1. Managing Canada’s Rural
Regions in a Knowledge-Based
Economy
by
Dr. Charles Conteh
Public Policy & Management
Dept. of Political Science,,
Brock University, Ontario
Introduction
“Rural economy” and “knowledge economy” - what’s the
connection?
The “triple bind” confronting some OECD economies (including Canada)
1. Increasing competition from low-cost jurisdictions
2. Declining productivity (total factor productivity)
3. Increased international competition

2. Recent global trends and the paradox of increasing emphasis on local
economic development
These transitions suggest the need for certain institutional capacities for
horizontal collaboration in rural economic development
The experience of the provinces New Brunswick and Manitoba over the past
two decades will serve to illustrate some of the complexities and challenges
of rural economic development policy governance
The implications of the above-mentioned changes for the mandates and
strategies of two federal agencies tasked with managing regional economic
development in the two provinces.
Conceptual Framework of Rural Economic Development
Economic development policy initiatives aimed at rural regions in the
country have included a wide range and mixture of strategies such as:
• modernization of traditional industries (like forestry, fishing, agri-business,
etc);
• diversification of the rural economies through service industries and
tourism;
• development of small & micro enterprises;
• exploitation of the potentials for research and development, and
•selective infrastructure development and social development (esp. better
access to health care & education)

3. In the context of the current knowledge-based economy, the discourse of
rural economic development is increasingly shifting towards innovation
in key sectors.
What distinguishes the new emphasis on innovation from earlier strategies
is its focus on the capacity of local economic clusters to learn
continuously and adapt to rapidly changing conditions that determine
their economic performance and even survival
Innovation implies that non-metropolitan regions must engage in value-
added industrial and commercial activities built upon their existing
comparative advantages in natural resources
It also suggests that service sectors such as tourism must demonstrate
credible differentiation (i.e. combating crowding and homogeneity)
Institutional Context of RED in Canada
Rural economic development policy is not new in Canada
• a rise, demise and re-birth over the past six decades
• gradual melding of rural and regional development since the 1960s.
The present institutional configuration of rural economic development policy
governance within the framework of regional development in Canada dates
back to the 1987 restructuring that led to the creation of four regional
development agencies for Western Canada, Atlantic Canada, Northern
Ontario and Quebec

4. ACOA and WD
The Western Economic Diversification (WD) and the Atlantic Canada
Opportunities Agency (ACOA) are two of the four agencies created
ACOA’s mandate has been to support and promote opportunities for the
economic development of Atlantic Canada, with particular emphasis on
small and medium-sized enterprises, through policy, program and project
development and implementation.
It main program activity areas are Enterprise Development, Community
Development, and Policy, Advocacy and Coordination.
The primary tool of the Western Economic Diversification Agency (WD) in
Manitoba has been the bipartite framework agreement referred to as the
Economic Partnership Agreement (EPA) by which the federal government
enters into a form of contractual commitments with the western provinces
The Canada-Manitoba Economic Partnership Agreement (MEPA) is a
province-specific example of the institutionalized series of five-year EPAs

5. Transition in Canada’s Rural Development Policy
But by the latter part of the 1990s, certain structural, ideational and political
changes have provided opportunities for some transformation in the policy
and institutional configuration of rural economic development.
Structurally, globalization and its implications for the Canadian economy.
Ideationally, the increasing urgency of innovation as a key competitive
advantage for knowledge-based economies
Politically, the emergence of a greater desire on the part of provincial
governments and, even, local communities to exercise more control over
their socioeconomic destinies.
Rural Development in New Brunswick and Manitoba
Key development in New Brunswick and Manitoba during the latter part of
the 1990s include:
First, rising discontent in the rural and northern regions about the constraints
of grassroots participation in economic development
Second, growing desire of the private sector within these regions to be part
of a more inclusive and strategic governance framework that focuses on
longer-term economic planning.
Third, the New Brunswick and Manitoba governments seemed increasingly
willing and desirous to take on more active leadership in directing the future
course of their economies (the politics of wilful provincialism).

6. New Brunswick
A particularly interesting irony accentuated by the greater assertiveness of
rural communities since the late 1990s was the absence of effective local
governance institutions for most of New Brunswick’s rural regions
Part of the provincial government’s response was to create community
economic development agencies (CEDAs) in order to stimulate greater local
participation in economic development
Each CEDA has an advisory board, providing a permanent forum for local
stakeholders to take part in decision making.
In 2002, the New Brunswick government released its “Prosperity
Plan” for the province (Government of New Brunswick 2002). The
Plan set out a 10-year comprehensive strategic path to economic
development covering both the rural and urban sectors.
The key elements of the strategy focus on innovation, productivity,
and export orientation – perceived determinants of success in a
globally-integrated knowledge-based economy.
In 2003 the government of New Brunswick launched the New
Brunswick Innovation Foundation (NBIF).
The significance of the NBIF for rural communities is that it supports
activities in value-added natural resource products and business
processes in agriculture, forestry, minerals, aquaculture and
fisheries.

7. In 2006, a new Development Plan for New Brunswick, titled
“Achieving Self-Sufficiency,” was unveiled under a new government
The substance of the 2006 Plan was similar in many respects to the
2002 Plan, except that the 2006 Plan has a longer time frame and
greater attention to the inclusion of local and rural regions in the
institutional infrastructure of innovation governance.
In particular, the 2006 Plan prioritizes working more closely with the
resource-based sectors to enhance their competitiveness through
productivity improvements and greater economic diversification.
Just recently, in 2010, the New Brunswick government published yet another
strategic plan, titled “Action Plan for self-Sufficiency in Northern New
Brunswick 2010-13” - solely dedicated to the economy of non-metropolitan
regions of the province.
The 2010 Action Plan further reinforces the dawn of a new paradigm that
envisages a more strategic approach to rural economic development in a
knowledge-based economy.
E.g. the Action Plan targets 3 areas: modular fabrication and component
construction industries; industrial development; and resource-based
industries.
The above initiatives and development are indicative of the recognition by
the New Brunswick government of the existing vulnerabilities of its resource-
dependent regions that have been a severe victim of seismic shift in global
resource markets.

8. Manitoba
Rural municipalities and northern jurisdictions in Manitoba are gradually
being viewed less as residual institutions for performing rudimentary tasks,
and more as indispensable partners in the search for local innovation and
adaptation.
An evidence of this shift in thinking is the response by the Manitoba
government to the demand for new rural governance arrangements in the
late 1990s that led an Aboriginal Summit in 2000.
Some of the key initiatives that have emerged from this Summit and
subsequent consultations include the Manitoba International Gateway
Council Initiative, which seeks opportunities to use Manitoba’s unique
northern rail route, and deep sea port, in the Port of Churchill, to develop
trade links with northern Europe and Asia.
Another significant development indicative of the new approach is
the province’s adoption of a strategic plan titled “Creating
Opportunities Action Plan”.
The Plan identifies rural economic development initiatives in six
areas: alternative energy, tourism, agriculture, natural resources,
industry services and manufacturing, and Aboriginal and northern
initiatives.
A number of other initiatives have been developed within the past
decade. One of them is the Rural Entrepreneur Assistance Program
(REAP)

9. Manitoba’s Agriculture, Food and Rural Initiatives Department can be
seen as an increasingly significant player in the province’s attempt to
enhance the economic capacities of rural communities.
E.g., their programs include assistance for farm and rural families with
the goal of enhancing their knowledge and skills in leadership and
management, marketing, sustainable production, value-added
processes, and the range of economic development options within the
agricultural sector.
Another significant initiative of the Department is the Rural Economic
Development Initiatives (REDI). REDI programming includes the
Community Works Loan Program, Rural Entrepreneur Assistance, the
CED Tax Credit Program, and the Community Adjustment Assistance
programs, among others.
There has also been a noticeable increasing emphasis on nurturing
productive innovation clusters in the rural economy of Manitoba.
E.g., the Economy and Rural Development Branch fosters the development
of co-operative enterprises among rural, northern and urban Manitobans.
This is considered by the Branch as critical to the social capital and network
linkages of adaptable rural regions in the knowledge-driven economy.
In pursuit of the concept of innovation clusters and social capital within rural
economies, Manitoba’s Agriculture, Food and Rural Initiatives Department
recently organized a conference titled “Capturing Opportunities 2011”.
The conference is designed to create knowledge exchange among
entrepreneurs and researchers about new ideas and resources within the
bio-based economy (namely, in sectors such as food and health, bio-
products, energy, and agriculture).

10. Moreover, back in 2003, the Manitoba government released the “Action
Strategy for Economic Growth,” which became the official document that
lays out the province’s vision for future economic development, including
rural economic development
The Action Strategy contains a ‘Six-Point Action Plan’ that involves among
other things, leveraging the increasing strategic importance of rural regions
in a knowledge-driven global economy.
Since the publication of the Action Strategy, a particularly significant
initiative reflective of the new paradigm of rural economic development in a
knowledge-based economy is the development of an assistance program for
Brandon University’s Rural Development Institute to support rural research
and development projects.
Also, the province’s Broadband Communications North program has been
increasing the potential for economic development, having connected 52 out
of 67 northern communities to a broadband network.
Another policy initiative of crucial importance to rural economic development
in Manitoba is the Northern Development Strategy (NDS).
The NDS was initiated by the northern MLAs in April, 2000 responding to
the pressure of their constituencies for a more proactive and collaborative
approach to rural and northern economic development.
The NDS is a long-term plan that identifies opportunities to develop the
human capital and value-added industrial processing in the natural
resources sector of the North

11. An even more significant aspect of the NDS is that it envisages an
implementation strategy that focuses on horizontal public, private and
community partnerships.
In this regard, if implemented according to its stated instruments, the NDS
may serve to correct the historic tendency of provincial governments in the
province to pursue top-down and uncoordinated initiatives in the rural and
northern regions.
In particular, what would make the NDS even more different from previous
northern and rural initiatives is the extent to which it provides the institutional
requisites for the inclusion of communities in its implementation framework.
The Imperatives of the New Governance Context:
Implications for Federal Agencies
By the turn of the millennium, in the face of the aforementioned
developments in New Brunswick and WD, the focus of ACOA and WD has
gradually turned toward overcoming administrative boundaries and
facilitating better networks with the provincial and municipal governments,
as well as with non-state actors such as the private sector and community
actors.
Successful regional development policy governance in New Brunswick
and Manitoba gradually became about how well ACOA and WD could
frame their policy interventions as consistent with and supportive of local
joint action under provincial leadership.

12. E.g, the Community Adjustment Fund (CAF) administered by ACOA and
WD is reflective of the new governance model.
ACOA in particular appears to be most keen to make the necessary
adjustments to synchronize its programs and activities with provincial and
local initiatives.
E.g. the agency’s Regional Economic Development Organizations
(REDOs) play a leadership role by bringing communities together to plan,
develop, and implement economic development efforts.
What the new approach of the two federal agencies share in common is a
program delivery mechanism that emphasizes collaborative policy
governance that transcends institutional boundaries.
Key Lessons
The imperatives of the new economy require a rethink of rural economic
development
1. Policy alignment across levels of government - a framework of public
management that gives a central importance to “place” not only as a
geographical construct but also an institutional construct.
2. Horizontal collaborative governance between the public, private and
community sectors - rural communities can be seen less as objects of
economic development and more as agents of their own adaptation to
global and local changes.
The role of government is increasingly to serve as a facilitator or enabler
of community-driven processes of economic adaptation

13. 3. Rural economic development is not about redistribution, but about a
strategic vision focused on investing in innovation-related assets of each
region (in key sectors such as agriculture, aquaculture, minerals,
forestry and tourism).
4. Invest more in mechanisms to benchmark progress against goals as
well as demonstrate evidence-based policy formulation and program
development (i.e. systematic analysis of regional, national and global
trends and their implications for distinct rural communities)
5. Encourage policy learning and transfer across regions, agencies and
communities.
Conclusion
The complexity of modern public policy environments means that
managing rural economic development could be better viewed as a
process of navigating institutional boundaries rather than simply
optimizing program output.
The effectiveness of policy governance in such settings requires the
ability of public managers to make connections across levels of
government and outside government, and share ideas, resources and
power with public and non-state actors.
The analysis of the cases of New Brunswick and Manitoba illustrate that
the emergent threads of rural economic development policy governance
weaves through a wider fabric of innovation policy in a knowledge-based
economy.

14. However, other critical factors that influence the success of adaptive
regions include the presence of local champions, institutional
intermediaries, equitable participation, a dynamic and creative civic
culture, and financial and technical resources.
Therefore, the increasing role of local regions in the new economy does
not necessarily translate into greater adaptive capacity for rural
communities - as such capacities are a function of the institutional
structures of multilevel governance especially in federal systems such
as Canada.