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TO THE POINT: Why does Nova Scotia have a chronically under-performing economy?


The town of Canso is seen in this file photo. In Nova Scotia, 43 per cent live in rural areas (defined as communities of less than 5,000), compared to a national average of just 19 per cent.
The town of Canso is seen in this file photo. In Nova Scotia, 43 per cent live in rural areas (defined as communities of less than 5,000), compared to a national average of just 19 per cent. - The Chronicle Herald file photo.
Don Mills
Don Mills

One of the objectives of this column is to provide factual analysis of key challenges facing our region and advocate for the kind of changes needed to increase prosperity in Atlantic Canada.

I’ve spent my life analyzing data to uncover trends, understand consumer habits, behaviour and attitudes, and the cause and effect of key issues, and I have long tried to discern why Atlantic Canada has trailed the rest of the country in terms of economic growth.

Relative to the rest of the country, Atlantic Canada has suffered from a chronically underperforming economy for decades. The reality is that this region becomes a smaller and less important part of the national economy every year. Atlantic Canada represented 7.8 per cent of the Canadian economy in 2000. By 2017, that percentage had dropped to 6.3. Relative to the economy of the entire country, Nova Scotia’s share has shrunk from 2.9 per cent in 2000 to 2.3 per cent in 2017.

Over that same period, the Canadian economy has grown nearly 58 per cent, compared to only 24 per cent for Nova Scotia (the weakest in the Atlantic region). In other words, the provincial economy is about a third smaller than otherwise would be the case, had it only progressed at the average national rate over the last 18 years.

In 1973, Atlantic Canada represented 9.5 per cent of the total Canadian population. By 2017, this had decreased to 6.5 per cent. Over the same time frame, the population of Nova Scotia declined from 3.6 per cent of the national total to 2.6 per cent. With declining relative population comes declining political clout.

There is a relationship between economic growth and population growth; in fact, the latter is essential for the former. Unfortunately, there has been little population growth in the region since the 1990s, except, interestingly enough, in Prince Edward Island, which has outperformed the rest of the region economically.

What are the causes of this chronically underperforming economy? Let’s start by looking at employment. For years, I have wondered why the region leads the country —year in, year out — in terms of unemployment rates. Are we less educated, less entrepreneurial, less motivated than our Canadian counterparts? One of the consequences of these relatively high unemployment rates is that the region has had proportionately fewer workers helping to build economic prosperity on a year-round basis. It also means that there have been fewer taxpayers to fund public services, and therefore equalization payments from other Canadians are needed to subsidize those services.

Why has Atlantic Canada had the highest unemployment rates in the country? The key reason is the higher-than-normal reliance on seasonal employment within the region, compared to elsewhere in the country — a reliance driven by the high percentage of the Atlantic population living in smaller, rural communities, which are often challenged to provide year-round employment opportunities.

For years, I have wondered why the region leads the country, year in year out, in terms of unemployment rates. Were we less educated, less entrepreneurial, less motivated than those living in other parts of the country?” – Don Mills

While this challenge is no different than elsewhere in Canada, the problem for the Atlantic region is that, as a percentage of the population, there are more than twice as many people living in rural communities. In Nova Scotia, 43 per cent live in rural areas (defined as communities of less than 5,000), compared to a national average of just 19 per cent.

Rural communities have a higher reliance on natural resource development and a greater dependence on seasonal work than their urban counterparts. Added to that challenge is the growing resistance of the general public to resource development (of any kind, it seems) and there are limited opportunities to create full-time, year-round jobs in most of these places.

The key to greater economic prosperity is the creation of more full-time jobs in urban communities within a reasonable commute of rural ones. By focusing economic development efforts on these urban areas, there is an opportunity to serve those living in nearby rural communities with full-time employment.

A future column will be devoted to the establishment of economic hubs across the province for this exact purpose.

Don Mills is the former owner of Corporate Research Associates and a recognized expert in data trends in Atlantic Canada. After selling his business recently, he remains passionate about data — and learning the guitar. He can be contacted at [email protected] or on Twitter at @donmillshfx.

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