Economic Development
Economic Research and Analysis
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This is the first time such a course has been held in British Columbia and is based in part on the very successful Northwest Economic Development Course held for many years in Ellensburg, Washington (at which Jamie also presented last year). The course will give students some practical tools for estimating the economic impact of projects in their communities, and also demonstrate how to track local economic performance.

]]> http://vannstruth.com/2011/05/ucluelet-economic-development-strategy/feed/ 0 http://vannstruth.com/2011/02/kootenays-lead-bc-in-business-growth/ http://vannstruth.com/2011/02/kootenays-lead-bc-in-business-growth/#comments Sun, 27 Feb 2011 02:42:48 +0000 Jamie Vann Struth http://vannstruth.com/?p=700 Continue Reading]]> The Kootenay region has easily the highest rate of business growth in BC, based on 2010 figures from Statistics Canada’s Business Register. (An explanation and summary of the data is available in this pdf from BC Stats).

The number of business locations in the Kootenay region grew by 6.0% from December 2009 to December 2010, more than doubling the growth rate of any other part of BC. The province overall added 2.1% more business locations.

Table: Business Locations by BC Region, 2009-2010

What types of firms showed such strong growth in the Kootenay? Turns out the high rate of growth is consistent across all sizes of firms. The table below shows that Kootenay growth rates rank either 1st or 2nd in BC for all company sizes, and are consistently much higher than the BC growth rate.

Table: Kootenay Business Location Growth by Business Size, 2009-2010

By industry, the sectors that added the most business locations (with employees) were construction, retail trade, and health-related (e.g., doctor’s office or massage therapist). The sectors that lost the most business locations were the traditional resource industries – mining and the combined agriculture/forestry sector.

Table: Kootenay Business Locations (with Employees) by Sector, 2009-2010

Within the Kootenay, the fast growth is not spread evenly.The Central Kootenay and Kootenay Boundary Regional Districts each had higher growth rates than BC, but the East Kootenay is the star with 10.0% growth.

Table: Business Location Growth by Kootenay Regional District & Size, 2009-2010

So what does this mean? Well, despite spending a lot of my time working with government statistics, I don’t trust the accuracy of any single indicator. It’s not uncommon to see large changes in a statistic one year (maybe caused by an error, or something random) only to fall back the next year. That’s why I usually average these types of stats over several years to try to understand the real underlying trends, but in this case StatsCan changed their methodology recently so we only have business location data back to 2008.

Another confounding factor is the labour force statistics for 2010 that showed a 2.3% decline in employment in the Kootenay, ranking 7th out of 8 BC regions. Might a whole bunch of newly unemployed people started part-time businesses? Hard to say. The 2011 and 2012 numbers will show whether the apparent explosion of business creation in the Kootenay, especially the East Kootenay, is sustained.

“We need to out-innovate, out-educate and out-build the rest of the world.”

On their face, all of these things seem positive. Innovation? Definitely good. Education? Absolutely good. Building? Well, I’m not sure exactly what he means but I think he’s referring to re-building infrastructure as well as building a sustainable economy, a strong and cohesive society, etc. In that case, great.

But I have a problem with some of the underlying messages in this type of political rhetoric, for two reasons. First is that it suggests that economic development is a zero-sum game, and second, it focuses on relative prosperity rather than absolute prosperity.

Economic development is NOT a zero-sum game

By suggesting that America needs to out-innovate and out-educate the rest of the world, Obama is suggesting that innovation and education are not enough. It is only by having MORE innovation and MORE education that America will achieve success.

But I think this ignores the reality of how the benefits of innovation, in particular, are propagated through the economy. We’re all in this together here on planet Earth, and pesky things like national borders often serve to confuse how these things work. Think of some of the great innovations by Canadians, such as Frederick Banting’s insights on how to use insulin to control diabetes. Did Banting share this innovation only with his family? Do only Canadians have access to this treatment? Of course not. Through the process of exchange, ideas and goods and services are spread throughout the world.

If a major breakthrough is made somewhere in the world that makes automobiles operate efficiently and affordably with a non-carbon fuel source, will only the originating company or country benefit from this innovation? Of course not. The innovating company will happily trade access to this idea to everyone who wants it, because THEY TOO WILL BE MADE BETTER OFF. This is one of the most important insights in economics that is woefully misunderstood – trade doesn’t benefit only those doing the selling, because unless both parties are made better off, they won’t make the exchange.

So by all means America should do more innovating and more educating. But America will benefit by other countries also doing more innovating and more educating, all of which helps to propel humanity forward. If you were alive in 1800, standards of living in much of the world today would seem unimaginably high (and that means not just material possessions, but also quality and access to health care, quality and quantity of food, amount of leisure time, the immense variety of entertainment options, etc.), but of course the world still faces many real problems. It would behoove all of us to recognize that the solutions to those problems can come from anywhere, and we should celebrate them, even if they aren’t our ideas. China getting richer, or India, or Germany or France or Africa, does not make America poorer. Everyone can win.

Relative vs. absolute prosperity

Ask yourself which of these two alternatives you would choose: (A) living standards in North America double, and we stay at or near the top of the richest countries in the world, or (B) living standards in North America triple, but China passes us by and becomes even richer. There is fascinating research on this topic that suggests that most people would choose (A) because they care more about how they compare to others rather than their absolute well-being.

Imagine an 8-year-old girl living in rural Arkansas, and another 8-year-old girl living in rural China. Should Americans care more about the future well-being of the Arkansas girl, who most of them will never meet, than the Chinese girl, who they will also never meet? Well of course Americans should wish for the Arkansas girl to have a healthy and prosperous life, benefiting from continuing increases in living standards. But the USA vs. China cheerleading also implies that it’s only OK for the Chinese girl to be better off so long as she stays poorer than the American.

Now I recognize that Obama is a politician, so what he says cannot be taken at face value. It’s his job to cheerlead for America, but I just wish it could be done without implying that they need to keep the other guys down.

Summerland has a well-established economic development function so this plan was constructed to provide some direction to future marketing efforts for the community (focused mainly on the attraction of people), as well as a variety of initiatives to enhance the local business climate. My colleague Janey Cruise of MarketPulse Strategic Direction provided the marketing direction, while some of my background analysis addressed the demographic challenges facing the community.

While there is a strong desire in Summerland to enhance the local economy, when you step back and take a wide view it has so many things going for it, not the least of which is its amazing location in the BC Okanagan. Have a look at this place!

Operated by the Washington State Department of Commerce and Business Oregon, this course is renowned throughout the US Pacific Northwest and British Columbia as an outstanding training session for economic developers. A large contingent of BC students are attending this year and rather than having them attend a class on economic development finance that is not relevant in Canada, I will be speaking to the group on “Economic Analysis Tools for BC Communities.”

I’ll be covering economic impact analysis for community projects, as well as performance monitoring and benchmarking of economic data. I’m looking forward to the class, which is comprised almost entirely of economic developers from northern BC, as well as my first visit to the college town of Ellensburg. According to Wikipedia, the town’s population of 15,000 includes about 9,000 students from Central Washington University.

Central Washington University

There were over 6,000 entries this year, including 2,100 in the English Short Story category. Winning entries were broadcast on cbc.ca and published in En Route magazine.

Read Down to the Roots.
Listen to a podcast of Down to the Roots.
See the story in En Route magazine.

CBC Press Release

Elissa blogs about writing at elissavannstruth.blogspot.com.

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