Regional Economic Development: Canada's Search for Solutions

K.J. Charles was Professor of Economics, Lakehead University, Thunder Bay.

Regional development is one of the important goals of policy of modern governments. In Canada there are a variety of programs, at both federal and provincial levels, costing billions of dollars a year, designed to bring about rapid regional development. D.J. Savoie submits past and present programs to a comprehensive analysis and evaluates their effectiveness.

In the late 1960s development policy in Canada was excessively ambitious and aimed at practically wiping out regional disparities through accelerated regional development. When this over-ambitious goal was not attained, some economists and policy-makers hastily concluded that regional development was an unrealizable goal, and called for the abandonment of regional development policy altogether.

Savoie rightly rejects this pessimistic view and suggests that regional development goals should be realistically scaled down to levels compatible with the economic potential of particular regions. The purpose of policy should be to encourage local entrepreneurs rather than to lure big capital from outside. For Atlantic Canada he favours a tax incentive scheme, patterned after the RRSP model, that would enable local existing and potential business to accumulate tax-free capital provided they could invest the capital in new or expanded businesses in the region. Among his other proposals, an interesting one is the establishment of an agency with a solely regional development mandate, combining the capacities of a central agency with that of a program and research body.

Donald Savoie, a native of New Brunswick, is director of the Canadian Institute for Research on Regional Development and also teaches at the Université de Moncton.