Access to the Internet has facilitated the spread of economy activity outside of Norway's city centres, generating economic and social growth in remote regions.
DAMVAD’s 2013 report investigates the economic and social impact of Internet access on regions located far outside of economic centers. In particular, DAMVAD selects Tromsø, Norway as the rural region of choice. It is tested whether the Internet’s reach to such remote areas offers a major contribution to local growth and sustains their appeal as attractive locations to live and work. This is based on the assumption that the Internet creates new possibilities for economic growth and social welfare, available to consumers, businesses and governments, in all locations. These benefits are hypothesised to be even larger for rural areas than city centers owing to the specific challenges the Internet allows such remote areas to overcome.
Remote, rural areas face a number of barriers to generating economic activity and social development. Their large distances from metropolises lead to large transaction costs. They suffer from a lack of specialized labour and a vulnerable industrial structure. Their populations are largely in decline owing to migration of people and businesses to city centers in search of better opportunities and access to services. Such challenges are closely interconnected and form a self-reinforcing negative development cycle. Workers move to the city for education and career pursuits; companies position themselves where most workers are; workers are required to move to the city to access jobs; population decline in smaller regions makes it difficult to preserve cultural activities and reduces the attractiveness of rural locations.
The region of Tromsø is truly remotely geographically located, 1600 Km north of the capital, Oslo. However, despite such physical distance from the city center, Tromsø does not display many of the typical features of a remote area. Institutions, festivals and businesses attract an international and diverse population, this population is growing faster than Norway’s average population growth and it is largely comprised of well-educated, young civilians. This begs the question of how Tromsø has managed to develop in this manner.
DAMVAD’s results show that Tromsø has embraced the opportunities that Internet access offers. The Internet is used by local businesses to improve quality, service offerings, efficiency and visibility. Some businesses have structured their operations such that the Internet is their sole means of accessing customers, while others have moved online to create efficiency in their purchasing and delivery systems. Institutions are is innovative in their use of the Internet. For example, the “Norwegian Centre of Integrated Care and Telemedicine” incorporates Internet use in its medical care. The “World Opera Project” uses the Internet for complex music interaction in their productions. The Internet is also used to attract tourists through the circulation of much online content about the region. It is estimated that Tromsø's economy would be 10% lower today if the Internet did not exist. This is largely owing to the fact that many businesses would not exist, or would experience a reduction in income, or would have had to move closer in proximity to customers.
“Tromsø is an excellent example that maybe leads us to reassess the modern meaning of rural and remote.“
The wide adoption of the Internet in Tromsø in three key areas offers a lesson for other remote regions. First, the hospital and university have been essential for the area’s development, and heavily utilise the Internet in functioning effectively. Second, the population is particularly open-minded and globally aware. While such an outlook is facilitative of progression in and of itself, it is also heavily dependent on Internet access to survive. Third, Tromsø is influenced by the increasing importance of political and economic development in the Arctic region. The Internet remains essential in exploiting the growing opportunities in this neighbouring region. In conclusion, Tromsø offers evidence that digitization can be instrumental in maintaining the competitiveness of rural regions.