P.E.I. has the best economic growth in Atlantic Canada - but is it enough?

One of the objectives of this column is to provide fact-driven analysis of key challenges facing our region and to advocate for the kind of changes needed to increase prosperity in Atlantic Canada.

As someone who has spent my life analyzing data to uncover trends, understand consumer habits, behaviour and attitudes, and the cause and effect of key issues, I have long tried to understand why Atlantic Canada has trailed the rest of the country in terms of economic growth.

Relative to the rest of Canada, Atlantic Canada has suffered from a chronically underperforming economy for decades. The reality is that this region becomes a smaller and less important part of the economy every year. Atlantic Canada represented 7.8 per cent of the Canadian economy in 2000. By 2017, that percentage had dropped to 6.3 per cent.

In P.E.I., the size of the provincial economy relative to the Canadian economy has remained relatively unchanged, representing 0.4 per cent of the national economy in 2000 and 0.3 per cent in 2017. Over that same period, the Canadian economy has grown nearly 58 per cent, while the New Brunswick economy has only grown about 37 per cent.

While still significantly behind the growth in the national economy, P.E.I. has had the best economic growth in Atlantic Canada since 2000. The main reason appears to be related to steady population growth over this period.

In 1973, Atlantic Canada represented 9.5 per cent of the total Canadian population. By 2017, this had decreased to 6.5 per cent. Over the same time frame, the population on the Island has declined only modestly from 0.4 per cent to 0.3 per cent as a result of its steady population growth over this period.

There is a relationship between economic growth and population growth. In fact, population growth is, in my opinion, essential for economic growth. Unfortunately, there has been little population growth in the region since the 90s, except interestingly enough, in P.E.I. The Island’s economy has clearly benefitted from this population growth.

What are the causes of Atlantic Canada’s chronically under-performing economy?

Let’s start by looking at employment. For years, I have wondered why the region leads the country, year in year out, in terms of unemployment rates. Were we less educated, less entrepreneurial, less motivated than those living in other parts of the country? One of the consequences of higher unemployment rates in Atlantic Canada, relative to the rest of Canada, is that the region has had proportionately fewer workers helping to build economic prosperity on a year-round basis. It also means that there have been fewer taxpayers to fund public services and equalization payments from other Canadians are needed to subsidize those services.

So why has Atlantic Canadian had the highest unemployment rates in the country? The key reason, in my view, is the higher-than-normal reliance on seasonal employment within the region than elsewhere in the country. That higher reliance on seasonal employment is driven by the high percentage of the population in Atlantic Canada who live in smaller rural communities relative to other parts of the country. Not surprisingly, and this is the case for much of rural Canada, rural communities are challenged to provide year-round employment opportunities for all those living in those communities.

While this challenge is no different than elsewhere in Canada, the problem for Atlantic Canada is that, as a percentage of the population, there are more than twice as many living in rural communities in this region. In P.E.I., 53 per cent live in rural communities (defined as communities of less than 5,000 population). This compares with only 19 per cent of the population in Canada that live in rural communities. The trend in population growth in P.E.I. is in urban communities, most notably in Charlottetown.

Rural communities have a higher reliance on natural resource development for jobs and a greater dependence on seasonal work than their urban counterparts. Added to that challenge is the growing resistance to resource development (of any kind, it seems) and there are limited opportunities to create fulltime, year-round jobs in these rural communities.

The key to greater economic prosperity is the creation of more full-time jobs, in nearby urban communities within a reasonable commute, for those living in these rural communities. By focusing economic development efforts on these urban areas, there is an opportunity to serve those living in nearby rural communities with full-time employment. Indeed, a future column will be devoted to the establishment of economic hubs across the province for this exact purpose.

Don Mills is the former owner of Corporate Research Associates and a recognized expert in data trends in Atlantic Canada. He can be contacted at dmillshfx@gmail.com or on Twitter at @donmillshfx