Report by David Wolfe offers solutions for regional economic growth

July 9, 2010

Canada emerged from the global economic crisis in better shape than many countries, but we have lessons to learn from other nations about regional economic development. Many countries around the world are pursuing strategies that are far more innovative than Canada’s traditional approach.

Regional economic development (RED) often gets a bad rap in Canada. Much of the spending on it has been ineffective and has not narrowed the economic disparities between regions. And sometimes spending decisions have not been motivated by political calculations — with higher spending in “swing ridings,” for example.

Many Canadians correctly question the value of such spending and would like to see the RED agencies killed. This would save the federal government over $1-billion annually and would stop a significant wealth transfer from Ontario to other parts of Canada. But perhaps a reprieve — or at least a stay — is in order. Instead of killing the agencies, why not change them into key partners in economic transformation by learning from our past and from emerging international best practices?

RED must move away from trying to equalize outcomes toward investing in strengths. Transferring funds from prosperous regions to businesses in less successful ones has not helped poorer regions at a structural level, and has harmed more prosperous regions, depriving them of the resources they need to continue to invest in their strategic assets in a globally competitive environment.

RED policies designed in the latter half of the 20th century emphasized top-down, centrally managed redistributive schemes that focused on attracting investments to lagging regions. Today’s new approach around the world emphasizes investing resources in all regions to maximize their specific opportunities.

How is this done? According to three Mowat Centre research reports on RED by professors David Wolfe and Neil Bradford there are three ways.

First, while traditional RED can still take place — building infrastructure, supporting businesses — support for specific projects is less important than support for the networks that allow communities to take advantage of their local strengths and resources. This requires investments in organized social learning processes involving individuals, firms and institutions.

The new approach to RED is “place-based.” Successful regions identify and cultivate their assets, undertake collaborative processes to plan and implement change, and encourage a collective mindset fostering innovation — like we see so much of in Kitchener-Waterloo, for example. Government funds can help leverage and deepen these activities.

Second, governments should co-ordinate programs at the local level. Together, governments can work across sectors and with civil society. Acting alone, government departments and agencies often just create silos, fragmentation and overlap — or even worse, they steer in opposite directions.

In Canada, many government agencies are involved in economic development. Therefore, collaborative governance that gives a decision-making role to provincial and local governments and community organizations is essential.

Third, agencies will be most effective if they attempt to make a small number of transformative investments, rather than adding drips and drops. “Go Big or Go Home” is one lesson that emerges from international best practices.

By Matthew Mendelsohn. Continue reading this article online at