Partnership Chief Economist and Executive Vice President Fred Morley accepted the awards at IEDC's annual conference in Fort Worth, Texas in the company of over 800 international economic development professionals.
IEDC's Excellence in Economic Development Awards recognize the world’s best economic development programs and partnerships, marketing materials, and the year’s most influential leaders and organizations who are creating positive change in urban, suburban, and rural communities around the world.
The Partnership won 4 gold, 1 silver and 1 bronze award. Gold awards went to WhyHalifax.com (Special Purpose Website), the Partnership’s SmartBusiness Program (Business Retention and Expansion Program of Three Years of More) and the National Connector Program (Human Capital and Multi-Year Economic Development). Silver and Bronze went to Why Halifax (General Purpose Print Brochure) and the Halifax Gateway Mega Projects (Special Purpose Print Brochure).
This year's awards were very special for our team as Fred Morley was awarded Fellow Member Status for his “unusual” stature in the field of economic development. This designation recognizes substantial contributions to the profession through service to IEDC and/or academic ventures directly related to the practice of economic development.
IEDC Chair Bill Sproull said, "Mr. Morley serves as a premier example of one who has made just such contributions and we are proud to have bestowed Fellow Member status upon him."
Fred has been a leader in the field of economic development for over 30 years. Fred has made significant contributions to our local, provincial and regional economy in his roles as Chief Economist and Executive Vice-President at the Greater Halifax Partnership, Senior Economic Advisor at the Government of Nova Scotia, Senior Policy Analyst and Research Coordinator for the Atlantic Provinces Economic Council, and Director of the Marketing and Research Branch of the Nova Scotia Department of Economic Development. Fred also taught for nine years in the Economics Department of Saint Mary’s University and is the author of over 100 articles on economic development. He has presented his views to hundreds of organizations, companies, and government groups around the world and is a frequent media commentator.
Our team is truly honoured to be recognized by IEDC and our community as a leader in economic development here at home and abroad. Our work and achievements would not have been possible without our public and private sector investors, partners and sponsors, and we thank them for their ongoing support and commitment to growing Halifax's economy.
Author:
Celina Lam is Marketing and Communication Assistant at the Greater Halifax Partnership. She currently is in her final year of the Public Relations Program at Mount Saint Vincent University
(Originally published in the August 2014 issue of the Nova Scotia Business Journal)
People have been building and using catapults for about 2400 years. The Temporary Foreign Worker Program (TFWP) and broader labour market policies seem to be taking a similar targeting approach.
Hitting a target with a catapult is pretty rudimentary. The first step is to fire a test shot. Catapults almost never hit the target on the first try, so you have to bracket the target and make adjustments based on whether the projectile lands long or falls short, or whether it drifts to the right or left. Projectiles vary in weight and impact so you have to adjust your projectile's weight. Bigger, heavier objects loft higher and fly shorter distances and land with a thud. Lighter objects fly flatter and faster but often land out of sight. You continue to adjust your release time or projectile weight until you have zeroed in upon your target. Then you can successfully deal with your target — unless of course it has moved while you were making adjustments.
The predominant labour market strategy over the last few years has focused on dealing with a “national” labour supply crisis. Early salvos in response to this crisis included changes to employment insurance in terms of tightened eligibility, duration of claims, and workforce re-entry requirements. The policy landed with a thud. Rural areas of most eastern provinces were particularly affected. Migration numbers suggest that many previously seasonally employed workers in the Maritimes have been heading west.
Strangely, this policy probably helped create labour shortages in seasonal and low-wage sectors. Time for another shot.
Enter the massive expansion of the Temporary Foreign Worker Program and its extension to seasonal and low-wage sectors. In 2005 the TFWP has its greatest use among highly skilled workers entering Canada to address labour shortages in professional and technical fields. By 2011 the majority of TFWs were unskilled. In 2012 more than half of TFWs were in rural areas where unemployment rates were still very high. Companies no longer able to attract Canadian workers because of previous policy changes still needed people on the production lines or at the fast food window.
Ten years ago there were 110,000 TFWs in Canada. In 2012 there were about 340,000. In Nova Scotia levels of TFWs jumped from 1,289 in 2003 to 4,363 in 2012. The big jump came in Alberta were TFWs jumped from 11,376 to 68,339 in 10 years. However the popularity of TFWs among employers and the apparent squeezing out of Canadian workers created a bit of a backlash. Time for another shot.
Newly announced policies will likely tighten the flow of TFWs to Canada. A key restriction was to limit TFW applications to areas where unemployment rates were below six per cent — mainly large cities. According to recent figures from Human Resources and Skills Development Canada, Halifax is one of the few eastern cities to qualify. More fine tuning and more shots will probably be required before policy zeroes in on the target. But the target is shifting.
Evidence of a national skill shortage has been difficult to establish. Most analysts and their leaders agree that the skill shortage exists in one or maybe two western provinces and in some sectors and occupations.
The other big news in recent weeks is that the government will begin to reinvest in labour market analysis. This is good news after years of ratcheting back on the collection of good data. This is important. We are, of course, facing some national labour market challenges in the long term because of our aging demographic and increasing international competition for talent. Better analysis of the situation should help improve our aim.
Author:
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
To encourage more people to live in the downtown, creating new accommodations is a priority. The city is currently saying farewell to the Roy Building and welcoming a new 150-condo development in its stead. One of the most recent developments to get a thumbs up from the city includes a 500,000 square-foot twin tower with 88 condo units in the centre of downtown.
Attracting people to downtown living, however, will mean providing them with the services they require.
“We need people living in the downtown to bring our city back to life, but it’s not enough to have a home, you also need easy access to a grocery store, a dry cleaner, a convenience store, and more,” says Rand Gaynor, owner of Drala, a décor and gift shop on Grafton Street.
To a certain extent, the issue reflects the age-old question of which comes first — the chicken or the egg, the people or the services? The answer, says Kent, is neither.
“This is a symbiotic relationship.”
While services will attract more owners and renters, their presence, in turn, will attract more services. But caution is required: diversity is needed. A vibrant downtown community requires more than upscale accommodations.
“It’s critical that the downtown be home to an incredible mix of individuals of all ages, all backgrounds, and all incomes. A truly thriving downtown has room for everyone,” says Chris Hornberger, a partner with Halifax Global Inc., a management consulting firm.
Savage points out that revitalizing the downtown is not and should not be a competition between the suburbs and the urban centre.
“People have to have a choice,” he says.
Ensuring both diversity and density requires sound planning and a value judgment. Halifax has both, says Kent.
“Elected officials often favour proposals that allow low-cost options to co-exist with more affluent options.”
Still, he notes, incentives may be needed to encourage developers.
Such incentives need to be strategic, stresses Gaynor.
“Cities that develop naturally are stronger,” says the retail store owner. “Let lower-cost housing and more expensive housing evolve. If we force the issue, we will fail.”
There is perhaps one final ingredient essential to building a downtown that draws people, services and business. It is optimism, and it is currently lacking, says Kent.
“Confidence is so fragile,” he says. “When there is a lack of confidence, people are less likely to take a risk. An attitude transformation is necessary.”
The Greater Halifax Partnership and the City of Halifax are hoping to sow the seeds of that transformation by launching a movement.
Fred Morley, executive vice-president and chief economist of the Greater Halifax Partnership, says his organization recently challenged stakeholders to take an individual and personal pledge to embrace a positive attitude and take the first step towards a better innovative culture.
“Innovative economic ecosystems are built by people who commit to being bold, challenging activist pessimism, extending trust, innovating together, being a champion and paying it forward, and most of all celebrating success,” says Morley.
There is, not surprisingly, widespread agreement that Halifax’s downtown core has lan guished. Surprisingly, there is equally widespread agreement that new life, new energy, and new ideas are beginning to revitalize the neighbourhood.
For Halifax mayor Mike Savage, there is one critical ingredient to building a vibrant, prosperous city centre.
“What we want downtown is community, and community is people who live, work, study, and visit the downtown,” he says.
That has not been the case, Savage acknowledges.
“We have a great downtown, but there’s no question over the last number of decades we’ve seen a reduction in the size of the population on the peninsula. That’s not unusual. What we hadn’t done was come up with a plan to invest in our downtown.”
That plan, HRM By Design, is now in the works. Released in 2010 after three years of public consultation, the plan creates a new 25 year-vision for the city along with a new land-use bylaw, a municipal capital improvement strategy, and a design-based development approval process. Many believe the impact of this plan is now evident in the numerous construction projects underway throughout the downtown.
Still at least one of the essential ingredients for a flourishing downtown — residents — is noticeably absent. Developers like Joseph Ramia, whose company Rank Incorporated is building the one million square-foot mixed-use Nova Centre in the heart of the downtown, is hoping to change that by making the downtown generally more appealing and more amenable. Build it and they will come seems to be the current mantra, and it is being widely chanted.
“There are 35 cranes on the peninsula,” says Greater Halifax Partnership president and CEO Paul Kent. “If someone says we’re stagnant, I have to ask them what planet they’re living on. Things are changing.”
The change is both significant and long term. The new public library is expected to be substantially complete this summer, and the Nova Centre, which boasts more than 285,000 square feet of convention space and 18,000 square feet of public space, is slated to open its doors in 2016. Most recently, city council approved the transformation of the Cogswell Interchange into what it calls a “mixed-use, pedestrian/transit/active transportation-friendly redevelopment, connecting downtown to northern Peninsula neighbourhoods, and acting as a gateway to downtown Halifax.” The transformation, says Savage, will take approximately a decade.
What could these two studies possibly have in common? Well both are largely about labour force issues. The one from KPMG refutes the widely held orthodoxy that Atlantic Canada is a bad place to do business The one from Ottawa suggests that in much of Canada, there is no labour supply crisis.
These reports have a few things in common. Both were immediately rejected as nonsense by some. The KPMG study drew most of the criticism from people online providing their comments. They just couldn’t bring themselves to believe the data. The negative comments on the PBO study came from government itself who just couldn’t bring themselves to believe the data.
KPMG points out that Halifax and other Atlantic Province cities are great places to do business and a very attractive place to invest largely because of the cost and availability of quality labour compared to the rest of North America. It would seem that here, and in much of Canada, labour supply problems are not reducing unemployment or driving up wages. The PBO study confirms what KPMG observes….that labour is Canada’s competitive advantage…not our weakness.
This doesn’t mean that there aren’t provinces or sectors that suffer from labour supply shortages. It doesn’t mean that demographic change and increasing competition for international talent will deliver labour shortages in the future. But right now there is no crisis and intervention in Canadian labour markets that may be creating imbalance in the pattern of growth in Canada.
First KPMG
The Competitive Alternatives Report is prepared by MMK Consulting for KPMG and has come out every two years for more than a decade. It is the best source of cost comparison information on cities anywhere in the world. It reviews over 100 cities in 10 countries. (Full disclosure…the Greater Halifax Partnership was a sponsor of the study which allowed Halifax to be a featured city in the report, offering more comprehensive Halifax information for investment decision making. We did this because we know we have a solid business case. Other cities who can’t compete on cost didn’t sponsor and don’t appear in the study.)
Overall Findings:
Halifax provides an incredibly competitive environment for business, ranking as the 4th lowest cost in the New England/Atlantic Canada region, 5th among American and Canadian cities and 8th lowest among the 107 cities studied worldwide. The cost index places Halifax 8% below the US average cost and 1% lower than the Canadian average.
Exchange rate movements since the KPMG report was finalized, make Nova Scotia and Canadian locations even more competitive. Halifax does best in service sector industries and is particularly cost competitive in Digital Services (particularly digital media), R&D (particularly in clinical trials), and corporate services (particularly financial services
In Research & Development categories, Halifax had a cost of doing business that was 23% lower than the US average and 7% lower than the Canadian average. Halifax also provides a very competitive cost of business for Corporate Services (e.g. international financial services and shared services – everything from professional to support services), measuring 20% lower than the US average and 7% lower than the Canadian average.
Our cost competitiveness is largely based on lower labour costs across a range of sectors. This is important. In Professional Services for example, labour costs represent almost 85% of location sensitive costs. Tax which is often pointed to as a challenge in Halifax represents only 7.6% of these costs. Rental costs are very comparable to other places but only represent 7% of competitive costs.
With one of the largest concentrations of universities and best educated workforces in North America, Halifax offers a sustainable, talented workforce to support business growth. Halifax’s seven university campuses and three community college campuses enrol over 33,000 students annually and support numerous knowledge-based clusters. Close to 70% of the workforce has post-secondary certification, and 37% have a university certificate, diploma or degree. Most of them want to live and work in Halifax.
So it’s all about talent…a good thing because apparently, despite reports to the contrary, we’ve got lots of it.
The PBO Study……National Skill Shortage: Not So Much….
We are, of course, facing some national labour market challenges in the long term because of our aging demographic and increasing international competition for talent. But what’s happening today? Apparently that’s up for debate.
Some feel we have a national skill shortage….because… it appears Canada’s Department of Finance saw it on the internet. Apparently their research numbers pointing to shortages are based on internet reports. (I must revise my views on the status of Elvis and extra-terrestrials.)
Fact is….the skill shortage exists in one or maybe two western provinces that are becoming uncompetitive on cost. PBO’s report uncovers this. KPMG proves it. Is that a national labour market crisis? Hardly.
In a functioning free market for labour companies know how to deal with high labour costs. In areas of high labour costs, companies begin looking for outsourcing opportunities in other jurisdictions. We are pretty familiar with this in Halifax. We have benefited from financial services firms outsourcing functions and divisions to our city from high cost locations in the US, , the UK and other places. The same potential exists in Canada. When costs are too high in one area, investment moves to more competitive areas within Canada. Business investment moving west to east is not a national crisis.
Recent intervention in labour markets is largely about lowering labour costs in high cost locations. However, the KPMG study demonstrates that many parts of Canada have a very competitive labour market. If the market were allowed to work, investment would move to those competitive areas…including Halifax and other Atlantic cities. The market principle that investment can be attracted by a competitive business case is about moving jobs to people. Recent intervention in the market is about moving people to jobs.
Most of the available studies say labour supply is not a problem except in certain sectors and certain provinces. Maybe we have a labour supply crisis. Perhaps we should ask Elvis and ET. Or perhaps we should just let the market rebalance the Canadian jobs landscape. Perhaps we should free investment to move to where available labour and a good business climate can provide the best return to business.
Author:
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
The Ivany “Now or Never” report talks about the need to shift attitudes in Nova Scotia. This is bang on, and particularly helpful for our new government. Often new governments set about changing structures and programs, sometimes creating years of lost productivity as the best minds in various organizations direct all of their efforts to reinventing the process wheel. All the while, the challenge is seldom with programs but with attitude.
Recently, the Governor of the Bank of Canada pointed out that Canada is operating in two economies. Some places are just lucky. They find themselves in the middle of a resource boom like Calgary and St. John’s. They find themselves at a crossroads or a gateway like Toronto or Vancouver or they find a benefactor with deep pockets — the Capital Region (Ottawa) comes to mind. Other places without these accidents of location are growing slower.
Some of us have to make our own luck. Successful economic development requires shifts in four attitudes: optimism, trust, passion for success, and leadership.
Optimism
Economic development, at its heart, is about optimism… optimism about your business, your community and your province. Positive attitude fuels success. It’s my observation that confident cities and confident businesses just grow faster. They enter into local and international partnerships easily and they don’t fear failure. It’s impossible to succeed at economic development and be a pessimist. To grow our province we can’t believe we have already peaked.
Trust
We also have to trust more. In an environment governed by attitudes of scarcity, we don’t trust potential business partners because they could take our ideas or our clients. Government doesn’t trust anyone and lack of trust shows up in the form of mountains of regulations built up over generations. In his book “The Speed of Trust”, Stephen M.R. Covey points out that in environments where there is a high level of trust, initiatives move faster and are cheaper to implement. Years ago, you could propose a project to a government over a cup of coffee and if you shook hands the deal was done and the paperwork followed. Now, largely because some government clients abused this trust, compliance cost and timelines for approval for most government-funded programs have grown massively. Somehow we have to build trust in our communities.
Success Focused
We have to become more success focused. We’re just off another Olympics where Canada’s Own the Podium Program generated great results. OTP focused significant resources on our best athletes competing in sports where Canada has a competitive advantage. In economic development, communities and provinces sometimes take the opposite approach focusing on our worst performing regions and industries in decline. Opportunities and areas with the best potential are ignored because average is good enough for them. Unfortunately, the math of that approach doesn’t work for us. Average plus below average equals below average. And that’s where our growth has been for a generation. It will stay there unless we begin to drive and celebrate success.
Leadership
Economic leadership is about having that gut conviction that you can change the future of your city or province or business and maybe the world. It’s about a belief that prosperity is not just about the accident of location and proximity to markets, or what kind of carbon or metal is under the ground in this place. It’s about people and organizations that believe that their effort and personal commitment can set a new path and remake the future.
Perhaps the toughest attitude shift will be for us to leave behind our pessimism and become hopeful about our future. It’s not easy. But you know what, it’s not that hard either. Optimism is not about blind faith or a cheery attitude. It’s about seeing a path forward when others only see a dead end. It’s about seeing obstacles as challenges to go around, not stop signs. Sometimes it is about just seeing and accepting the reality around us. In Nova Scotia it is about recognizing that the massive construction underway at the Halifax Shipyard means the yard is actually getting ready to build ships… and that two major oil companies are putting more into offshore exploration in Nova Scotia than any other offshore in the world… and that having more building cranes in Halifax now than at any time in the 250-year history of the city is significant. It is recognizing that we have good businesses doing amazing things all over Nova Scotia.
Optimism is where economic developers like me, an organization like the Greater Halifax Partnership and good businesses get their energy and their drive. Pessimism is our kryptonite. It will kill good organizations, a good city and a good province. It’s time to change our attitudes Nova Scotia.
Author:
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
The federal government’s expenditure control efforts should yield a balanced budget in 2015. Indeed expectations are that the next budget will see a $6.4-billion surplus, a first for the current federal government.
A big part of expenditure control has been the reduction in the numbers of federal employees from coast to coast and overseas. The regional implications of these measures are very different. Cutting government employment levels from the hot economy and insatiable labour market of Alberta from 2012 to 2013 by 893 people has a very different impact on local spending power and local small business than cutting 823 jobs in Nova Scotia over the same period. Most likely the Alberta cuts, and perhaps even some of the Nova Scotia reductions, are soaked up quickly by Alberta’s fast growth. But expenditure reductions are necessary to achieve budget goals and how local economies adjust is collateral damage.
What the federal government does control is the regional balance of expenditure reductions related to people. About a year ago, the Treasury Board made a commitment to protect existing regional shares of federal jobs. A February 2013 press release quotes Tony Clement, president of the Treasury Board, as saying: “Our Government has said from the beginning that it would ensure that each province and territory is treated fairly. We said the regional representation of federal jobs would remain unchanged, and we are being true to our word.”
Indeed, under the commitment, the Atlantic region share of federal employment is expected to rise slightly between 2012 and 2015 from 12.4 per cent to 12.6 per cent. So how are we doing so far?
Well it’s difficult to tell. Statistics Canada’s series on federal employment by province and municipality was discontinued in 2012 for budget reasons. However the Treasury Board’s own figures on non-military and RCMP employment give a hint of the pattern. From 2010 to 2013, Newfoundland, Nova Scotia, Prince Edward Island, and New Brunswick have seen cuts of 12.7 per cent, 10.6 per cent, 4.9 per cent and 8.3 per cent. This compares to reductions of 5.7 per cent in the capital region (Ottawa-Hull). This is likely accounted for by the fact that most cuts to date have come from early retirements and the Atlantic region has the oldest public sector profile in Canada while the National Capital Region (NCR) has the youngest.
For the federal government to keep to its promise of regional balance, attention must now turn to the NCR — most future cuts should come at the centre. Nova Scotia and most places outside of Ottawa have pretty much seen the last of the pain.
Author:
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
(Originally published in the Feb. 2014 issue of the Nova Scotia Business Journal)
By Fred Morley
Nova Scotia’s new provincial government has announced that it is undertaking a review of business incentive programs. New governments often look for a new prescription for economic development early in their mandates. Smart governments take their time, get the best advice and move carefully to new models.
I remember having a hand in the last business investment framework developed for Nova Scotia back in 2000. It recognized that successful business attraction depended on a number of factors including; operating costs for incoming companies, quality and available labour, good infrastructure, suitable buildings and sites, a cooperative community and yes… business incentives.
Back in the day, we came up with a concept called a payroll rebate. It got us in the game with over 1000 different incentive programs available at the time in the US and Canada. It had the benefit of generating a return on investment. Every $1 million in new incremental payroll generated about $120,000 in provincial tax at a cost of an $80,000 payroll rebate for a net gain of $40,000. This didn’t put Nova Scotia into the vanguard of incentive programing, but it was innovative enough to get us in the game and risk neutral enough to sell to a new government.
Investment Attraction is a Competitive Game
Years later, investment attraction is still a pretty competitive game. Three months ago Korea’s Hankook Tire Co. Ltd. benefited from more than $120 million in state, local and county economic development incentives for a tire plant to be built near Clarksville, Tennessee employing 1800 people. That’s $67,000 a job. Despite the perceptions, incentives flow to many sectors in many jurisdictions, not just auto and auto parts plants in the Southern US. Similar incentives deals can be found in almost every corner of the United States. Recently Vertex Pharma signed a deal to locate its global headquarters and lab complex in the Fan Pier project in Boston. The 500 job project was helped along with $12 million from the Boston Redevelopment Authority and $10 million in life science tax incentives along with $50 million in public infrastructure financing from the state.
Louise Story of the New York Times did a very comprehensive piece on business incentives just over a year ago. Local governments in the USA shell out about $80 billion in business incentives every year. That’s just over $9 million an hour in business assistance through 1874 programs. Some states were bigger players than others. The fastest growing US state, Texas, also spends the most on incentives…about $19 billion on average over the last several years. That’s about $760 per person and over 50% of the state budget. Clients in Texas are a who’s who of technology companies…Amazon $277 million, Samsung $232 million, Apple $30 million. The list is very long.
US economic development incentives are pervasive and intensive. Occasionally some fresh new governor, encouraged by left wing or right wing think tanks will ban incentives outright. These states immediately find themselves on corporate do not call lists, a blacklisting that usually lasts until the governor is replaced or the economic development czar is run out of the state. A few provinces like Ontario say they don’t provide incentives…but they do when big opportunities in the auto and tech sector arrive on their doorstep. Quebec takes the opposite approach with incentives more aggressive than many US states, which is pretty aggressive.
So where does Nova Scotia land in the hyper competitive world of business incentives. Investment attraction incentives are never that popular with existing business….even those that qualify for incentives themselves when expansions occur. Small business hates incentives even though tax expenditures through extremely low small business tax represent a significant incentive in that sector. In many high profile cases in Nova Scotia, incentives flow to business in declining sectors which most observers view as a high risk bet. Media outlets often view incentives as a giveaway rather than the investment in the future which they often are. So in an environment where no one seems to like them, why do we still have them?
Time for a New Prescription
Largely this is a leadership issue. Leaders know that the only thing worse than winning a major deal using highly criticized incentives is losing a high profile deal because we are not in the game or even on the radar. What those in the economic development profession can agree on is, like the famous cough medicine…incentives taste awful but they work. Does this mean that we plod along with the same incentives we’ve always used? I don’t think so.
The most progressive jurisdictions find ways to enhance and improve their value propositions and this means updating and enhancing their incentive offerings. Nova Scotia’s last innovation 14 years ago was pretty good….but 14 years is a long time in the hyper-completive field of investment attraction. It’s time for a new prescription. I would bet that whatever we come up with, we probably won’t like how it tastes.
Author:
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
(Originally published in the Dec. 2013 issue of the Nova Scotia Business Journal)
By Fred Morley
Awhile back I was in the boomtown of St. John’s and had a chance to meet Zita Cobb. Ms. Cobb is behind the economic revival taking place on Fogo Island and in particular the development of the now world famous Fogo Island Inn in Joe Batt’s Arm. Zita speaks passionately about the vital importance rural areas play in shaping the character of their provinces. In her view, rural areas are the custodians of our culture and our sense of place. In many respects they make us who we are as a people. Rural areas are not only important they are indispensable.
It’s easy to see parallels in Nova Scotia. Is there a stronger sense of place anywhere in Canada than on Cape Breton Island? Is there a deeper connection to the ocean that surrounds most of the province than in Lunenburg? There is no place with a stronger musical culture. However many of the songs we sing are about leaving.
Rural areas are shrinking. Sometimes the thought is that people are moving to Halifax. But 54,355 people who lived in Nova Scotia five years ago live in some other province today according to the National Household Survey. (To be fair, 50,000 people have also moved from other provinces to Nova Scotia).
The fact is, many rural Nova Scotians are bypassing Halifax and heading west. Our largest urban centre is growing below potential. In 1956, Nova Scotia was about 56 per cent urban. Today, two generations later, that number is the same. Canada has changed considerably over those years and is now more than 80 per cent urban. Despite this, in much of Canada rural areas have not declined and in some places they have even grown. The research is in. Rural depopulation is not a function of urban growth.
So Canada and Nova Scotia and other Maritime provinces have ended up in a different place economically with a much different split between rural and urban. The question is… how would our economy and our demographics differ if Nova Scotia and the Maritimes urbanized at the same rate as the rest of Canada?
New Brunswick economist David Campbell worked some numbers on this and came up with some interesting figures. Looking at New Brunswick, Campbell points out that if that province’s cities had grown at the same pace of the top quartile of Canadian cities since 1951, New Brunswick would have a population today of 1.6 million people. Again, based on the pattern in the rest of Canada, the rural population would be about the same as it was then.
Working the numbers for Nova Scotia, our province would have 1.9 million people today with about 80 per cent in urban centres and no rural depopulation. Much of the population growth would have come from people staying rather than going down the road over the past 60 years. Indeed, our population would have been further bolstered by other Canadians and immigrants attracted to Nova Scotia by our growth.
The implication here is that stronger urban economies actually support a stronger rural economy because those economies are linked. It’s pretty easy to see how this works. Growth in Nova Scotia’s wine industry depends on day trips from Halifax. Marketing and tech firms in Bridgewater partner and work with businesses in Halifax. Rural manufacturing and resource industries depend on Halifax’s port and airport and they, in turn, depend on the business generated by rural companies. It’s the same story of linkage across every sector of our economy.
Unfortunately, for Nova Scotia, many of us are still held captive by the zero sum thinking that if rural areas are declining it’s because urban centres are growing. This is how leaders and policy makers have viewed the urban-rural issue for decades. Zero sum works politically, for a few years, but makes for poor economic decisions.
The reality is that our rural areas are in decline not because our urban centres have grown, but because our cities and towns have not grown fast enough. If we were serious about stopping decline in rural areas we should be stoking the urban growth engines of our economy and allowing them to pull our whole province along. Our rural areas are too important for us to continue on our current path.
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
Originally published in the Nov. 2013 issue of the Nova Scotia Business Journal
By Fred Morley
Success requires that we understand our economic ecosystem
As
our new government starts to get its feet wet with economic development, now is
the time to look at a few new ideas. By new ideas, I don’t mean old ideas or
simple ideas…I mean new ideas.
There
are lots of genuinely new ideas for growing cities and communities. In fact, I
have some new favourites.
The
first is a concept from Brad Feld who published the ground-breaking book
“Start-up Community” last year. Feld speaks to the vital role entrepreneurs
play in the growth of communities and how governments can either help or hurt
this process. The second is the concept of “Economic Gardening” popularized by
the Edward Lowe Foundation.
Start-up
communities need start-ups and entrepreneurs. But that’s not enough to ensure
success. Feld’s “Boulder Thesis” (Feld is based in Boulder, Colorado) suggests
that successful start-up communities have four elements:
1 The start-up community is entrepreneur led. These
entrepreneurs have to be networked in a very real sense. Partnership attitudes
are required. Zero sum mentality (the notion that there must be one winner and
one loser; for every gain there is a loss) is a start-up community killer.
2 Communities have to commit for the long term.
Building a start-up community is a 20-year process and doesn’t adapt well to
the three- or four-year cycle of government. It’s why start-up communities
can’t be led by governments.
3 Start-up communities are not an exclusive
club but are open to anyone who wants to join. Those that can’t partner or have
zero sum or “old school” compete-with-my-neighbour attitudes are quickly
excluded.
4 Activities and events are important. But they
can’t be the old school cocktail receptions, awards banquets and speaker of the
month clubs. Think more start-up weekends and hackathons.
Feld distinguishes
between “leaders” (the entrepreneurs who must lead the process) and “feeders” (organizations
like government, NGOs, universities, suppliers and basically everybody else). His
basic observation is that feeders can’t lead. Governments sometimes try this
but they are hierarchal and slow moving. Start-up communities are networked and
move fast.
So
we need entrepreneurs to lead growth in our communities and we need to support
them as much as possible. Businesses invest more in business lines that
generate the best results; we need to rejig our business support structures to
do exactly that. This doesn’t mean picking winners. That’s not required because
winners pick themselves. It’s pretty easy for communities that have active
business outreach programs, like Halifax’s Smart Business program, to identify
companies that are consistently growing by more than 20 per cent a year.
Many
successful communities focus economic gardening programs on exactly these kinds
of companies. The Edward Lowe Foundation in the U.S. runs economic gardening
programs in 42 states, so it is not an experimental concept. It’s just new to
us. These kinds of programs encourage business networks, peer-to-peer learning
often through business accelerators. Accelerators put promising business
leaders from hyper-growth companies through a comprehensive assessment and a
kind of boot camp for business where key skills are learned and shared.
Concepts
like start-up communities and economic gardening all have one thing in common,
a much deeper understanding of the nature and needs of successful business and
successful communities. These kinds of ideas recognize that business and
communities prosper or fail because of the business ecosystems they exist
in. Success requires more than simple
ideas and short-term band-aids. Success
requires that we understand our economic ecosystem.
Fred Morley is the executive vice president and chief economist of the Greater Halifax Partnership. He has written over 100 articles on economic growth issues and presented his views to dozens of organizations and governments around the world. You can reach Fred at fmorley@greaterhalifax.com.
The Greater Halifax Partnership welcomes contributions from staff and guest authors. The opinions expressed by individual authors and those providing comments are theirs alone, and do not reflect the opinions of the Partnership.
