What Drives The Alaska Economy?

Abstract

What drives Alaska’s economy is new money: money coming in from outside the state. How big the economy is, and how much it grows, depends on how much new money comes in. New money comes from “basic” sectors— the sectors that are the basis for all jobs and income across Alaska. They are, in effect, the gears driving the economy. Alaska has eight main basic sectors, but the number of Alaskans they employ directly is small, compared with the number of jobs they support indirectly. Figure 1 shows numbers and shares of jobs for Alaskans that the federal government, the petroleum sector, and the other basic sectors generated on average between 2004 and 2006. The numbers for any specific period aren’t as important as the percentages, which don’t change much from year to year.