Summary of Performance

In its seventeenth year of working in partnership with Atlantic Canadians, ACOA is regarded as a mature and experienced practitioner of regional economic development. The Agency is respected for its innovative programs, policies and initiatives aimed at enhancing the Atlantic region's competitiveness, both nationally and internationally.

The Agency's three strategic outcomes reflect its mandate to help increase employment opportunities and earned income for Atlantic Canadians:

• Enterprise Development - improving the growth and competitiveness of Atlantic small and medium-sized enterprises (SMEs), leading to increased productivity, earned incomes and job creation.
• Community Development - increasing economic opportunities for Atlantic Canada through community economic development.
• Policy, Advocacy and Co-ordination - developing policies and programs to support and promote growth in the Atlantic economy.

These strategic outcomes do not operate independently of each other, but fit within a framework of interlocking programs, policies and initiatives that are designed to be cohesive, integrated and sustainable.

Following are summaries of the Agency's performance for fiscal year 2003-2004 in the three strategic outcome areas.

• Enterprise Development
  
  
  • Innovation

    To tackle lower rates of adoption of advanced technologies by companies in Atlantic Canada, ACOA has invested in innovation and related skills development. Initiatives include the Atlantic Innovation Fund (AIF), to increase the capacity for and commercialization of R&D; in the region, and related programs to increase innovation skills and repayable loans to companies to acquire new equipment. Research has shown that the most widespread obstacle to introducing improved product and process technologies is the high cost of development. ACOA has been active in encouraging productivity improvement by addressing these obstacles.

    ACOA's investment in innovation and skills training has resulted in significant growth in assisted firms as evidenced by the increase in highly skilled and better paying jobs. AIF is providing a major stimulus to the scope and pace of innovation in the region and reinforces the Agency's expanding role in building partnerships in innovation. Productivity gains within the Atlantic manufacturing sector have exceeded the Canadian average over the past five years.

    • AIF is increasing R&D activity not only by direct support to researchers, but also by contributing to the region's R&D capacity. AIF is supporting scores of world class R&D; projects, including IT, biotechnology and life sciences, aquaculture, environmental research, oil and gas, and in universities, research institutions, and the private sector.
    • For every dollar of AIF funding invested, project proponents have committed to leverage, on average, $1.14 in additional funding from private and public sources.
    • Through AIF, university researchers and other research centres are actively partnering with businesses, as well as with each other, in novel ways. There is now an increased emphasis by Atlantic universities on commercialization, and scientists and researchers are being drawn to the Atlantic region.
    • The Atlantic system of innovation will be strengthened through a new Atlantic Research Commercialization Network, supported through AIF, which involves 12 Atlantic universities and focusses on commercialization of university research.

  • Entrepreneurship and Business Skills Development

    A key means of achieving better employment and economic opportunities in Atlantic Canada is to ensure there are more entrepreneurs. ACOA is an advocate of entrepreneurship, and translates its beliefs into action through an entrepreneurship and business skills development strategy that focusses on providing Atlantic Canadians with the motivation, knowledge, skills, and ability to start, operate and expand a business. Much of the Agency's work in this regard relates to changing attitudes, particularly among young people, educators, guidance counsellors, women and Aboriginals. These results speak for themselves :

    • Nine of ten firms funded by an ACOA program targeting innovation skills confirm early indications that the project will result in additional innovative activity within the firm. (Hickling Arthurs Low, Evaluation of the Innovation Skills Development Initiative Draft Report, August 2004.)
    • Some 87% of participants at ACOA business skills development workshops said they can apply what they learned and that ACOA's initiatives in this respect are relevant and useful. (Profit Learn Survey)
    • ACOA's investments in youth entrepreneurship are relevant and strategic with 69% of young people polled indicating that government programs and information are an important career influence. (Corporate Research Associates Inc., Study of Entrepreneurship Among Young Atlantic Canadians Aged 15 - 19, 2001.)
    • ACOA's Young Entrepreneur Development Initiative has already helped 6,000 young Atlantic Canadians learn what it takes to be an entrepreneur. (ACOA, Young Entrepreneur Development Initiative, Client Poll, 2004.)

  • Trade and Investment

    Atlantic Canada must export to expand its economy, and has generally done very well in this regard. But very few SMEs in the region are currently engaged in export activities, and ACOA has targeted efforts toward this potential source of export growth by offering opportunities to enhance export experience and success. These include research into market opportunities, company match-making, organizing trade missions with provincial and other federal partners, and offering skills training in exporting.

    Attracting foreign direct investment to Atlantic Canada is a way to promote the growth of SMEs in the region, bring in new technologies and skills, and enhance exports and trade networks.

    Specific results from trade and investment initiatives at ACOA include:

    • In 2003-2004, nearly 1,000 potential exporters were assisted in becoming export ready.
    • Team Canada Atlantic has completed nine missions to United States markets, involving 300 companies, almost 2,500 business meetings, and resulting in $21.5 million in immediate sales (100 immediate jobs being created), and the prospect of $115 million in long term sales.
    • The Atlantic-wide International Business Development Agreement (IBDA), started in 1994, has resulted in 32% of participating companies beginning exporting to new markets, and 40% increasing their export volumes to current markets.
    • ACOA has formed a partnership for investment promotion with the four Atlantic Provinces and other federal partners, which will enable the region to pool resources in areas such as marketing, investment missions, and hosting incoming investment missions.

  • Tourism

    Expanding tourism in Atlantic Canada has been one of ACOA's most sustained efforts. In conjunction with the four provincial tourism departments and the Atlantic tourism industry associations, the Agency formed the Atlantic Canada Tourism Partnership (ACTP) in the mid-1990s to promote visitation from key markets. Support to the industry has enabled tourist operators to adopt innovative practices, including Internet technologies and e-commerce through the Atlantic Canada Technology Initiative.

    • Evaluation of the Atlantic Canada Tourism Partnership found that the Partnership attained an overall return on investment estimated at $16.36, well above its 10:1 revenue objective. This success was largely driven by the U.S. Consumer advertising campaigns, which generated an estimated $73.2 million in revenue and posted a return on investment (ROI) of $19.98.
    • 87% of the region's tourism businesses were involved in business-to-consumer e-commerce transactions in 2002 compared with 42% in 1999.

  • Access to Capital and Information

    The Conference Board of Canada has noted that "… the SME debt market appears to be less developed in Atlantic Canada than in Canada as a whole. Indeed, there may be fewer suppliers, less breadth, fewer providers and few choices". (Conference Board of Canada, Sources of SME Business Debt Financing in Atlantic Canada, March 1999.) To fill this gap, ACOA's Business Development Program (BDP) is designed to enable SMEs to obtain interest free loans that act much like equity, and that can be used to leverage capital from other sources. Repayable since 1995, BDP loans become available for re investment in other SMEs. Some $213 million was repaid during the period 1998 to 2004, including $56.4 million in 2003-2004 alone.

    • ACOA maintains a Canada Business Service Centre (CBSC) in each province in Atlantic Canada as a full service, free-of-charge business information resource. Within the last two years, business inquiries received by CBSCs have nearly doubled, with over 690,000 inquiries in 2003-2004, and users reporting an 85% satisfaction rate with the service offered.
    • ACOA maintains special access to information services through the Aboriginal Business Service Network with a presence in 41 communities throughout the region.

• Community Development

  Atlantic Canada's population is more rural than most of the rest of Canada, with a large number of smaller communities that contain about 45% of the region's population. Developing the strength of these communities is one of ACOA's priorities, with about 65% of BDP loans going to businesses outside metropolitan areas. This is intended to counter the fact that commercial banks have closed 16% of their branches in the region, with many of these closures in rural areas.

  Enabling communities to build their own futures entails assisting them prepare plans based on realistic goals and the assets they have at their disposal, and helping fill gaps in the financial infrastructure left by withdrawal of commercial institutions.

  • Strategic plans have been developed for each territory covered by the 52 Regional Economic Development Organizations (REDOS) in Atlantic Canada.
  • The Seed Capital ConneXion Program for Young Entrepreneurs (SCCYE) has resulted in an average of 1.72 jobs per project at the time a loan was made, and 1.86 currently, both exceeding target rates of 1.5 jobs.
  • Clients report that about 72% of projects would have either been cancelled or postponed without a SCCYE loan.
  • SCCYE has been effective in slowing the outmigration of young people from small communities and rural areas, with 58% of clients reporting they would have moved away without the assistance they received from SCCYE.
  • Atlantic Canada's Community Futures Program - delivered through the ACOA-supported Community Business Development Corporations (CBDCs) that cover Atlantic Canada - has filled a gap by providing an essential source of capital for small business.
  • The average CBDC loan ($38,000) has created 1.9 jobs and maintained 3.3 others.
  • 57% of clients said they would not have started their business without the loans they obtained from a CBDC, and 35% of existing businesses would have shut down or reduced operations without their CBDC loans.
  • CBDCs help keep people in rural areas and small towns, thereby helping to maintain the communities where they live.
  • ACOA has invested $66 million in 156 projects through the new Strategic Community Investment Fund (SCIF) to help improve community capacity.

• Policy, Advocacy and Co-ordination

  Recognizing that good research and analysis lead to good information and intelligence, and hence improved decision making, ACOA's policy role has expanded and forms an indispensable part of the Agency's operations and planning. Policy effort concentrates on identifying the strategic interests and opportunities of the region, as well as exploring established and emerging sectors and trends that are of interest and concern not only to ACOA, but to the Government of Canada and other stakeholders. Research is used both to further Atlantic Canada's interests in national decision-making, and to extend the co-ordination of federal efforts in developing the Atlantic region.

  An important element of ACOA's advocacy efforts relates to industrial regional benefits (IRB) from large national procurement contracts. Such large projects are constantly monitored by ACOA for their potential benefits for Atlantic industry, and the Agency uses the IRB policy to inform and advocate to national and multi-national companies about Atlantic Canadian industrial capabilities. Recent industrial benefits activity undertaken by ACOA has contributed to some $500 million in contracts for Atlantic companies.

ACOA's Macroeconomic Impact

Measuring ACOA's overall impact on Atlantic Canada has been undertaken using Statistics Canada data and reputable economic models, including that developed and tested over many years by the Conference Board of Canada. This has made it possible to measure ACOA's impact at a level that transcends the results of individual programs and initiatives in order to provide an aggregate picture of all of ACOA's assistance. Salient results from these modelling exercises (Details on how these estimates are made are contained in the Five-Year Report to Parliament 1998-2003, at http://www.acoa-apeca.gc.ca/publicationE/ 5year/1998-2003/report.shtml) and Statistics Canada data include:

• For every dollar invested directly in business through ACOA programs there is a $5.00 increase in Atlantic gross domestic product. (Conference Board of Canada's Atlantic Provinces Econometric Model)
• Atlantic gross domestic product in 2002 was $1 billion (constant 1997 prices) higher than it would have been without ACOA direct support to businesses. (Conference Board of Canada's Atlantic Provinces Econometric Model)
• Expenditures of about $500 million had produced tax revenues of about $600 million. (Conference Board of Canada's Atlantic Provinces Econometric Model)
• Total employment in the Atlantic region was over 20,000 higher in 2002 than it would have been without total net employment gains (direct plus indirect and induced) resulting from ACOA's direct support to SMEs. (Conference Board of Canada's Atlantic Provinces Econometric Model)
• More than one-third of manufacturing jobs added in Atlantic Canada between 1997 and 2002 were attributable to ACOA clients. (Statistics Canada / ACOA data)

Productivity growth for ACOA clients is more than three times that of unassisted firms

• Productivity growth over the period 1999-2001 for ACOA-assisted firms exceeded that for unassisted firms, both on an all-industry basis (40.9% versus 12.4%) and for the crucial manufacturing sector (9.5% versus a decline of 6.4%). (Statistics Canada, Proxy for Labour Productivity, 1999, 2001)
• ACOA's impact on firms with less than 20 employees is also evident. Productivity growth more than doubled for the ACOA-assisted firms, compared to a decrease of 18.5% for unassisted firms. (Statistics Canada, Proxy for Labour Productivity, 1999, 2001)
• Payroll data from Statistics Canada Employment Dynamics (1991-2001) indicate payroll increases for ACOA-assisted manufacturing firms is three times that of unassisted manufacturing firms and employment growth is four times higher.