I’ve always been a big fan of foreign direct investment (FDI) led economic development particularly in smaller, peripheral places like New Brunswick.
It was the main reason why places like China, India and Ireland have boomed over the past 25-30 years. It was used in the U.S. south (particularly the auto manufacturing sector) to drive above average economic growth.
Even in Atlantic Canada, FDI was key to the development of the financial services sector in Nova Scotia, the business services/back office cluster in New Brunswick and, I would argue currently with the fast growing biosciences cluster on PEI which has 26 firms with founders from outside Canada.
But we have always had a troubled relationship with FDI.
Way back in the mid 1990s when Bernard Lord was running for Premier he ran on a “New Brunswick first” approach to economic development implicitly rejecting Frank McKenna’s signature accomplishment – attracting dozens of national and international firms to invest in New Brunswick.
Now many economists and other policy makers as well as government officials talk of focusing on New Brunswick firms and growing them rather than attracting industry. They continue to raise the old canards that the only reason why multinational firms would locate in your jurisdiction is because of vast subsidies or to exploit cheap labour. Once these are gone they will flee your jurisdiction.
Stephen Lund spent 20+ years on the front lines of economic development including efforts to attract industry here. We ask him if FDI-led economic development dead in New Brunswick and across Atlantic Canada from two perspectives:
1. We have lost the political and institutional interest in attracting firms to our province and region.
2. We have lost the original value proposition that attracted them in the first place – namely lower costs, and an abundant supply of lower wage but talented workers?
Stephen reflected on his efforts including anecdotes such as meeting with the N.A. CEO of Michelin and getting the deal done to see that firm expand in Nova Scotia. He talks about return on investment (ROI) and avoiding getting into bidding wars for FDI projects.
I think this remains a central challenge for New Brunswick. Many of our firms are investing capital in other markets – the U.S., other places in Canada and beyond. Most of our pension monies flow out to invest in companies and projects around the world (very little invested here, almost none). We need capital flowing in.
Hope you enjoy the podcast: https://www.buzzsprout.com/920539