Adopting a life cycle approach to ED

I have been studying the various ways that communities and governments attempt to stimulate economic development for almost 15 years. One conclusion that I am prepared to make is that I really believe that some communities and provinces/states try economic development strategies that are ‘out of their league’ and then get frustrated when there is no success and then cut funding and so the vicious cycle begins.

I believe that we need to take a ‘life cycle’ approach to developing and implementing economic development programs. It would be unthinkable to use a Silicon Valley economic development model to try and develop Botswana. However, in a slightly scaled down analogy, should New Brunswick be attempting to compete with Ottawa or Toronto? Or should we set our sights – if not lower – at a different target?

Take the call center industry example. In the early 1990s only three jurisdictions in North America were actively pursuing the call center industry (Nebraska, Manitoba and New Brunswick). After the enormous success that this industry brought to communities like Omaha, Winnipeg and Moncton, everyone else jumped on the bandwagon and by the end of the 1990s every province in Canada – including Ontario – had a ‘call center strategy’. New Brunswick, was among the first in and among the greatest beneficiaries. Some estimate there are over 16,000 call center workers in New Brunswick. I believe it is more like 10,000 but no matter, there are at least 10,000 jobs and the vast majority are full time with benefits and average salaries approaching and exceeding $30,000/year.

In that case, New Brunswick leveraged its unique advantages of bilingual, relatively low cost labour, low cost office space and excellent telecommunications. Add to that mix a basic government incentive program and an aggressive marketing campaign and ten years later (by 1999) you had over 10,000 jobs.

Now fast forward to 2005. Economic developers talk about ‘innovation’, ‘life sciences’, ‘aerospace’ and other sectors and areas of activity that are highly competitive, where we have very few advantages and almost no industrial base. On the ‘innovation’ front, there is over 10 times as much R&D activity over the course of a year in just the Ottawa/Hull region than all of Atlantic Canada combined. Some large companies in Ontario spend more on R&D themselves that most of New Brunswick’s companies combined. Not that I am against innovation, but if there are new dollars for economic development, I think they should be targeted where they would achieve the greatest results. Further, new ‘innovation’ funding will, like the last time, end up just making up where the region was not able to secure its fair share from other government sources such as the Canada Foundation for Innovation or NSERC. If we are not getting a ‘fair’ share of that funding, that is a separate issue.

On the life sciences front, I recently heard there were over 70 life sciences initiatives across North America – all competing for a relatively small industry. Montreal, for example, has spent hundreds of millions of government dollars over 30 years creating its small biotech cluster. Can we compete with that? The Governor of Florida recently announced a funding package of up to $400 million in incentives to attract a 1,500 person medical research facility. Can we compete with that?

The Federal Government and the Government of Ontario recently announced a $1 billion program to support the auto sector in that province. Can we compete with that?

I think we need to be realistic and targeted at the same time. I honestly believe that if the government of New Brunswick was prepared to make the investments in infrastructure, training and yes, the companies themselves, we could attract several thousand new manufacturing jobs over the next ten years. Not overly sexy – $15-$20/hour with full benefits from companies such as Michelin, Irving, etc. but good quality, long term jobs with long term, employers – replacing the resources-based ones that are leaving.

I also think that a highly targeted and properly funded strategy could bring in several thousand new jobs in the high tech sector as a ‘near shore’ location for information technology growth. Not overly sexy – $40,000-$50,000/year computer programming, technical support and multimedia development – but good quality jobs to keep our graduates here.

Message to both provincial and Federal government policy makers – stop fooling around with abstract concepts such as ‘innovation’ and setup a few highly targeted and well funded programs to attract real companies and real jobs to the province.