This paper compares and contrasts regional economic policy in the UK and Canada.
The UK’s regional economic structure is notable for the large disparity between London, with its heavy dependence on financial services and absence of manufacturing, and the rest of the country, where manufacturing, such as motor vehicles, continues to play an important role. This greater dependence on manufacturing, particularly in the north, has driven regional economic development policy since before World War Two. Regional economic policies were scaled back under the administration of Margaret Thatcher, as was regional government more generally. Subsequent government have tended to expand both regional economic development and regional government.
In Canada, no province of Canada stands out the way the region of London does in the UK; however, there are considerable differences, with the oil-rich provinces of Alberta and Saskatchewan having considerably higher GDP per capita than the other provinces. Canada’s political structure is quite different from that of the UK because it is a federation, with provinces that have constitutionally protected powers over large areas of economic policy.
Despite the broad powers of provinces, the federal government has a long history of involvement in regional economic development, going back to the 1960s. A key element of this history is the creation of Regional Development Agencies (RDAs), which now number seven and cover every province and territory. These agencies coexist with other federal programmes targeted to specific sectors, as well as a new initiative—the Global Innovation Hubs—that target specific industry clusters in specific regions. The RDAs provide programming aimed both at business and non-profit organizations. Provinces and Territories all have Ministries that deliver economic development programming that is similar to that of the RDAs, with roughly similar level of spending overall.
While federal involvement in economic development has grown over the years, the results are mixed. In some cases, such as Northern Ontario, economic disparities have been reduced, in other cases, such as economic disparities between Atlantic Canada and the rest of Canada, policy does not seem to have been successful.
There are a number of lessons for UK policymakers from the Canadian experience. Firstly, and following on from the previous point, regional economic policy does not necessarily have a discernible impact at the macro level. Industrial structure is hard for governments to change. Secondly, political decentralization does not mean that central governments will stay out of regional economic development, particularly if perceived problems exist. Furthermore, there will always be an overlap between national policies aimed at sectors and regional policy, when sectors are unevenly distributed across a country. Fortunately, at least in Canada, federal and provincial governments have generally worked together quite harmoniously in advancing economic development policy. Indeed, there a great deal of commonality in the structure of programming, both across provinces and compared to the federal government. Thirdly, having political representation in the Cabinet is a key part of Canada’s regional economic development approach at the federal level; attempts to change this have swiftly been reversed. Finally, Canada has some innovative economic development programmes that would be useful models for the UK.
Author Tim Sargent
