People have been asking me how I would recommend going about the process of selecting targeted sectors to focus on and build up a strong value proposition. I was thinking we could adapt some of the old BCG modelling from the 1980s. Take this chart I put together as a fictitious example. In this idea, we would developa methodology for assessing sectors with growth potential (x axis) against the economic value (y axis). Growth potential would be developed using a variety of metrics and economic value would be tied to things like high wages, high economic multiplier, etc.
So, in my theoretical model here (back of the napkin stuff), you would protect sectors that have high economic value but limited growth potential. By protect, I don’t mean throw massive subsidies – by putting them into this quadrant we are saying they have high economic value. The bottom left quadrant would be harvest – meaning don’t particularly invest a lot of new effort because there is limited growth potential and the economic benefits per dollar of investment are low.
For fast growing sectors (high growth potential) but limited economic value, I would say you invest strategically – only when it makes sense. For the sectors in the upper right quadrant, you invest heavily. Invest heavily, again, doesn’t necessarily mean subsidies but it means investing in developing the workforce, R&D, infrastructure, tax incentives, business recruitment, people recruitment, etc. that will animate these sectors into high growth/high value for the province.
Work in Progress.
Personally, I think there’s room for inland fisheries & fish farms – wild fish are becoming much more scarce, which means prices will improve.
I’m not sure about large scale industrial fabrication. This requires a lot of power, which is still a question mark in NB. Also, where are the raw materials coming from?
Animation and Life sciences definitely belong in the quadrant, but with the demise of Fatkat we don’t really have an industry. And most of our life sciences industry is low-value retail (Moncton, in particular, has emerged as the regional hub for retail health services).
Those were mostly random placements but probably reflect my biases. I agree about the inland fisheries and fish farms although I am not sure about the wage levels and seasonality. Industrial fabrication – I think has potential.
I’m a little behind on my reading of your blog, been busy at work, but I like the framework. Diversified but not the shotgun approach. One thing I though of immediately is that if we are going to burn calories investing in something it should be more than just growth potential, we should be looking down the road at the mature industry and what it could look like in NB. Maybe add a third axis for potential longterm economic value. Not sure how that would work.
For illustration purposes, think of the IT sector in NB circa 2000, good growth in the short run, sputtered in the mid-run, and now it is growing slower than elsewhere in Canada. So maybe we should have a measure for likelihood of establishing a competitive mature industry and not a third axis.