No province, city, or municipal district in Canada is without some office dedicated to the elusive activity of economic development. More jobs, faster growth, higher tax bases, better living standards\u2014 all part of the admirable goal of \u201cdeveloping the economy.\u201d But how effective have our efforts been?<\/p>\n
In Canada, these economic development efforts can be loosely organized into the following categories:<\/p>\n
The \u201caren’t we great\u201d approach.<\/em> One of the main jobs of the economic development office is to extol the virtues of their region and to convince businesses that this is where the action is. Slick brochures and sexy videos try to lure footloose businesses. Cities use everything from the presence of a major sports team (\u201cWe have NHL hockey!\u201d) to local parks and natural amenities to sell the city as a great place to live and work.<\/p>\n The tax carrot approach.<\/em> If nice parks and sport teams are not enough, this scheme goes one step further by using tax breaks, tax credits, or other financial concessions to seduce specific industrial sectors. For example, most provinces use tax credits to attract the film and TV production industry. It’s a desirable sector to attract because it is non-polluting, creates service sector jobs, is renewable, and probably most of all, attracts hot movie stars who can double a restaurant’s business just by walking past it.<\/p>\n The government partnership approach<\/em>. This is code for \u201cpour in buckets and buckets of public tax dollars to prop up a questionable business idea, and hope for the best.\u201d This approach almost always ends badly, and everyone knows it. Yet it gets votes.<\/p>\n The Holy Grail of value-added approach.<\/em> This method tries to identify ways to \u201cadd value\u201d to natural resources by doing more processing, milling, refining, slaughtering and packaging at home. I call this one the \u201cHoly Grail\u201d of economic development, as public officials chase and chase after a very elusive prize\u2014 a bustling secondary manufacturing sector, a big factory on the edge of town with lots of jobs for their kids. The concept is appealing, but it usually unravels when the type of manufacturing the town is trying to attract has no economic rationale for locating there.<\/p>\n The level playing field approach.<\/em> Alberta has been the champion of this radical idea. The notion is for the government to quit picking winners and let the market decide what makes the most economic sense. In Alberta’s case, the playing field has been levelled by lowering taxes and reducing the red tape for all sectors. The results are mixed. No doubt the province’s economy is the hottest on the continent, but that is arguably more the result of high energy prices. And many correctly point out that despite the rhetoric about not picking favourites with special concessions, the provincial government has done just that with the royalty structure it has designed to jumpstart the oil sands development by deferring most royalties until capital costs are covered. Without question, the lower taxes in Alberta create an enticing business environment, but can that be maintained when a competing province (or country) manages to out-do you with even lower taxes?<\/p>\n The cluster development approach.<\/em> This concept tries to identify the existing strengths already present in a city or region and build on them. This idea has appeal. Rather than spending all your time and money chasing a sector you don’t have and never will have, why not work with what you’ve got? If the cluster sector happens to be one trapped in a long-term, downward transition (e.g., agriculture), use that to springboard into a related sector with a brighter future (e.g., bio-tech). The inevitable result is a dozen major cities in the country all claiming and wanting to be a world-class bio-tech centre. The reality is, of course, something else.<\/p>\n What makes economic development so tricky for policymakers is that it is really hard to pinpoint what it means to develop the economy. The economy\u2014 the system whereby land, labour and capital are combined with entrepreneurial energy to create wealth and (we hope) improve our standard of living\u2014 is a social creation. It is not concrete like a piece of real estate that can be \u201cdeveloped.\u201d It is at its root only a conceptual notion, a set of agreements and customs among its agents. How do you develop something as cerebral as that?<\/p>\n The answer lies in policy-makers creating a setting in which entrepreneurial energy can best do its job, while at the same time working to fill those holes that may be left by enterprise alone. Rather than trying to lure businesses that don’t naturally fit within a region, why don’t we invest more in building up the creative and innovative energies of our young entrepreneurs? Sure, lower taxes help. But in the long run, it’s not lower taxes that will keep tomorrow’s economy healthy, it’s new ideas.<\/p>\n It’s the scientist in the lab saying \u201cThat’s interesting.\u201d It’s the manager saying \u201cWhat if we try it this way…\u201d It’s the entrepreneur saying \u201cHey, I’ve got a great idea.\u201d<\/p>\n The most critical aspect of economic development is investing in Canadian brains. The country with the best, the brightest, and the most creative workforce will propel tomorrow’s economy. Even the most level playing field in the world will lie empty if we don’t equip our labour force with the creativity and innovation they need to play the game.<\/p>\n","protected":false},"excerpt":{"rendered":" No province, city, or municipal district in Canada is without some office dedicated to the elusive activity of economic development. More jobs, faster growth, higher tax bases, better living standards\u2014 all part of the admirable goal of \u201cdeveloping the economy.\u201d But how effective have our efforts been? In Canada, these economic development efforts can be […]<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false,"apple_news_api_created_at":"2025-10-07T23:54:42Z","apple_news_api_id":"4b49f5ff-f423-44ec-889b-c391f7668e90","apple_news_api_modified_at":"2025-10-07T23:54:42Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/AS0n1__QjROyIm8OR92aOkA","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false},"categories":[9346],"tags":[],"article-status":[],"irpp-category":[],"section":[],"irpp-tag":[],"class_list":["post-262215","issues","type-issues","status-publish","hentry","category-uncategorized"],"acf":[],"apple_news_notices":[],"yoast_head":"\n