July 2015: Growth Clusters and the ONE Nova Scotia Economy

The many significant achievements of community economic development and social enterprise groups across the province are indicative of what can be done when leaders in different sectors put their heads together to change attitudes and build a better future from the ground up.”– One Nova Scotia Commission (Ivany) report.

Theme Overview Growth Clusters [PDF]

Creative Nova Scotia Leadership Council [PDF]

Excerpts Now or Never Growth Clusters [PDF]

This month, the One Nova Scotia Coalition will explore how growth clusters can be nurtured in Nova Scotia.

“Our urban and rural areas have many strengths and successes under their belts,” said Mayor David Corkum, ONE Nova Scotia member. “We need to recognize the assets we have in all areas and how they work together, and complement and reinforce each other to fully realize their potential.”

Preview_Digby_0585_MCreagenThe effects of the demographic and economic challenges we face as a province are felt particularly hard in rural communities. Higher levels of outmigration combined with lower levels of immigration have made attracting and retaining skilled labour challenging for some rural business. The benefits of the limited research and development that does take place in Nova Scotia does not always spread from the urban cores to more rural regions. These factors contribute to less diversified economies where post-secondary education and earned income can be lower and unemployment higher.

The Ivany report called on government, industry and community leaders to come together and agree our traditional rural sectors – including for example, tourism, manufacturing, mining, fisheries, forestry and agriculture – are essential parts of a single new Nova Scotia economy. It also said these sectors need to find ways to be more productive, more innovative and more competitive.

A new approach to economic development is needed. It must involve collaboration among sectors, create opportunities for innovation, and be based on a shared vision and a willingness to openly explore how any risks associated with economic progress can be effectively managed.

The economic growth cluster concept is increasingly being applied to regional economic development. Clusters consist of businesses, governments, communities and other key economic actors working together to maximize the advantages of local industries through mutual proximity and connections. By working collaboratively to develop and achieve a shared strategy for development, the entire sector is better positioned to identify and take advantage of the opportunities that co-operation can bring including economies of scale, pools of specialized expertise and skilled workers, easy access to suppliers, business attraction, and the potential for synergy and innovation.

In other parts of the world, clusters are helping tourism, information and communication technology, manufacturing, and renewable energy sectors grow. Examples of regional clusters include:

  • Computer chip production in Silicon Valley
  • London’s financial sector
  • Napa Valley’s wine production
  • Flower growers in the Netherlands

Clusters are geographic concentrations of interconnected companies or institutions that manufacture products or deliver services to a particular field or industry. Clusters typically include companies in the same industry or technology area that share infrastructure, suppliers, and distribution networks. Supporting firms that provide components, support services, and raw materials come together with like-minded firms in related industries to develop joint solutions and combine resources to take advantage of market opportunities. An economic cluster, or several clusters, serves as the driving force in most regional economies.

Nova Scotia has assets around which growth clusters in all our regions can be nurtured. Clusters are already emerging around information communication technology, ocean products and technology, wine and other agricultural products, tourism, and creative industries. Our diverse natural resources from fisheries and aquaculture to forestry to mining also offer potential for added value that can be realized through cluster and partnership development.

According to Forbes, “[i]n a perfect world, clusters would just exist without much effort.  But the truth is it takes a very focused and strategic approach to bring companies and organizations from the value chain together to form partnerships for funding, research and revenue opportunities.” An intentional approach through which communities, businesses, and governments build and implement shared strategies can help make all our communities – in rural and urban areas – more competitive in an increasingly borderless global economy and labour market.

Goals & Game Changers

Goal 14: Tourism Expansion

As Nova Scotia’s leading source of service sector exports, gross business revenues from tourism will reach $4 billion (approximately double the current level).

Game Changer II:

Attitude Shift – A Shared Commitment to Growing Nova Scotia’s One Economy

A better future for Nova Scotia, and most emphatically for its rural regions, is not possible unless ways are found to grow the economy at a greater rate than has been the case for the past 20 years or more. And if we are to sustain rural communities and grow the provincial economy as a whole, the province will need more businesses of all types — predominantly private sector but including social enterprises and innovative voluntary sector organizations — to employ more people and generate more wealth.

Game Changer V:

Renewing Rural Industries

Preview_SugarMoonFarm_9720_LWaggIn future, as in the past, the traditional rural industries – tourism, manufacturing, mining, fisheries, forestry and agriculture – will provide the essential foundations for Nova Scotia’s rural economy. The basic viability of many of our rural communities hinges on whether these sectors can create more and better jobs and generate more wealth. Some 43% of Nova Scotians live in rural regions and they are in many ways an underutilized human resource. Government, industry and community leaders need to come together to declare, in the most unequivocal terms, that our traditional rural sectors are essential foundations for the new Nova Scotia economy, now and in the future, while acknowledging that all of these sectors need to be more productive, more innovative and more competitive.

For many years the highest public policy priority for these sectors has been simply to maintain jobs in rural communities. But today we find that many business operators are insufficiently profitable to support the investments in product quality, plant productivity, worker training, and market expansion that are needed to maintain and grow market share. In some sectors it is increasingly difficult to find local workers to take the low-wage and seasonal jobs many employers offer. As a result, young people are leaving rural communities, other countries are out-competing us in the marketplace, and the province is not realizing the full value of our asset base. These business models need to be revised if the province and our rural communities are to escape the current pattern of weak economic growth and population decline.

On the “upside”, globalization is creating significant opportunities if we can bring higher value products to expanding markets. We still have the crucial ingredients: an attractive environment, valuable natural resources and advanced capacities to manage them sustainably. We also have a highly developed education and training system and the R&D capacities with which to transform our traditional rural industries into knowledge driven, innovation-intensive sectors.

Additional Resources

The Power of Industry Clusters, Bloomberg Business

What makes clusters unique is not just that companies with similar or complementary interests, competencies, and needs congregate around each other. It’s that an entire value chain exists within a cluster: suppliers, manufacturers, distributors, academic institutions, researchers, and workforce training, as well as those who provide relevant support services.

The Cluster Effect, Forbes

…what if there was an opportunity for small, like minded companies in the same industry to meet and make meaningful business connections with medium and large companies on a regular basis? And, what if the connections actually translated into real business deals? And the deals led to commercialization of products, revenue growth, new customers and yes, even new jobs.

Cluster Profiles: A set of standardized descriptions of more than 800 industry clusters in 52 countries, Institute for Strategy and Competitiveness

Profiles have been culled from a large body of literature on clusters that has been created in recent years by cluster practitioners and academic researchers alike.

Building Assets for the Rural Future, UNC School of Government

When a regional industry cluster forms in a rural area, it presents an opportunity for strengthening the regional economic base, sustaining a skilled workforce, and benefiting households on the economic margin. Nurturing emerging industry clusters and supporting others undergoing transition is explored