Economic Projections for Alaska and the Southern Railbelt to 2020 - Reports and Summaries

Abstract

The Alaska economy will continue to be dominated by commodity producing industries as well as tourism, national defense, and the movement of international freight. High labor costs, sparse and expensive infrastructure, small market size and great distance from market share barriers against the development of significant processing and manufacturing for export. Petroleum, mining, and tourism hold the most potential for employment growth through expansion of the resource base. Growth of the timber and seafood industries will result from more intensive exploitation of the resource coupled with the expansion of value-added processing. Because of its dependence on commodity-producing industries, the Alaska economy will continue to experience localized business cycles as prices in these industries respond to world market conditions. Although the existence of these cycles can be anticipated, their timing cannot be forecast. Consequently these projections have the appearance of smoothness and continuity which is unlikely to be the actual pattern over time. One cycle which can be anticipated would be associated with the construction of a gas pipeline to bring North Slope gas to market. This would cause a significant construction boom followed by a transition to a much smaller operational work force. In the High Case projection, this appears as a cycle similar to, albeit smaller than, the cycle associated with construction of the trans-Alaska oil pipeline in the 1970s.