Economic Transformation in Atlantic Canada

The Public Policy Forum held a conference entitled Economic Transformation in Atlantic Canada this week in Ottawa. The web site only contains a backgrounder and the ACOA minister’s speech and I haven’t read much about it in the press. I guess other things are too important.

I will say are few things, however; about the backgrounder to the conference. It’s a 17 page summary of interviews the PPF made with a dozen or so people. I was blown away to see that there were no local economic development groups on that list and only one provincial economic development representative. There were a pile of ‘association’ employees, a few think tankers and a few private sector firms.

I will reiterate. The CFIB is a great organization but its interest is small business – not attracting business to the region. The companies that are here are focused on their own business and what would help it grow – not on attracting business to the region. The Chambers of Commerce are looking out for their membership – which has no firms from outside the region. And the universities, well, that’s the clearest of all. I don’t think I have ever heard a university chancellor, president or provost call for more foreign business investment into Atlantic Canada. They want funding for their costs and more speculative R&D.

So, it is no wonder that this backgrounder barely mentions the issue of attracting business investment. There was a cute point in the document where it states that one of the interviewees said we should follow the ‘Ireland’ model.

Cute. Ireland led the globe in foreign direct investment for something like 12 out of a 15 year people. There were years in the 1990s when Ireland had more foreign direct investment than Canada (we have six times the population and all of that foreign investment went into Ontario, BC and Quebec anyway).

So, if you want to ‘invoke’ the Irish model, you need to set this in the context of what it did. You can yak all day about ‘tax breaks’, ‘free education’, ‘streamlined regulation’, and good ‘marketing’ but at the end of the day, Ireland attracted billions of dollars worth of business investment into that country. In 2003 and 2004, Ireland attracted $41 billion in FDI compared to only $13 billion into all of Canada (OECD data) – and we all know where the bulk of that $13 billion went.

If the PPF had interviewed the GHP, EGM, ECBC, or most of the urban economic development groups, they would have gotten an earful about the need to attract foreign investment and less about helping small business, funding unversities, etc.

If the PPF and the Feds figure this out, we may end up seeing substantative change in Atlantic Canada. Ireland has a little more than double the population of Atlantic Canada. So, if we were to match their results, we would need to see about $10 billion per year in FDI into Atlantic Canada. At an average of 20,000 jobs per $1 billion foreign investment, that would be about 200,000 new jobs per year.

Now, considering that all of Atlantic Canada in the past six years has generated a net new 50,000 jobs, 200,000 per year (or 1.2 million over six years) would be a slight improvement, don’t you think?

Sounds a bit like prosperity (not the Tory lexicon version).