Greenland has a developing economy, with a large public sector and extensive foreign trade. This has resulted in an economy with periods of strong growth, considerable inflation, unemployment problems and extreme dependence on capital inflow from the Kingdom Government. The economy is hampered by lack of infrastructure with less than 100 miles of paved roads and no railways. However, as of 2012, partly due to the retreating ice sheet due to climate change, it was starting to emerge as a territory rich with untapped mining resources.

Overview Greenland's per capita disposable income is the lowest in the Arctic other than Russia's, and less than one third that of the American state of Alaska. GDP per capita is close to the average for European economies, but the economy is critically dependent upon substantial support from the Danish government, which supplies about half the revenues of the self-rule government, which in turn employs 10,307 GreenlandersStatBank Greenland. "Main employment for permanent residents by time, industry, gender, age, place of residence, place of birth and inventory". Accessed 19 Jan 2017. out of 25,620 currently in employment (2015). Unemployment nonetheless remains high, with the rest of the economy dependent upon demand for exports of shrimp and fish.

Historical development

Except for an abortive royal colony established under Major Claus Paarss between 1728 and 1730, colonial Greenland was administered by companies under royal charter until 1908. Hans Egede's Hope Colony was organized under the auspices of the Bergen Greenland Company prior to its bankruptcy in 1727; it was succeeded by the merchant Jacob Severin (1733–1749), the General Trade Company (Det almindelige Handelskompagni; 1749–1774), and finally the Royal Greenland Trading Department (KGH; 1776–1908).

Early hopes of mineral or agricultural wealth were dashed, and open trade proved a failure owing to other nations' better quality, lower priced goods and hostility.Marquardt, Ole. "Change and Continuity in Denmark's Greenland Policy" in The Oldenburg Monarchy: An Underestimated Empire?. Verlag Ludwig (Kiel), 2006. Kale, lettuce, and other vegetables were successfully introduced, but repeated attempts to cultivate wheat or clover failed throughout Greenland, limiting the ability to raise European livestock.Del, Anden. "Grønland som del af den bibelske fortælling – en 1700-tals studie " ["Greenland as Part of the Biblical Narrative a Study of the 18th-Century"]. After government-funded whaling failed, the KGH eventually settled on maintaining the native Greenlanders in their traditional pursuits of hunting and whaling and enforced a monopoly on trade between them and Europe. Repeated attempts to open trade were opposed on both commercial and humanitarian grounds, although minor reforms in the 1850s and 60s lowered the prices charged to the natives for "luxuries" like sugar and coffee; transferred more of the KGH's profits to local communities; and granted the important Ivigtut cryolite concession to a separate company.

During the years before World War I, the KGH's independence was curtailed and the company folded into the Ministry of the Interior. Climate change, apparent since the 1920s, disrupted traditional Kalaallit life as the milder weather reduced the island's seal populations but filled the waters offshore with cod.Nielsen, Finn. "Planned reforms in Greenland". Arctic, Vol. 4, No. 1 (May 1951), pp. 12–17. After World War II, reforms were finally enacted by the Danish Greenland Commission composed of Greenland Provincial Council members and Danish economists. The report outlined a program to end the KGH model and establish a modern welfare state on the Danish model and supported by the Kingdom Government. The KGH monopolies were ended in 1950; Greenland was made an equal part of the Kingdom of Denmark in 1953 and Home Rule granted in 1979.

The KGH had long opposed urbanization of the Kalaallit Greenlanders, but during the 1950s and 1960s the Danish government introduced an urbanization and modernization program aimed at consolidating existing settlements. The program was intended to reduce costs, improve access to education and health care, and provide workers for modernized cod fisheries, which were growing rapidly at the time. The program faced a number of problems including the collapse of the fisheries and the shoddy construction of many of the buildings, particularly the infamous Blok P, and produced a number of problems of its own, including continuing unemployment and alcoholism.

Greenland left the European Economic Community in February 1985, principally due to EEC policies on fishing and sealskin. Most EU laws do not apply to Greenland; however, owing to its connection with Denmark, Greenland continues to enjoy preferential access to EU markets. In the same year, Greenland exercised its new control over the Royal Greenland Trading Company to reestablish it as KNI. Over the next few decades, divisions of the conglomerate were slowly spun off and competition within the Greenlandic economy somewhat increased.

Following the closure of the Maarmorilik lead and zinc mine in 1990 and the collapse of the cod fisheries amid colder ocean currents, Greenland faced foreign trade deficits and a shrinking economy, but it has been growing since 1993.

Sectors of the economy The Greenland economy is extremely dependent on exports of fish and on support from the Danish Government, which supplies about half of government revenues. To reduce its dependence on Denmark and prepare for independence, a longstanding priority of the Greenlandic government is increasing United States interest in the island; it seeks more American tourists, business and mining investment, and customers for its fish. The public sector, including publicly owned enterprises and the municipalities, plays the dominant role in the economy.

Governance

The largest employers in Greenland are the various levels of administration, including the central Kingdom Government in Denmark, the Local Greenland Self-Rule Government, and the municipalities. Most of these positions are in the capital Nuuk.Government of Greenland. "About Greenland: Resources and Industry ". Accessed 30 Apr 2012. Forty-three percent of Greenlanders work for the government, compared to 15% in the United States. In addition to this direct employment, the government heavily subsidizes other major employers in other areas of the economy, including Great Greenland Furhouse's seal skin purchases, Pilersuisoq's rural stores, and some of Air Greenland and Royal Arctic's regional routes.

Fishing industry

The second-largest sector by employment is Greenland's fishing industry. The commercial fishing fleet consists of approximately 5,000 dinghies, 300 cutters, and 25 trawlers. While cod was formerly the main catch, today the industry centers on cold-water shrimp and Greenland halibut.

The fish processing industry is almost entirely centered on Royal Greenland, the world's largest retailer of cold-water shrimp.

Hunting and whaling

Whaling and seal hunting were once traditional mainstays of Greenland's economy. Greenlanders still kill an estimated 170,000 seals a year and 175 whales a year,Catches under Permit . Iwcoffice.org. Retrieved on 2011-10-11.Catches under Objection . Iwcoffice.org. Retrieved on 2011-10-11. ranking them second and third in the world respectively. Both whaling and sealing have become controversial, limiting the potential market for their products. As such, the only seal tannery in the country Great Greenland in Qaqortoq is heavily subsidized by the government to maintain the livelihood of smaller communities which are economically dependent on the hunt.Hovelsrud-Broda, Grete K. "Contemporary Seal Hunting Households Trade Bans and Subsidies" in At the Interface: The Household and Beyond: Monographs in Economic Anthropology, Vol. 15. Univ. Press of America, 1999.

Reindeer or caribou are found in the northwest of the island, while muskoxen are found in the northeast and at Kangerlussuaq. Because the muskoxen's natural range favors the protected Northeast Greenland National Park, it is a less common object of hunting than in the past. Polar bear and reindeer hunting in Greenland still occur but are regulated to avoid endangering the populations.

Retail About half of total sales are conducted by KNI, the state-owned successor to the Royal Greenland Trade Department; its rural sales division Pilersuisoq; or its daughter company which has been purchased by the Danish Dagrofa Pisiffik. The third major chain is the Brugsen association of cooperatives.KNI. "Om os " ["About us"]. Accessed 1 May 2012.

Mining Ivigtut used to be the world's premier source of natural cryolite, an important mineral in aluminum extraction, but the commercially viable reserves were depleted in the 1980s. Similarly, deposits of coal, diamonds, and many metals including silver, nickel, platinum, copper, molybdenum, iron, niobium, tantalum, uranium, and rare earths are known to exist, but as of 2011 not yet in commercially viable deposits, while Greenland's Bureau of Minerals and Petroleum was working to promote Greenland as an attractive destination for prospectors. In 2010, improvements in technology and increases in mineral prices led to some mines being reopened, such as the lead and zinc mine at Maamorilik and the gold mine at Nalunaq.

As of 2012, partly due to the retreating ice sheet due to climate change, Greenland was starting to emerge as a territory rich with untapped resources. Substantial volumes of minerals were within reach of geological land mapping technologies, according to research conducted by GlobalData

A difficulty is the island's lack of infrastructure. The CEO of Nunaminerals, which went bankrupt in 2015 after 17 years, said that unlike similar mineral deposits elsewhere, Greenland projects were greenfield land and needed new roads and power plants as well as the mine. Even in 2025, Greenland had less than 100 miles of paved roads.

As of 2025, Lumina was digging for anorthosite, and KoBold, financed by Jeff Bezos, Bill Gates and other billionaires for nickel. Critical Metals Corporation has been operating a mine in southern Greenland, backed by Cantor Fitzgerald of which Howard Lutnick has been the firm's chief executive prior to becoming commerce secretary in 2025.

Energy

At 70%, Greenland has one of the highest shares of renewable energy in the world, mostly coming from hydropower.

While the Greenland Home Rule Government has primary sovereignty over mineral deposits on the mainland,Treaty. 2008. oil resources are within the domain of the Danish exclusive economic zone. Nonetheless, prospecting takes place under the auspices of NUNAOIL, a partnership between the two governments. Some geologists believe Greenland has some of the world's largest remaining oil resources:Overlooking the world's largest island, The Copenhagen Post, 17 April 2008 in 2001, the U.S. Geological Survey found that the waters off north-eastern Greenland (north and south of the Arctic Circle) could contain up to of oil, and in 2010 the British petrochemical company Cairns Oil reported "the first firm indications" of commercially viable oil deposits. Nonetheless, all six wells drilled since the 1970s have been dry.