Alberta needs to nurture its economic gazelles

Stop talking about diversification and start talking about broadening the economic base

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EDMONTON, AB July 19, 2015/ Troy Media/ – A colleague suggested to me recently that Alberta should stop talking about diversifying its economy. Instead, he said, we should talk about broadening the economic base.

He is right.

Of course, the province’s economy is diversified now – somewhat.

For example, Alberta opened its forests to forest companies back in the 1970s, which led to the province becoming home to North America’s largest pulp mill (Athabasca’s ALPAC), as well as several other mills. Our mills and lumber firms are efficient, productive and significant players in the Alberta rural economy, with some 18,000 jobs and significant exports ($2.7 billion in 2014). It is a $5.4 billion industry.

Our agriculture sector is also a player on the world stage. With significant food, fibre and livestock systems, Alberta agricultural sector generated $12.9 billion in 2014 and represents some 22 per cent of Canada’s agricultural output. The value added sector – food and beverages – generated close to $14 billion in that year. Our largest single employer (Sobeys/Safeway) is a significant food manufacturer.

Our Information and Communications Technologies sector is also strong, home to Canada’s leading geospatial companies and some smart companies doing great work in big data analytics, simulation, gaming and RF/wireless technology. The ICT sector employs some 43,000 people and generates some $13 billion in revenues.

We also have a robust creative industry sector – great theatre, ballet, music, art and film. Nurtured by the Banff Centre and good creative arts programs at our colleges and universities, a host of small companies have built a global reputation for excellence. Alberta Ballet is a great example.

Unfortunately, none of these sectors add up to the energy sector in terms of employment, GDP contribution or tax revenues. Alberta is a fossil fuel state and will remain so for a long time to come.

So what can Alberta do broaden its economic base?

First, we have to recognize that our primary asset is land and how we use it. One use, tourism – already a major employer (135,000 people) and generator of wealth ($7.5 billion in 2013) – is likely to grow as more and more wealthy people retire and choose to travel and explore the world.

We should also use our land asset to implement strategies and mechanisms to develop new agri-crops to produce higher value nutrition or health value, new ways of livestock breeding, new ways of responding to climate change (drought resistant crops), and new forms of land remediation after spills, floods or drought.

Second, the development of effective markets for eco-systems services – trading in land remediation and development permits, CO2 and GHG emissions, wetlands protection and other eco-systems features – would stimulate economic activity in rural Alberta. It would also create demand for innovative technology and new solutions (new soils which respond better to drought conditions, such as those developed from waste by the Eden Project in the U.K.) and new forms of eco-systems management and monitoring using advanced sensors and big data analytics.

Third, creative industries – film, television, theatre, gaming, and simulation – are real engine of growth in other countries, notably the U.K. Two of our most successful IT companies – BioWare and Smart – are aligned with these creative industries. We should be doing much more to incubate and support design-related start-ups and enable their growth.

Finally, we have an excellent healthcare system in Alberta. We have pockets of excellence in health innovation in Alberta, but a collection of pockets do not make a suit. We need to leverage these pockets of innovation to a new level, elevating the work to produce solutions to health challenges which the world needs to see.

Unfortunately, 95 per cent of Alberta’s firms are small- or medium-sized. To broaden our economic base we need to find the gazelles among them (firms growing at 20 per cent each year from a base of $1 million or more) and nourish them in whatever sector or location they are.

Alberta has been talking diversification ever since Peter Lougheed was premier in the 1970s. Maybe the reason we haven’t been successful at achieving it is we were asking the wrong question.

Troy Media columnist Stephen Murgatroyd is a consultant in innovative business and education practices with a PhD in psychology.

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