Monday, May 23, 2011

Economic Footprint and Alignment in New Brunswick

I think the point about economic footprint is well-taken and worth making not only in this context but in other contexts as well.

For example, when I sponsor projects in Kiva, I select projects that have a greater economic footprint – projects that are based on creation and building, rather than just sales. So I am much more likely to sponsor a person who makes baskets for export rather than a person who sells baskets locally.

And also for example, my assessment of enterprises such as convenience stores is that they have a net negative footprint on the economy. If they did not exist, the same (or better) products would be purchased elsewhere, and for a lower cost. That doesn’t mean they shouldn’t exist – but it does mean that I’m not very supportive of, say, programs that drive students and youth into employment at convenience stores.

But it’s also worth pointing out that not all retain activity has a negative or zero footprint. Retail in product lines not previously available in a region, or creating competition where none existed in a region, have generally positive impacts, as they reduce costs to consumers, increase wages, and result in more money retained locally rather than shipped out of the province as retail chain profits.

All of that said, though (and I rather suspect you know this), we cannot focus on footprint along (or more accurately, footprint as a snapshot). I am not totally supportive of the shipbuilding projects, for example, because they tend to be one-shot enterprises. Look what happened in Saint John after the Halifax-class frigates were completed. It is much better to have sustainable high-footprint economic activity than episodic activity, and the money invested specializing in frigates would have been better spent in shipbuilding for more reliable markets.

Meanwhile, this post is one that belongs in the category of posts (not just from here, but generally) that could be titled “we need to get organized around a smallish set of priorities.” When I read a phrase like this – “All doing their little parts – many quite well – but it rolls up to a system that isn’t working by any measure.” – the implication is that the many little parts should align to one grand scheme.

This to me is the nib of the weakness of economic development strategies in general. When the effort is made to align resources around a single (or smallish set of) objectives, several critical factors fail.

- most importantly, it pulls people out of their expertise zone. You can’t just convert people from being, say, education specialists to medical-treatment specialists. If investment is aligned along one priority, the people involved in the other priority consider themselves under-employed, or actually become unemployed, and move away.

- almost as important, when priorities are being aligned, this is almost always done by people with no particular expertise in the domain around which efforts are being aligned. These managers learn about innovation only after it has been developed, marketed and offered at conferences, well behind the actual innovation curve. Actual experts are dismissed as impractical, or worse, impolitic.

- and third, in environments like (but not limited to) New Brunswick, there is a significant pull of incumbents toward investment in their preferred industries despite changes in world conditions. Actual innovation in a region would probably erode their influence in the province, and so they oppose it. New Brunswick’s forests, for example, cannot compete with much faster wood and wood-fibre growing regions in the tropics, but any effort to transfer Crown land into, say, aquaculture and fruit production, would be resisted by existing leaseholders. And so the province remains mired with low-value industries that can’t compete.

From my perspective, if we really want to reset the system, we should reassign the people currently engaged in trying to manage economic development efforts into support and service roles, and focus on providing a supportive and inclusive network of business and entrepreneurship services to designers, developers and creators or any product or service, and not just those the managers deem ‘align’ with a wider strategy.

We should additionally examine services and supports for industry in the province with an eye to reducing our levels of support for incumbents, especially large incumbents, who should be able to compete on their own merits. Additionally, provincial resources, such as crown land and other assets, should be made available to the widest range of enterprise as possible, encouraging the support of new enterprises, rather that reinforcing the status quo.

In other words, if we’re going to align, what we should align toward is not becoming expert in some specific domain or cluster activity, but rather, in becoming, as a province, expert in creating, growing and bringing to market new and innovative ideas no matter where they occur, no matter who has them, and no matter what industry they support.

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