It's The Economy, Stupid

From a recent TJ column:

If I asked you to name the most important sectors of the Prince Edward Island economy, you would likely mention potato farming and tourism.  While agriculture and Anne of Green Gables continue to be mainstays of the economy, the bioscience sector is rapidly emerging as one of the Island’s most important growth sectors.

I was recently commissioned by the Prince Edward Island BioAlliance to prepare an economic impact analysis of the bioscience cluster. I was quite surprised by the results of the study and it raised some eyebrows among Islanders as well.

There are 37 private sector firms in the cluster along with eight supporting entities including education, research and government organizations. Collectively these firms and organizations generated $188.3 million worth of direct economic output in 2012 and employed nearly 1,000 people.  With indirect and induced employment, the cluster supported over 1,700 jobs across the province in that year.

The PEI bioscience cluster generated nearly $140 million worth of gross domestic product (GDP) on the Island in 2012 making it a more significant contributor to the economy than the seafood products manufacturing and fishing sectors combined. The bioscience sector now generates a similar level of GDP as the accommodation and food services sector – the core of the Island’s tourism industry.

The cluster is also a high wage industry generating an average annual employment income 40 per cent higher than the average for all workers across the Island.  

But what is really interesting is its growth trajectory. Since 2006, private sector revenue among bioscience firms has grown at an average annual rate of 33 per cent compared to only four per cent for the economy has a whole.

The bioscience cluster is now one of the island’s most important export sectors generating $66 million worth of product exports in 2013 up by nearly 150 per cent over the last decade. On a per capita basis, only Manitoba and Ontario generate more biosciences-related product exports than Prince Edward Island and the latter is catching up fast.

Adjusted for the size of the overall labour market, there are more biologists and related scientists on PEI than all other provinces.  For its size, Prince Edward Island has far more animal health technologies, veterinarians and chemists compared to the rest of Canada.

How is it possible that little Prince Edward Island could have fostered 37 private sector bioscience firms and the fastest growing cluster in Canada?

According to Rory Francis, the Executive Director of the PEI BioAlliance, the cluster has grown through hard work and determination. They had a long term plan and strong commitment from all three levels of government. In addition, the cluster leveraged key assets such as the Atlantic Veterinary College.

They knew from the start that if they were to grow the cluster, they would need to attract entrepreneurs, talent and investment from across North America and beyond.

An impressive 14 of the firms are early stage companies whose technologies and management were recruited from outside the province. The cluster has also attracted global firms such as Novartis Animal Health and Sekisui.

In addition, the PEI BioAlliance is a well-funded and resourced organization certainly larger than most, if not all, industry development organizations across the Maritime Provinces.   The BioAlliance is funded by both the public and private sectors and is a model for industry-government cooperative cluster development.

As New Brunswick considers what sectors of its economy have the best potential for growth, it should learn from the example of Prince Edward Island.  

Instead of looking inward for growth and investment, turn the lens outward. Bring in world class talent and attract ambitious entrepreneurs looking for a place to call home.

Instead of having thinly staffed industry lobby groups and stretched government bureaucrats attempting to work together, consider well-funded and staffed private-public sector partnerships as catalysts for cluster development.

Finally, take a long term view but develop measurements to ensure you are progressing towards the goal. There are many examples in New Brunswick of industries that were identified back in the 1990s as having growth potential that was never realized.

Sometimes we need to look far away for inspiration. In the case of the bioscience sector, we only have to look in our backyard or, at least, across the Northumberland Strait.