This paper examines the role of public funding in transforming tourism pathways in sparsely populated Arctic destinations, comparing Northern Sweden and Finnish Lapland. Our theoretical framework considers destination path plasticity and moments of change through the lens of geographical political economy to understand patterns of uneven development. This perspective helps explain how regional development funding driven by multi-scalar political priorities and global markets set structural conditions for tourism. We present a spatial analysis of public funding between 2007 and 2021 for private firms and public projects, complemented by document analysis and expert interviews. We find that public funding in Finnish Lapland has largely reinforced ‘Arctification’ and export-driven tourism in a few locations. In Northern Sweden, it has focused more on redistributing resources to micro-businesses and broader socio-economic development in lagging regions, yet with limited impacts on changing dominant tourism pathways. Public projects improved knowledge creation and networking among public and private actors but were largely unable to consolidate emerging pathways in the long run. Overall, regional development funding supported incremental change around existing pathways and had limited transformative effects in response to shocks or disruptive moments due to the rigid nature of funding programmes.

Public spending on rural tourism in Sweden