It’s time to up our game
In a “slower for longer” growth environment, how can Atlantic Canada improve its economic performance? As we begin 2016, let me share three strategic priorities for governments aimed at strengthening the region’s economy.
Set a global standard. We live and operate in a global economy, but among the provinces the three Maritime ones have the lowest levels of international exports (in terms of value added) relative to the size of their economies. Newfoundland and Labrador would join them at the bottom of the pack if offshore oil production was excluded. Through newly negotiated trade agreements we are now intensifying our exposure to international competition in our local market.
We shouldn’t try to be the best in the world at everything, but we do need to be globally competitive. Strengthening our international linkages can help provide new ideas and stimulate novel approaches to familiar problems. It is hard to be globally competitive if we don’t know what the rest of the world is doing.
So governments should focus on firms that are globally successful. Expose domestic firms to global leaders and international best practices. Benchmark industries against international standards before offering any support; do the same for our tax, regulatory and royalty regimes and make reforms accordingly. Ensure students leave high school with a strong global awareness and their literacy skills match, and will continue to match, international benchmarks. Increase the number of international student exchanges and ensure our graduates meet international performance standards.
Develop scale. Economic development agencies focus on small firms. But an APEC Report Card has shown that doubling the number of small exporters (those with sales between $30,000 and $1 million) would only increase Atlantic Canada’s exports by 3%. We need to focus on developing larger exporters not creating a multitude of small ones. Even some of our larger businesses may not be big enough. We have seen the closure of one refinery and several pulp and paper mills in the region over the last decade or so, in part because they didn’t have global scale.
Too often we feel a need to spread new economic development initiatives throughout a province, region or nation, diluting the benefits of scale. I recently heard a comment that there were 100 centres of excellence in one Atlantic province. How could that be in a province with a population of less than 1 million? How many of these would meet the test of global excellence? We won’t be known in the rest of the world for 100 different things. Irving Shipbuilding is creating a North American shipbuilding centre of excellence on the East Coast based on ‘best in class’ construction practices and standards. The province should be known for being a global leader in two other areas. Each Atlantic province should be known globally for excelling in three areas.
Build on proven success. Governments are often criticized for not being good at picking winners. My recommendation is to focus on where growth is occurring and to build upon proven success.
What baffles me is that in a region that is supposedly hamstrung by issues such as high taxes, high energy costs and government regulation we still see successful firms emerge and prosper. Even if this is a difficult business environment to operate in, this tells me that success is still possible. So let’s focus on nurturing proven winners, and accelerating the growth of firms that have already met the test of being globally successful.
And where is the majority of business growth occurring? In our cities. Employment in Charlottetown, for example, has grown more than six times faster than the rest of the province over the last decade, creating 4,700 jobs. With the labour force coalescing in urban centres, it makes sense to focus on ensuring our cities are attractive places to support further business growth with resulting incomes for workers and governments.
Implementing these three principles — setting a global standard, developing scale and building upon proven success — across government decisionmaking would help bring much needed focus to economic development activities.