim to increase renewable energy projects and strengthen the region’s green innovation ecosystem. Some of the expected outcomes of this sub-goal could be the: launch of grants and tax incentives for renewable energy projects, establishment of guidelines for green R&D investment, formation of public-private partnerships for green infrastructure.

Promote sustainable land use and forestry management. In Sweden's NSPA, effective land use and forestry management must balance economic development, environmental sustainability, and cultural preservation. Forestry plays a crucial role in the local economy, providing jobs and renewable resources while intersecting with agriculture, energy, and tourism. Rising demand for timber and biomass heightens pressure on forest resources, threatening biodiversity and ecosystem resilience. Stakeholders, including forestry companies, environmental organisations, local landowners, and Sámi communities, often have competing priorities. To address these challenges, the Swedish Forest Agency could implement a certification programme to promote sustainable land use practices. By offering regulatory measures (e.g. certifications) and economic incentives (e.g. subsidies for sustainable practices) to associations and landowners, the programme could aim to ensure resource sustainability while supporting economic growth.

Develop cross-border circular economy initiatives. The Swedish Innovation Agency (Vinnova) could help regions establishing a cross-border green innovation network with partners in Finland and Norway, focusing on the circular economy. By fostering shared resource management between regional governments, NSPA clusters and existing innovation labs, two cross-border circular economy projects could be implemented by 2030. Some of the expected outcomes of this sub-goal could be the: creation of a regional circular economy network with NSPA partners, launch of shared green innovation hubs across the NSPA, establishment of cross-border project funding for circular practices.

Green transition and environmental challenges

Balance industrial growth with biodiversity and cultural preservation. Implement stricter regulations and monitoring of externalities like water pollution, carbon emissions, and biodiversity loss. Simultaneously promote eco-tourism and traditional land-use activities like sustainable forestry to create alternate revenue streams for affected communities.

Integrate Indigenous and local community interests into decision-making. Institutionalise mechanisms to include Indigenous peoples’ perspectives in environmental impact assessments and planning processes. Establish funding parity for reindeer husbandry comparable to agricultural subsidies to support their economic resilience.

Promote sustainable transportation infrastructure. Develop a robust rail network for both passenger and freight transport. Complement this with extensive EV charging networks and investments in alternative fuels like biogas, hydrogen, and biofuel. Foster urban walkability and cycling while exploring on-demand transport solutions for rural areas.

Promote industrial diversification and high-value green products. Use the natural resources of biomass in the regions to support biorefining technologies, creating bio-based high-value products. This can reduce dependence on volatile resource extraction industries while boosting the local economy.

Address workforce shortages in green industries. Develop targeted training programmes and university-industry partnerships to build a skilled workforce for green industries such as battery production, green steel, and renewable energy technologies. Provide incentives for talent attraction and retention in the region.

NSPA level

Green transition and environmental challenges

Integrate green manufacturing hubs with regional resources. Align the expansion of industries like fossil-free steel and battery manufacturing with the availability of local resources and environmental capacity. This ensures the long-term sustainability of industrial hubs while minimising socio-environmental impacts.

Multilevel governance and cross-border co‑operation

Strengthen capacity for policy development through strategic capacity building frameworks. In Sweden, responsibility for capacity development of regional and municipal staff is largely delegated to individual authorities. However, the absence of a structured, long-term framework results in fragmented and short-term training efforts. This lack of a comprehensive, forward-looking strategy significantly limits the ability of local authorities to effectively address the increasingly complex challenges NSPAs will face in the future. At the subnational level, the primary obstacle to implementation capacity is the scarcity of human and financial resources—both in terms of the number of qualified staff and the funding available for sustained development. To overcome these challenges, regions and municipalities must move beyond sporadic actions and adopt a strategic, long-term framework for fostering capacity in policy design and implementation. This framework should establish clear goals, prioritise needed skill development, and ensure a continuous pipeline of well-trained public officials throughout their careers, thus enhancing local governance capacity in a sustainable manner.

Create conditions for innovative ecosystems. The NSPAs of Sweden are characterised by a considerable degree of diversity in terms of experience and receptivity to systemic innovation. While each region demonstrates some capacity for innovation that is either fully utilised or partially underdeveloped, there is also a considerable degree of internal disparity across the same region. Consequently, a concerted and sustained effort is required to enhance the performance of underdeveloped areas through the dissemination of innovation and knowledge sourced from the regional dynamic centres.

Promote place-based development and address regional disparities. This recommendation builds upon the previous one, emphasising the need for a tailored approach to regional development. In light of the unique structural challenges faced by NSPA, it is crucial that development strategies be designed and implemented in a way that reflects the specific strengths and needs of each sub-regional and local community. This includes leveraging successful models like LEADER or similar bottom-up initiatives, which empower local communities to drive their own development. In addition to fostering local action, it is essential that the national government plays an active role in creating enabling conditions through an improved regulatory framework. The effective promotion of place-based development requires a co‑ordinated, multi-tiered approach, where both national and local levels of government are engaged in addressing regional disparities and supporting weaker municipalities.

Develop a comprehensive strategy for strategic co‑operation and networking between the regions and stakeholders across the NSPA. It is recommended that a consistent vertical and horizontal networking strategy be developed and implemented across the levels of government. This strategy should be based on the strengthening of links with local universities, businesses, research centres, local authorities and civil society, with a particular focus on the most remote areas. The objective of this strategy is to facilitate the further development of existing networking and collaboration across the NSPA.

Strengthen interregional and cross-border co‑operation. It is recommended that the EU projects and initiatives, in addition to other national and international sources (e.g. the Nordic Council), be employed for long-term co‑operation, with a perspective that extends beyond the immediate scope of the individual project. Indeed, it is advised that inter-municipal co‑operation and partnerships between NSPA regions in Sweden be strengthened, as well as those with neighbouring regions in Finland and Norway. This is believed to be an effective method of increasing the economic influence and resilience of each region.

Manage geopolitical risk across the region. In addition to the aforementioned point, it would be recommended to establish a task force across the NSPA with the objective of navigating and mitigating geopolitical risks, thereby ensuring economic stability and regional security in collaboration with the national government.

Reference

[1] OECD ((forthcoming)), Bridging connectivity divides, OECD Publishing, Paris.