Western Economic Diversification Canada
Symbol of the Government of Canada

Common menu bar links

Executive Summary

Introduction

Western Economic Diversification (WD), as the federal department with the mandate for developing and diversifying the western Canadian economy, plays a key role in supporting western Canadians to participate in international markets given Trade and Investment's important contribution to economic growth. In recognition of these critical linkages, international trade and foreign direct investment have been a strategic priority for the department since 2007–08. Under the departmental Program Activity Architecture (PAA) from 2010–11 to 2012–13, WD's Trade and Investment activities have fallen under the Business Development program activity, and under the two sub-activities of Market and Trade Development as well as Foreign Direct Investment.

The department collaborates with federal, provincial and industry partners to assist small and medium-sized enterprises to prepare for and participate in international business, improve trade corridors of importance to Western Canada and enhance the capacity of the region to attract and retain foreign direct investment (FDI). The department works directly with not-for-profit organizations to achieve its Trade and Investment objectives. Types of Trade and Investment initiatives supported by WD include: Grants and Contributions (Gs&Cs) projects, the North American Platform Program (NAPP), Procurement and Industrial and Regional Benefits (IRBs), Asia-Pacific Gateway and Corridor initiatives, as well as Research and Advocacy.

The purpose of this project was to conduct an evaluation of the department's Trade and Investment activities in accordance with the Treasury Board Policy on Evaluation, focused on relevance and performance. The evaluation covered the time period from 2007–08 to 2011–12.

Method of Study

This project was undertaken in two phases. The first phase focused on the development of a Terms of Reference and a detailed evaluation work plan. The field research undertaken in the second phase of the project included a detailed document and literature review, project and database analyses, as well as interviews with 42 key informants, comprising WD management and staff and other federal, provincial, and regional government representatives. A client survey was conducted of 79 participants, comprising project recipients, project beneficiaries, project proponents that did not receive funding and organizations that did not apply for funding. Case studies were conducted of eight projects and focus group sessions were held in Winnipeg, Saskatoon, Edmonton and Vancouver, involving 37 participants.

Major Findings

Relevance: Continued need for Trade and Investment Activities

  • Evidence from the evaluation indicates that stakeholders lack an understanding of the department's role in Trade and Investment. There is a need for the department to improve its coordination and collaboration with stakeholders in order to increase awareness of the departmental mandate with respect to Trade and Investment.
     
  • Key informants and project recipients identified the need for projects that help small and medium-sized enterprises access new and emerging markets (e.g., export-readiness training, marketing to increase awareness of western Canadian capabilities and matchmaking services) and support for technology commercialization. Interviewees indicated that the need for support has increased and the nature of the need has changed over the past few years.
     
  • Key informants perceived the department to be somewhat effective in identifying and responding to emerging needs and markets. The department's response was categorized as being reactive rather than taking a strategic and proactive approach to project funding. Gaps identified in the support provided include a lack of training and advice for small and medium-sized enterprises to help them acquire the necessary skills to engage in trade and attract investment, direct support for small and medium-sized enterprises, as well as support for specific costs related to Trade and Investment (e.g., travel and accommodation).
     
  • Other organizations in Western Canada offer support for Trade and Investment activities including federal, provincial, regional and industry partners. Taken together, the services of these organizations are viewed as somewhat effective in meeting regional needs.
     
  • On average, there was 18 percent likelihood that projects would have been implemented without assistance from the department. Most projects (67 percent) that applied for but were not approved for funding from the department did not go ahead.

Relevance: Alignment with Departmental and Federal government priorities

  • Since 2007–08, WD's Report on Plans and Priorities identify Trade and Investment as a priority. Through this priority, the department contributes to the Government of Canada's Global Commerce Strategy and the National Policy Framework for Gateways and Corridors. The department's Trade and Investment activities also align with the Government of Canada's 2013 Economic Action Plan.

Relevance: Consistency with Federal Roles and Responsibilities

  • The literature reviews done for the evaluation indicate that governments are in a unique position to help firms overcome trade barriers by providing access to networks in both the public and private sectors. Most key informants and almost all project proponents agreed that funding Trade and Investment activities is an appropriate role for the department, since it is consistent with the department's mandate to support economic diversification and growth in Western Canada.

Performance: Achievement of Expected Outcomes

  • Key informants perceived that the department's Trade and Investment activities overall have been somewhat successful in meeting identified needs for support. Successful projects include those that support small and medium-sized enterprise participation at trade shows and in market exploration, promote western Canadian capabilities to potential foreign buyers or investors and build international partnerships and networks.
     
  • Project recipients perceived their projects as successful in achieving their objectives, particularly with respect to increasing the interest of participating companies in expanding their business internationally. Focus group participants and respondents in the case studies agreed that the department had been successful in identifying and meeting the needs for specific projects.
     
  • Although some projects are still underway, the Trade and Investment projects from the past five years have made good progress towards achieving their performance indicator targets. On an aggregate basis, 14 of the 21 indicators associated with two or more Trade and Investment projects have already been met and some are very close to being met.
     
  • On the achievement of immediate outcomes from WD's Trade and Investment projects, key informants provided high ratings for outcomes related to the effectiveness of projects focused on developing new partnerships and networks and for projects focused on increasing awareness of Western Canada in priority markets.
     
  • Other impacts generated by the department's Trade and Investment activities include the growth of emerging regional sectors, strengthened business relationships and economic spin-offs from the projects.
     
  • Most WD funded projects led to further projects and investments, such as new investments or export deals and the continuation of projects and partnerships beyond the department's funding. Beneficiaries (project participants) reported their businesses to be successful in achieving their objectives, particularly in terms of expanding their networks and exploring potential opportunities.
     
  • Key factors that contributed to the success of projects included: resources to link businesses to international markets (e.g., consultants and key decision makers at events), support and financial assistance from WD or from other government departments and provincial and industry sources. Factors that most commonly constrained or impeded the success of the projects included a limited time frame to meet targets, a lack of capacity amongst client organizations and project beneficiaries, limited financial resources and buy in from municipal and industry partners, as well as a lack of investor and buyer awareness of the region.

Performance: Demonstration of Efficiency and Economy

  • Key informants and project recipients agreed that the objectives, target groups and activities of funded projects were well-defined and well-delivered. Some representatives were critical of the approval process, noting unclear and ambiguous processes for funding decisions and inconsistencies across regions with respect to the types and the costs of projects funded. Although many were satisfied with WD's support, several proponents noted the approval process was too slow and there was a lack of clear communication around guidelines and requirements.
     
  • Departmental expenditures on Trade and Investment totaled $38.2 million and the total operating expenditure totaled $7.0 million over the period of the evaluation. This shows that it cost the department $1.0 to administer $5.4 in Trade and Investment transfer payments. These numbers highlight the relatively small operating cost in relation to the breadth and depth of Trade and Investment projects undertaken and the results realized. WD representatives somewhat agreed that the processes are in place to allocate and coordinate resources across the department, adding that better coordination and communication would be helpful.
     
  • Key informants and project proponents viewed departmental funding as a catalyst for other sources of funds. Overall, each department dollar was matched by $1.4 from other contributors. An evaluation of Atlantic Canada Opportunity Agency's (ACOA) Trade and Investment program sub-activity conducted in 2010 indicated that on average, $0.99 was invested by other sources for every $1.00 invested by ACOA. The department's leverage ratio compares favorably to that of ACOA.
     
  • A number of suggestions were offered for improvement. These include streamlining project approval and funding disbursement processes, clarifying and communicating what support is available and the eligibility criteria, improving internal governance structures and enhancing collaboration with federal, provincial, regional and industry partners. Other suggestions included the need to have better consistency and allocation of funds across regions, to be more proactive in seeking out partnerships and projects, to support small and medium-sized enterprises directly and to align programming to other regional development agencies with respect to Trade and Investment support to create a level playing field across the country.

Recommendations

The following recommendations are based on evidence gathered and conclusions discussed in this study:

Recommendation #1: The department should develop a consistent approach and provide clarity on Trade and Investment project costs and activities in all regions.

Recommendation #2: The department should work on increasing awareness of its Trade and Investment mandate through enhanced collaboration and coordination with federal, provincial and industry stakeholders.