Western Economic Diversification Canada
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Operating context and key risks

Operating context

Western Canada accounted for 37 percent of Canada's real Gross Domestic Product (GDP) in 2016.[1] The region led the country in economic growth from 2011 to 2014, before posting small declines in both 2015 (-0.8%) and 2016 (-0.5%). Low oil and other natural resource prices resulted in sharply different outcomes for the western provinces over the past two years. British Columbia and Manitoba continued to experience above-average growth, but this was offset by recessions in Alberta and Saskatchewan. Looking forward, stabilizing energy prices should see oil and gas activity start to recover, which along with growth in other sectors, such as manufacturing and commercial services, should result in positive economic growth for all four western provinces in 2017.[2]

Western Economic Diversification Canada (WD) supports the Government of Canada's key priorities identified in the Ministers' mandate letters and in federal budgets. These priorities include implementing Canada's Innovation and Skills Plan, accelerating clean growth through investments in clean technologies, and assisting firms with high-growth potential to scale up through the Accelerated Growth Service. Other initiatives include the Canada 150 Community Infrastructure Program and promoting economic growth for Indigenous Peoples.

Economic success will require building on regional strengths. Progress is being made towards growing the Western Canada's clean technology sector, along with other innovation based industries such as information and communication technology, natural resources, aerospace, life sciences and value-added agriculture. There is also a higher proportion of high-growth small and medium-sized enterprises (10.1 percent) in Western Canada than in the rest of Canada (8.8 percent), led by Alberta and Saskatchewan. Sustained development of these firms will contribute to the success of the western Canadian economy.

Key risks

In its 2016–17 Report on Plans and Priorities, WD identified two key risks: competitiveness and productivity challenges, and a small domestic market and increasing global competition.

Businesses in Western Canada face a number of competitiveness and productivity challenges, such as comparatively low levels of business investment in research and development and slower adoption of new technologies and equipment.[3][4]  This is partly due to low levels of risk capital financing in Western Canada. Innovative start-up firms face greater challenges in accessing sufficient financing for technology commercialization priorities; this funding gap is particularly pronounced for early-stage firms.

Western Canadian businesses also face the challenge of a small domestic market and increasing global competition. Expanding international market opportunities for western Canadian businesses is an important component of economic prosperity. In order to remain competitive in a global economy, western Canadian businesses will need to increase their presence in international markets, participate in global value chains, and attract foreign direct investment.

The following table highlights the response strategies taken by the department in 2016–17 to address these risks.

Key risks

Risks Mitigation strategy and effectiveness Link to the department's Program(s) Link to mandate letter commitments or to government-wide and departmental priorities
Weak competitiveness and low productivity in Western Canada
(existing risk)
  • Approved 34 WINN projects with total WD investment of $47.7 million to bring innovative technology-based products, processes and services to market.
     
  • Strengthened engagement with stakeholder to facilitate policy discussions and promote innovation, skills development and training in Western Canada.

 

Business Development and Innovation
  • Job growth
  • Innovation Agenda
  • Clean technology
Small domestic market and increasing global competition for western Canadian businesses
(existing risk)
  • Approved nine new projects in Trade, Investment and Market Access with $4.1 million in WD funding.
     
  • Convened business development opportunities that connected western Canadian industry and innovators to global aerospace and defence companies.
     
  • Worked with industry associations and government partners to facilitate western Canadian access to global supply chain opportunities at international, national and regional trade shows and events.

 

Business Development and Innovation
  • Job growth
  • Export development

 

 

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[1]
Statistics Canada - CANSIM 379-0030: Gross domestic product (GDP) at basic prices (Accessed May 2017).
[2]
Conference Board of Canada. Provincial Outlook – Spring 2017. May 29, 2017.
[3]
Statistics Canada – CANSIM Table 358-0001: Gross domestic expenditures on research and development (Accessed May 2017)
[4]
Statistics Canada – CANSIM Table 383-0033: In 2015, labour productivity (real gross domestic product per hour worked) declined in Alberta (-2.6%) and Saskatchewan ( 0.5%), and increased modestly in British Columbia (+0.8%) and Manitoba (+0.4%). (Accessed May 2017)