Western Economic Diversification Canada
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Organizational Context

Raison d'être

Western Economic Diversification Canada (WD) was established to promote the development and diversification of the economy of Western Canada and to advance the interests of the West in national economic policy, program and project development and implementation. The Minister of Innovation, Science and Economic Development is responsible for this organization.

The Department operates under the provision of the Western Economic Diversification Act, which came into force on June 28, 1988. WD is responsible for regional development in Western Canada by developing and supporting economic policies, programs and activities to promote economic growth.

Responsibilities

WD's mandate, derived from the Western Economic Diversification Act, is to develop and diversify the western Canadian economy. This broad mandate allows the Department to implement programs and initiatives across the West to help western Canadians create strong, competitive and innovative businesses and communities.

WD's vision is to be a leader in creating a more diversified western Canadian economy that has strong, competitive and innovative businesses and communities.

With offices in each western province and its headquarters in Edmonton, WD provides a strong federal presence to promote economic development in the West. Its western base has enabled the Department to foster extensive partnerships across Western Canada with business and community organizations, research and academic institutions, Indigenous groups as well as provincial and municipal governments. WD also works with other Regional Development Agencies to make strategic investments that build on competitive regional advantages.

These connections enable the Department to identify and support economic opportunities in the West and to leverage its investments to benefit the western Canadian economy. In addition, through its strong connections with federal departments across Canada and its office in Ottawa, WD ensures that western interests and perspectives are reflected in national policy development and decision-making.

WD is an important contributor to a prosperous western Canadian economy and works to build on the West's traditional economic strengths while supporting the transition to a more diverse economy. WD continues to capitalize on opportunities and implement strategies to mitigate risks and adapt to changes in a dynamic and complex economic and policy environment.

WD focuses its activities in three program areas:

Business Development and Innovation: WD helps small and medium-sized enterprises (SME) develop and grow, create jobs, expand their markets, increase their exports and become more innovative and productive. The Department assists SMEs with international business engagement and works to attract investment to the region, as well as assist western Canadian SMEs to access opportunities linked to government procurement. Further, WD promotes the development and growth of the knowledge- based economy by building innovation capacity and supporting the commercialization of new knowledge-based products, processes and services.

Community Economic Growth: WD helps communities sustain their local economies and adjust to changing economic circumstances through departmental programs and by delivering national initiatives on behalf of the Government of Canada in Western Canada. WD also supports community-based organizations that provide western entrepreneurs with the information, training and loans they need to start and grow their businesses.

Policy, Advocacy and Coordination: WD identifies opportunities to strengthen the western Canadian economy and coordinate economic development activities, policies and programs across the West. WD works to build strategic relationships with key decision makers across Canada and works with western Canadian industry on defence-related procurement opportunities.

WD supports regional economic diversification and inclusive growth through investment in projects under the Western Diversification Program (WDP) in areas of innovation, business development, community economic growth and policy, advocacy and coordination. WDP provides funding to not-for-profit organizations for projects directly supporting one (or more) of WD's six organizational priorities. Under the WDP, through the Western Innovation (WINN) Initiative,vi WD provides repayable contributions to SMEs to support the commercialization of knowledge-based products, services and processes. WINN has been an important tool in helping western SMEs to accelerate the commercialization process and stimulate greater private sector investment.

In addition, WD supports the Western Canada Business Service Network (WCBSN), which is a network of several independent organizations to provide a range of business services to help create and build small businesses across the West. The WCBSN network includes the Canada Business Network (CBN), Community Futures (CF), Women's Enterprise Initiative (WEI), Francophone Economic Development Organizations (FEDO), Aboriginal Business Service Network (ABSN) and Entrepreneurs with Disabilities (EDP).

Further, WD provides value-added services to western Canadian stakeholders by delivering national initiatives on behalf of the federal government in Western Canada. These include the Canada 150 Community Infrastructure Program to renovate, expand and improve existing community infrastructures, the Strategic Partnerships Initiative (SPI) that better coordinates the Government of Canada's investments to boost

Indigenous participation in economic development opportunities, as well as the Economic Development Initiative (EDI) aimed at supporting businesses and economic development in western Canadian Francophone communities.

 

Strategic Outcome and Program Alignment Architecture

In 2015–16, WD's Program Alignment Architecture included the following programs and sub-programs that contributed to the achievement of its Strategic Outcome, helping to ensure that Western Canada continues to make a strong contribution to Canada's economic success. Detailed information about each WD program can be found in Section III: Analysis of Programs and Internal Services.

1. Strategic Outcome: A growing and diversified western Canadian economy.

  • 1.1    Program: Business Development and Innovation
     
    • 1.1.1     Sub-Program: Trade, Investment and Market Access
    • 1.1.2     Sub-Program: Business Productivity and Growth
    • 1.1.3     Sub-Program: Innovation Capacity Building
    • 1.1.4     Sub-Program: Technology Commercialization
       
  • 1.2    Program: Community Economic Growth
     
    • 1.2.1     Sub-Program: Infrastructure Programming
    • 1.2.2     Sub-Program: Community Development
    • 1.2.3     Sub-Program: Community Futures Program
    • 1.2.4     Sub-Program: Targeted Economic Initiatives
       
  • 1.3    Program: Policy, Advocacy and Coordination
     
    • 1.3.1     Sub-Program: Advocacy and Coordination
    • 1.3.2     Sub-Program: Economic Analysis
       
  • Internal Services

Operating Environment and Risk Analysis

Western Canada is a significant contributor to the overall Canadian economy, accounting for 38 percent of Canada's real economic output in 2015. After leading the country in economic growth over the previous five years, Western Canada's economy shrank by 0.9 percent in 2015, while the national economy grew by 0.8 percent. Economic growth and prosperity in Western Canada continues to be largely resource-driven and the West has suffered from the economic downturn driven by low commodity prices, particularly oil. Western provinces had sharply divergent growth experiences. The more resource- intensive provinces of Alberta and Saskatchewan underwent economic downturns, while the less resource-intensive provinces of British Columbia and Manitoba had strong Gross Domestic Product (GDP) growth relative to the rest of Canada.vii While the West's natural resources continue to be a strong foundation for future economic growth, the commodity slump has unmasked a number of fundamental challenges facing Western Canada's long-term economic prospects.

Compared to their international competitors, businesses in Western Canada suffer from weak competitiveness and low productivity, due in part to slower rates of adoption of new technologies and equipment.viii This is partly attributable to low levels of risk capital financing observed in Western Canada. Innovative start-up firms in the West faced greater challenges in accessing sufficient financing for technology commercialization priorities; this funding gap is particularly pronounced for early-stage firms. In 2015–16, WD invested in projects and activities that helped businesses increase their productivity and competitiveness through the development, commercialization and adoption of new technologies and business processes.

Western Canadian businesses also face the challenge of a small domestic market and increasing global competition. Expanding trade and market opportunities is an important component of economic prosperity. To help western Canadian businesses remain competitive in a global economy, WD worked with SMEs, industry associations and research institutions to improve access to global value chains, strengthen international partnerships and encourage foreign direct investment, in order to enhance access to international markets for western Canadian products and services.

During 2015–16, WD reviewed its projects for any potential impact that the decline in oil prices and Canada-US currency exchange may have had on project viability and deliverables. Through ongoing interaction with stakeholders, WD learned of challenges for some of its project recipients such as decreased demand for services and technologies, loss of project partners, accessibility of funds and increased cost of United States goods and services. WD continued to monitor projects and, where necessary, explored mitigation options to facilitate project progress.

Notwithstanding the current oil-driven weaknesses in the economy, Western Canada has numerous economic opportunities. The region is home to globally competitive business clusters in emerging sectors, including clean technology/green energy, advanced and composite materials, nanotechnology, biotechnology, ICT/software development and aerospace/remote sensing. The current economic climate presents challenges as well as opportunities for western provinces to pursue innovative activities and develop and enhance capabilities outside of traditional areas of strength. In 2015–16, WD continued to act as a pathfinder, convenor and strategic investor to support the development of innovative western enterprises, including those in emerging industries.

WD's policy and program development continues to support Government of Canada priorities, as outlined in ministerial mandate letters and Budget 2016. These priorities include contributing to the Canada's Innovation Agenda, supporting clean technologies, helping high-impact firms and promoting economic development and jobs for Indigenous Peoples. These priorities represent opportunities to grow and diversify the western Canadian economy, particularly in key emerging sectors, while maintaining traditional strengths.

WD ensures that departmental and Government of Canada priorities are met by mitigating its external risks through strategic investments and collaborating and convening with key stakeholders.

Key Risks
Risk Risk Response Strategy Link to Organization's Program(s)
Weak competitiveness and low productivity in Western Canada
  • Approved 55 WDP projects with total WD investment of $52.0 million to improve business development through activities such as the adoption of sound management or business practices, or technology, and training leading to the hiring of skilled workers.
  • Approved 21 WINN projects with total WD investment of $21.0 million to bring innovative technology-based products, processes and services to market.
Business Development and Innovation
Small domestic market and increasing global competition for western Canadian businesses
  • Approved 14 new projects in Trade, Investment and Market Access with $11.0 million in WD funding.
  • Worked with western Canadian SMEs and industry associations to improve access to global value chains by supporting projects that promote aerospace and defence sectors at global events and convening events to connect suppliers and global companies.
Business Development and Innovation