There is no doubt that university profs/Phds tend to be smarter than the average joes like the rest of us but when it comes to economic development even the profs show some sophomoric tendencies. Consider Université de Moncton economist Pierre-Marcel Desjardins. I have always said that the chasm between economists and economic developers is extremely wide. Economists will talk about macroeconomic factors and input-output models to explain some economic finding and economic developers will say “golly gee, look what happens when you insert 7,000 customer contact centre jobs into a small urban market like Moncton”.
Here are a few of the Professor’s comments in this article – just for fun:
Moncton is an anomaly, says Université de Moncton economist Pierre-Marcel Desjardins. It is doing well economically even though it is far from the main economic centres of the continent, and even though recent times have proved trying for many other parts of North America.
Oops. The data shows that particularly in the US (but also Canada) many smaller urban areas far from the larger Metros out perform. Boston, New York, Philadelphia, Chicago – all underperformed the smaller urbans like Reno, Phoenix (getting big now), etc. He may be referring to the recent past (i.e. the past 12 months) but even at that there are many small urbans doing very well across North America. The bulk of the economic pain is relatively concentrated.
“What is Moncton’s key to success?” will be the question Desjardins tries to answer more precisely as he goes on sabbatical later this year.
Imagine going on sabbatical to determine this. It might, just might, have something to do with 7,000 call centre jobs, a growing ICT industry, a stable manufacturing sector and a consolidating/rebuilding retail sector. Having said this, it would be interesting to determine the relative impact of entrepreneurial activity in the Moncton region compared to the national/multinational firms and the linkages between the two but something tells me the prof won’t be studying this issue.
Desjardins said the Moncton metropolitan area is unusually diversified for a city of its size and distance from major centres. Typically cities of Moncton’s size are classic mill towns or something similar, places dominated by one or two key employers.
This is a lovely myth. Economists look at NAICS data and the call centre jobs are dispersed throughout the NAICS system (financial call centres are in the financial sector for example). We have something like 7,000 people working in call centres in Greater Moncton. That is about 15-17% of the private sector employment in the Moncton region – or well about the concentration of CN employees in the 1970s. Now, these jobs are dispersed across many sectors but a rapid migration to Web-based customer service could and I emphasize could see a steep decline in these jobs over the next 10-15 years.
As for his assertion that Typically cities of Moncton’s size are classic mill towns or something similar, places dominated by one or two key employers. That’s not true either. That may be true for CA areas that have 30,000 or so but those with 100,000 or more residents do not tend to have only one or two large employers (with the possible exception of Saint John). Even a 2,000 person operation in Moncton would only represent less than 3% of the employment base in Moncton (and we have one – the Moncton Hospital and its affiliates). You would need to have a single company with 5,000 or more employees to make it ‘dominated’ and we don’t see that in the vast majority of urban areas in Canada.
He challenged his audience to think of any other similar sized city that would be as immune to death of any one sector of economy as Moncton is.
Disruptive technologies, professor. If the call centre sector went down (say lost half its employment), it would hurt.
The fastest growing centre in Atlantic Canada, Moncton is growing ahead of the national average.
I just took another look at the Census. The Moncton CMA was the 37th fastest growing from 2001-2006 (out of 144). Not too shabby but let’s keep things in perspective. Alberta had over a dozen CAs/CMAs that grew faster than Moncton. Ontario had 10. BC had 10. Quebec had a bunch. Moncton has been growing well – but only in the context of Atl. Canada. In order for New Brunswick to have achieved a modest 2% growth in population – Moncton would have had to more than quadruple it’s growth rate. In other words, if Moncton is to be the growth engine of the province, it is underperforming spectacularly. Note that I prefer an economic development strategy that results in economic growth around the province rather than single urban area (or two like the last 10 years).
The bottom line here is that we need to recast the discussion. Desjardin and his researchers are ‘shocked, shocked to see real economic development in a peripheral area like Moncton’ (read the article). I have a contrarian view. I wonder why Moncton hasn’t become the U.S. version of Phoenix (inhospitable climate 600 miles from L.A. – Moncton inhospitable climate 600 miles from Boston and Montreal).
Classic economic development theory suggests that capital investments agglomerates in hot, fast growing urban areas. Then that urban area overheats (costs through the roof, oppressive government regulation, stifling unions, etc.) and then capital investment migrates to areas with lower costs, less regulation and more open labour markets. Then the cycle repeats. Places like New York cut taxes (I remember them talking about cutting 99 taxes – how could you even have 99 different taxes in the first place?), cut regulation and try to be more business friendly and they begin to attract investment back.
That is why just about every region of the U.S. had its turn at above average economic and population growth during the 20th Century. In the past 10-15 years it has been the new southwest but the northwest, midwest, Florida, new south, Texas, etc. all saw periods of above average growth. Even New England as a region took its turn.
Unfortunately, Atlantic Canada has not ‘had its turn’ and has underperformed the natioanl average population growth in Canada since Confederation. That is what the Professor should turn that keen intellect toward solving. Take Donald Savoie’s book about economic development in the Maritimes and try to explain why the region hasn’t attracted more investment over the decades. Savoie makes good points about government policy and bias but there is more to the story.
Long rant today. If you made it through, congratulations.