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Atlantic Canada and the 50 States: A Development Comparison
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North American Policy Group |
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Dalhousie University
Halifax N.S. |
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June 1996
Janice E. Plumstead, Economic Development Specialist,
North American Policy Group
Dr. J. D. McNiven, Professor of Public & Business Administration,
Dalhousie University
Executive Summary
The creation of the North American Free Trade area has meant that Canadian jurisdictions
have to consider more closely their advantages and weaknesses relative to those of the other national
partners in this new environment for trade and investment. The North American Policy Group
(NAPG) at Dalhousie University, with the support of the Atlantic Canada Opportunities Agency
(ACOA), has undertaken two studies to provide objective comparisons of the Atlantic Region and
international jurisdictions. The Region is treated as a single unit or jurisdiction in these studies, not
as a political suggestion, but because of the complexity of presenting information on all four Provinces
and also because, in a number of instances, regional data was more readily available.
The approach taken in the two studies is to develop the statistics on the Region that will allow it to be compared and ranked, as accurately as possible, with, in one case, the 50 States of the United
States of America and, in the second case, with 48 "countries", including the territories of Hong Kong
and Taiwan. This report focuses on the comparison of Atlantic Canada with the 50 States.
The utility of this comparison comes from the need to understand the advantages and challenges
facing the regional economy in a broader context than an intra-Canadian comparison. Many of these
latter studies have been done over the years. Given the increase in external competition resulting from
liberalized trade and investment regimes, external comparisons are crucial to citizens and policymakers
alike. This study aims to fill this gap.
This study also allows the Region's decision-makers to assess key indicators of growth. In an
era when business development depends on a wide range of factors including lifestyles, access to
universities and environmental quality, an attempt has to be made to understand the challenges to the
Region and to examine its advantages and disadvantages.
Finally, international competition for investment requires that the Region sees itself as others
might see it. Atlantic Canadians will not benefit from uninformed opinions and prejudices that arise
outside, nor are they helped by telling each other unfounded but rosy opinions and projections. Baseline
data is critical if the Region is to effectively compete for its share of investment dollars.
The comparison with the 50 States presented in this report is based on the 1995 Development
Report Card for the States, published by the Corporation for Enterprise Development (CfED) in
Washington, D.C. The Report Card is based on 58 criteria of which 44 are used to grade each State
on three indexes. The other 14 are used in two ungraded indexes. Most of these criteria are relevant
to Atlantic Canada, though there are a few where Canadian national conditions penalize the Region's
scores and others where it helps them. On the whole, the 58 criteria are a valuable set of indicators -
and they do provide a consistent benchmark relative to the performance and prospects of Canada's
American neighbours.
Using the framework of the Report Card, NAPG developed "grades" for Atlantic Canada.
Taken in the context of the 50 States, the Region rated:
| Economic Performance | C |
| Business Vitality | C |
| Development Capacity | D |
A fourth index measuring tax and fiscal systems was not graded in the Report Card, with
States receiving a plus (+), check ( ), or minus (-) instead.
Atlantic Canada rated a check (), for this category. As well, an ungraded subindex on environmental,
social and health conditions is included.
While the CfED does not give a single overall rating to each State, it is possible to do so.
NAPG estimates that Atlantic Canada would rate 33rd among the States with an overall "grade" of
C-.
More detailed analysis reveals that the values that inspire less income disparity, a
comprehensive health system, and a clean environment all help to improve the Region's scores. Other
positive factors are the rate of job creation by new businesses, the availability of loan funds for
businesses, and a high rate of manufacturing investment.
The challenges facing Atlantic Canada exist in the quality of the regional workforce, the lack
of diversity in the Region's export industries, and our relative unpreparedness for a technology-based
economy.
The Region appears to fare well relative to its New England neighbours, especially with respect
to the northern New England States, which most resemble Atlantic Canada in population and
industrial structures.
The Region has a relative equality of income among those who are employed in rural and urban
areas. It suffers from high unemployment, labour quality problems, and a level of new business creation
that, while increasing, is growing from an extremely small base.
Two surprises stand out. First, the data suggests significant debt financing is available for
businesses. The data however, does not address the specific issue of access to credit on the part of small
and medium sized businesses. This is an unfortunate gap in the CfED methodology. Second, the
Region does rather well in attracting investment into manufacturing. The challenge is to diversify the
manufacturing base.
The policy challenges that stand out from applying this model are:
- Atlantic Canada benefits from its access to Canadian systems of health care, fiscal
equalization, as well as its intrinsically Canadian social and fiscal equity. This
advantage is important to retain.
- New business creation and entrepreneurship are critical to lowering the unemployment rate.
- Workforce quality has to be seriously addressed including the issue of retaining
university graduates.
- Technology capabilities will have to be expanded if the Region is to be competitive
in the immediate future.
- Either venture capital is lacking or the Region does not have a business culture that
encourages "going public", or both.
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