| Summary: | Abstract Development of the traditional economy of indigenous small-numbered Northern peoples acts as the production basis for retaining the most important features of their ethnic identity. Today, the main sector of traditional activity is reindeer breeding, which in contrast to other sectors is mainly based on production technology and organization that arose many centuries ago. Such a system of operating an economy, preserving a unique culture, language, and traditions, results in a nomadic way of life for the reindeer-breeding population and low efficiency of production and income level of workers. However, at present, it has virtually no alternative. In the situation that has evolved, state financial support of the sector acts as an important element of economic and ethnic policy. In substantiating the retention of this policy and directions of its implementation, the paper analyzes the natural and economic conditions of the sector development and makes corresponding conclusions and recommendations. Keywords: traditional economic activity, ethnos, reindeer traditional economic activity, ethnos, reindeer breeding, inefficient economic system, necessity and directions of state support
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