I was reading the latest RBC Economics report on provincial economies earlier today and I came across some interesting narrative.
For New Brunswick, RBC reports that a massive government infrastructure program and income tax reform “has offered a substantial offset to the economic weakness in 2009, propelling growth in non-residential investment and contributing to New Brunswick being one of only three provinces expected to experience employment growth“.
For Prince Edward Island, RBC concludes: “Fortunately, this weakness [in tourism and seafood] is almost
entirely offset by significant growth in the province’s emergent technology industries, particularly aerospace manufacturing and bioscience“.
For an economic development guy like myself, this is a truly instructive example. PEI pours tens of millions (with help from the Feds) into developing IT, biosciences and aerospace sectors essentially from scratch and now they are entirely offsetting the declines in tourism and seafood industries. These sectors are not oil & gas, they are not based on natural resources, they are based on knowledge and building a value proposition.
Now, while I know that the RBC report does not cover the waterfront it is interesting to note they single out massive government spending on primarily road infrastructure and tax cutting in New Brunswick and specific ’emergent technology industries’ on PEI as the reasons why these two economies faired reasonably well during the recession.
I will be quite happy when the day comes that RBC reports that “emergent technology industries” are driving growth in New Brunswick.
There are no shortcuts. Spending $800 million more on pavement may be important and cutting taxes may be important but in the long run (again consider my personal biases here) building these “emergent technology industries” is far more important because they providing sustaining revenue. The stimulus monies need to be paid back. The new industries from good economic development policy and effort generate ongoing streams of revenue.