This is the first instalment in a two-part series on local economic development.
Here are a few thoughts on local economic development (LED) in the Northwest Territories.
In the NWT, there is significant foreign direct investment (FDI) from mining companies, specifically diamond mining companies.
Normally, this is a very large part of the territory’s GDP. Covid and a world-wide downturn in diamond demand negatively affected investment in the mining industry and specifically the diamond mines from 2019 to 2021. The NWT economy is somewhat brittle in the face of recession as the economy is mostly non-renewable, resource based. Government makes up a significant portion of the economy.
Linkages to outside regions are mostly through connections to Alberta because that is the closest province and it is linked by the main highway and air traffic routes. Oil and gas exploration used to be a large part of the economy with investment and linkages from Alberta and B.C. international oil companies, such as Shell Oil and Exxon, formerly drilling and exploring in the Beaufort Sea, but that has stopped with government moratoriums and new regulations making it difficult and expensive to invest.
The NWT economy does not attract a lot of immigrants as it is seen as a high cost and challenging environment to live in. The service and government economy plays a significant part in the whole economy. The capital city of the NWT in Canada is Yellowknife. It is approximately one-half of the total 40,000 population and most of the new investment is in the city as it is seen to have a more vibrant economy. Investment is from construction companies, service companies, and other businesses serving both the local and territorial economy.
There is a large reliance on southern food, services and products as there is very little agriculture, high-tech services or manufacturing in the NWT. Investment outflows are much higher than inflows resulting in a government dependent economy that struggles in the global economy when there are downturns and can only benefit when commodities are at peak demand cycles (when it is economical to mine, log, etc.).
Economic Development Planning and Connectedness
In my home region of the Dehcho within the NWT in Canada, the territorial government undertakes to produce a regional economic development strategy every five years. The region has six communities and the total population is around 2,500. While not all issues would be equally applicable to each of the communities, their areas of LED concern and aspirations for the future would be more similar than dissimilar.
The most recent rendition of the plan is currently being done. At a recent public engagement session, topics such as tourism and education were highlighted. Being a small community in the Northern part of Canada creates many challenges and it is important that the region be as prepared to compete and be innovative in all aspects of economic development as possible.
Focusing on what will bring the best return for the investment, the region must also be realistic as to what it must do to be able to execute any economic development strategy. Some focus on agriculture (food security), climate change-related university partnerships (boreal forest/permafrost studies etc.), tourism (Nahanni National Park and nearby protected areas), and transportation opportunities would seem to be amongst some of the keys to a productive future for the community and region.
The community of Fort Simpson is also looking to partner with the local Indigenous governments (band and Metis) to augment the regional economic development plans with a complementary Fort Simpson/Liidlii Kue plan. Being the largest community in the region, the community is the government and business service centre for the region. This, and the fact that more of the regional business resides in the community, creates a need to identify key factors that can assist the community, while remembering that a healthy service centre depends on healthy and growing communities in the entire region.
Next week: Sean Whelly discusses innovation, local entrepeneurs and identifying possible LED actions.