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What We Learned
To compete, Nova Scotians understand that we need a renewed world focus and a return to our place as a prominent trading region.
Today, Nova Scotia finds itselfat a time of unsurpassed
opportunity and considerable challenge.
The global economy is surging, driven
by advances in technology and instant
and inexpensive communications.
Economic prosperity no longer depends
on resource endowment or proximity to
markets. Now, places with skilled workers,
learning institutions, and companies
tuned to the knowledge economy can
lead in economic development. And one
of those places could be Nova Scotia.
Our opportunities and challenges are
clear. Skilled and capable people are the
key resource of the knowledge-based
economy. Nova Scotians have known
for generations that education equals
employment. As a result, Nova Scotia
has one of the best-trained labour forces
anywhere and benefits from top-notch
universities, an innovative community
college system, and leading private
training organizations.
In addition, Nova Scotia is beginning to
reap benefits from one of the world’s
great natural gas resources. While the
gas is flowing, our challenge is to develop
upstream and downstream industries
related to exploration and production—
those industries that supply the sector
and those that add value to the resource.
Nova Scotia has also reduced dependence
on the federal government. We have
taken the deepest proportional cuts to
federal government spending of any
province and responded with the fastest
rate of private-sector job growth in the
late 1990s. We are rejecting insular
attitudes that have kept us from
measuring ourselves against the best.
Our companies are recognizing that we
are now part of a global market where
aggressive firms differentiate themselves
on the basis of cost, quality, and speed
of delivery.
To compete, Nova Scotians understand
that we need a renewed world focus
and a return to our place as a prominent
trading region. To this end, this strategy
begins the task of identifying and
dealing with challenges, marshalling
our resources, and taking full advantage
of the opportunities before us.
PEOPLE
Demographics play an influential role in determining pressures on the Nova Scotian economy. Our population continues to increase, but at a slowing rate. Growth during the census period 1991 to 1996 totalled only 10,000 people—the slowest growth in half a century. Declining birth rates, net outmigration, and decreasing immigration have played roles in the slowing rate of population growth.
(See Figure 1, Population Changes, Nova Scotia, 1991–96)
The implications of this trend are worrisome. In 25 years, there will be about 30,000 fewer people in the important 5-to-19 age group—important because this group comprises future workers. In addition, about 130,000 more Nova Scotians than today will be over 65 by the year 2025. Those leaving the province tend to be younger and well educated, while those arriving tend to be over 50 years of age.
We already see declining enrolments in
education, increasing costs in health care,
and workforce shortages looming in key
industries and construction trades.
EDUCATION
Nova Scotia has one of the best-educated
labour forces in all of Canada. Fifty-four
per cent of workers have a post-secondary
degree, diploma, or certificate, compared
with the national average of 51 per cent.
This has contributed to one of the best
rates of job growth among provinces in
the late 1990s. However, the promising
job growth figures mask changes on the
horizon.
Many new jobs being created require
higher levels of skills than the jobs being
lost. Nova Scotia will need to invest even
more wisely in education and training to
keep its workforce competitive. Nova
Scotians will also require higher levels
of literacy, including computer literacy,
to be ready for the opportunities to come.
EXPORTS
We cannot make ourselves better off by
selling to each other within the province.
Exporting allows us to tap markets much
larger than our own. Exports generate
wealth and jobs. According to the
Atlantic Provinces Economic Council,
for every $68,000 increase in exports,
another Nova Scotian goes to work.
However, in the mid-1990s, Nova Scotian
exports were growing more slowly than
those of most of the other provinces. In
1999, we had the second-lowest level of
exports per person among the provinces.
(Figure 2, Exports per Person, 1999)
Our export picture may be improving. Nova Scotian growth in exports was
among the fastest in the country in the
late 1990s, capped by a 16 per cent
increase in 1999. Business is adding
more value to our resources. Service
exports—customer service centres,
consulting services, for example—are
growing faster in Nova Scotia than in
most other provinces. By mid-2000,
natural gas had already registered as
one of the province’s top 10 exports.
(Figure 3, Change in Exports, 1997–99)
Our export picture may be improving.
Nova Scotian growth in exports was
among the fastest in the country in the
late 1990s, capped by a 16 per cent
increase in 1999. Business is adding
more value to our resources. Service
exports—customer service centres,
consulting services, for example—are
growing faster in Nova Scotia than in
most other provinces. By mid-2000,
natural gas had already registered as
one of the province’s top 10 exports.
(Figure 3, Change in Exports, 1997–99)
INVESTMENT
Nova Scotia’s economic performance
in recent years relates directly to big
investments in forestry, tire making, and
natural gas production and distribution.
Nova Scotia led all provinces in
investment growth in the late 1990s.
These investments play a big part in
the province’s current export boom.
But we have to do better. Nova Scotia
currently has the second-lowest rate of
investment per person in Canada.
Nova Scotian companies need continued
investment to compete in world markets.
New investment boosts productivity
and competitiveness. In today’s dynamic
environment, if companies are not
investing in new technology that builds
competitiveness, they are probably
shrinking—in size, employment, and
market share. Working with Nova
Scotian companies to expand their
investment in our province and put
down deep roots is vital. (Figure 4,
Investment per Person Expected in 2000)
Attracting new foreign investment is
also important. Foreign-owned firms
account for 75 per cent of Canadian
manufacturing exports and 1 out of
every 10 jobs directly. Also nationally,
89 per cent of foreign-owned firms
conduct research and development,
compared with 67 per cent of Canadian-
owned firms. Multinationals bring new
technology and new management
approaches. Most regions covet so-called
anchor companies that hire and train
new graduates, strengthen important
industrial clusters, and create supply
opportunities for a host of service
companies.
BUSINESS CLIMATE
Business climate is made up of many things: business and personal tax levels, quality of life, cost of living, for starters. Business taxes in Nova Scotia have been competitive. However, we are in danger of losing our place as other jurisdictions improve their fiscal situations. We would do well to pay closer attention to the Nova Scotian business climate. (Figure 5, Comparative Tax Rates, April 2000)
FISCAL ISSUES
The problems that a large deficit represents are now familiar to Nova Scotians. High debt-servicing costs mean less money for important programs like health care and education. Out of necessity, cutting the deficit becomes a priority. However, it is widely recognized that governments cannot cut their way to prosperity. (Figure 6, Program Spending per Person, 1999)
The Nova Scotia government must
continue to gain new efficiencies in the
delivery of services to the public, but
the real path to eliminating deficits is
through economic growth and revenue
generation. It is how other jurisdictions
have managed to control their deficits.
INDUSTRY STRUCTURE
Nova Scotia’s industry structure
continues to evolve. We are more
dependent on service industries than
the national average—76 per cent versus
66 per cent of GDP. Growth has come
from important service sectors such as
finance, insurance, and real estate, which
grew by about 12 per cent from 1994 to
1998. The tourism-related sectors of
retail trade and accommodations, food,
and beverage grew by about 19 per cent
over the same period. But overall
service-sector growth was held back by
a 12 per cent decline in GDP related to
public administration and government.
The high-wage manufacturing sector
grew by a healthy 22 per cent over the
same four years, an indication that
Nova Scotia processors are adding
considerably more value to resources.
Although Nova Scotia had among the
best rates of job growth in Canada in
the late 1990s, it has occurred at the
same time as some shocking reversals in
income growth. The average incomes
of Nova Scotians have declined in
recent years, even as those in most of
the other provinces have increased.
Our employment growth has been in
sectors and industries with too many
low-wage, part-time jobs.
Economic forecasts from a variety of
organizations are positive for Nova
Scotia, but most expect the province to
lag behind the national average in GDP
and employment growth over the medium
term. However, the future is not carved
in stone. Nova Scotia’s future is very
much what we make of it. (Figure 7,
Percentage Growth in Real GDP,
1999–2004)
NATURAL ADVANTAGES:
OLD AND NEW
While Nova Scotia continues to rely
moreon domestic markets than most
provinces, businesses have begun to tap
into our obvious geographic advantages.
Nova Scotia is closer to Boston than to
Montreal, closer to New York than
Toronto. Our businesses are making
inroads in the northeastern U.S. markets.
Good air access is shrinking distances.
Halifax International is one of Canada’s
fastest-growing airports. Nova Scotia’s
world-class ports have become major
players in international shipping.
Single-carrier rail access now stretches
from Halifax to the West and Gulf coasts.
(Figure 8, Nova Scotia: Direct Air Links)
Nova Scotia’s offshore hydrocarbon
potential represents the most significant
industrial opportunity in our recent
history. The potential exists for well
over 20 trillion cubic feet of gas reserves
distributed among the Scotian Shelf and
the Laurentian, Sydney, and Magdalen
offshore sub-basins. By mid-2000, there were 42 exploration parcels in the
offshore with expenditure commitments
of more than $840 million over the
next five years. Eight more parcels are
expected to be awarded before year-end.
The 25-year Sable Offshore Energy
Project, one of the largest new natural
gas developments in North America,
has established reserves of 3.5 trillion
cubic feet. A new natural gas distribution
system will spread the benefits of the
resource across Nova Scotia.
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Nova Scotians face a bright economic future in the century ahead. However, that future is not ours by right. It is, instead, ours by reward—if we deal head on with the challenges facing us today, and if we strategically take advantage of the economic opportunities before us. We must do so if Nova Scotians are to have a future with numerous opportunities for prosperity.
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