Our Overriding Economic Focus Should Be On Value Proposition: What Are We Selling?
David Campbell writes a blog about economic development in Atlantic Canada called It’s The Economy, Stupid. Campbell also operates Jupia Consultants, a consulting company that conducts demographic and economic analysis.
As you might expect, when I talk with people these days the main question I get is, “how do we get the economy back on the rails?”
Usually, this is in response to my presentation where I show New Brunswick is in the longest period of economic stagnation at least in the last 80 years as measured by GDP growth, business investment and labour market growth (decline).
For example, I had coffee with someone (a reader of this blog) who is adamant the solution is productivity. New Brunswick’s economy is less productive (various measures) than other jurisdictions and therefore only a productivity revolution will ensure long term economic growth. Other folks talk about the need to boost export revenue – flowing more money into our economy from outside. Others fret about the lack of new entrepreneurs.
These are all good points, but I always bring people back to the question ‘why?’.
We need a deeper understanding of the fundamental value proposition that drives business investment, attracts and retains talented people and creates the conditions for new entrepreneurs to step up.
Right now the overarching issue is people. I know I am a broken record on this but it is now the #1 reason why New Brunswick’s economy is not growing, IMO. The Canadian labour market has added nearly 1.5 million workers since 2010 while New Brunswick’s has shed 11,200.
Growth/decline in the size of the labour market
November 2010 to November 2018
(seasonally adjusted)
But the bigger long-term issue is value proposition – specifically the rationale for businesses to invest in our province or people to stay and build their careers here. We can’t buy this with government subsidies, we can’t just make a wish and hope nor can we rely on the munificence of local business people to keep investing even if it makes more sense for them to deploy capital elsewhere.
Sure, local people are more reluctant to move their capital – they feel a greater attachment to New Brunswick but in the longer run there needs to be a reason – a value proposition – for investing here. I would say the same thing for the workforce.
The value proposition varies from industry to industry, but it comes down to things like cost environment, talent pool, infrastructure, tax and regulatory environment, natural resources and other geographically-based assets and other factors.
We can’t just pitch ourselves as a great location for business. We have to see strengths and target industries and firms that would benefit from being located here.
Role of government
Whether we like it or not, many of our top export industries are significantly influenced by government policies. Here are the top 25 international merchandise exports from last year grouped by similar industries and the role of government. These industries generated $12.2 billion worth of export revenue for the province:
So to pretend the government doesn’t have a role is to be naïve. Government should be focused on ensuring that its policies related to each of these industries are competitive with other North American jurisdictions. Benchmarking should be routine.
The overriding focus of economic development should be value proposition. What are we selling?
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected]