Opportunities-based economic development: Revisited

Someone asked me recently if I had given up on my advocacy for ‘opportunities-based economic development’. The answer is no but I have to admit it has been hard to garner much interest. I presented the model at the national EDAC conference a few years ago. I tried to embed it in GNB when I was there and I have presented it to many clients along the way with only partial interest.

What is it?

About 15 years ago I decided to formalize an approach to economic development that I called opportunities-based economic development. Traditional economic development basically involves jurisdictions promote themselves to try and encourage business investment. This investment can come from entrepreneurs or large firms. It can come from local firms or national/international firms. These days this can take many forms but the end goal is (or should be) to ensure enough business investment to provide economic opportunities for residents and ensure a strong enough tax base to sustainably fund public services and infrastructure.

Many times a jurisdiction will highlight a specific industry or industries. Community x has several aerospace manufacturing firms so we promote the ‘cluster’. Why not add your firm to the cluster? Community y has a long coastline that could be good for aquaculture so we promote the potential of aquaculture.

In my experience, this is hit and miss particularly at the municipal or regional level.

So, I decided economic developers should determine what ‘opportunities’ might exist for business investment and then promote those opportunities to targeted investors. In other words, formalize a systematic approach to determining what might work in your community and then pitching those opportunities to businesses - local, national and international.

Essentially, economic development becomes focused on information. The normal model is that jurisdictions wait for entrepreneurs to step up. Is there a market locally for a veterinarian? If there is one, we assume an enterprising veterinarian will come long and fill the market need. What if they don’t? What if there is an information void between the opportunity and the potential investor (entrepreneur/company)? Economic developers fill those gaps.

Where to begin?

I, only partially tongue-in-cheek suggest you start with the 900+ NAICS industries. Why not?

NAICS 111110 - Soybean farming: Is there any reason why this could work in your community? Is there an existing base of farmers? Do we have enough farmland? Is there a growing market globally? Do we have a good supply chain here?

Of course, some industries fall off the table almost immediately but for those that do not, you go a little deeper.

NAICS 111330 - Non-citrus fruit and tree nut farming: This includes blueberries, cranberries, haskap berries, etc. Well, in this region of the country we have a considerable base of activity, farmers associations, existing supply chains, government support programs, etc. Does your region have any? Do local farmers have interest?

Now let’s go down to mining. How about NAICS212291 - Uranium ore mining. Well we think there is quite a bit of this in NB and NS. You can check provincial mining atlases to see if there are claims in your area. Is there a growing demand? Check. Should we wait around and hope that someone comes looking at our community or should we package up a little business case document and start pitching it to appropriate mining firms?

You can do the same process for manufacturing - do you have a base of existing firms? Access to local raw materials? Other advantages for specific sectors? Is your provincial government actively pursuing companies in specific manufacturing sectors? Is there a value proposition?

You can do the same thing for trade, for professional services, for personal services.

There are 900+ NAICS industries (5-digit), you better start now.

All kidding aside in my experience using a thoughtful process you can start to winnow down opportunities fairly quickly and then hone in those that have the most potential. Then you map those opportunities to the capacity to develop them as another filter.

Someone called me a few weeks ago to talk about the ‘target’ industries for their community. Hydrogen electrolyzer manufacturing was on their list. I questioned this choice. Sure, there is a growing market in North America and it is likely a Chinese or South Korean or German firm will set up somewhere but why your little community? Do you have a supply chain? Does your provincial government have tens of millions of dollars in subsidies to give to the firm?

By contrast, that specific community looks to have potential critical mineral deposits. It has a lot of hills that could be good sites for wind energy and it could have a small port facility that might be conducive to doing some related activities. Don’t focus on the latest shiny objects. Focus on aligning your specific strengths and attributes to potential opportunities.

Again, I realize my model here has not received much uptake. My EDAC presentation was greeted with a lot of ho hum.

But I’ll keep pitching it because it makes sense to me.