THUNDER BAY, ON - February 10, 2009 - Dr. Robert Atkinson is president of America’s Information Technology and Innovation Foundation. His paper presented ideas about developing knowledge-based economy in non-metro areas. His premise that economic change is constant, new technology that drives growth cycles and creates a dynamic economy. The notion that capitalism destroys older systems as new ways of doing things makes sense. When something new is introduced in the market, its advantages are apparent and this creates a growth spurt. As the product matures on the market, other manufacturers fine tune and find ways to improve the product. In the latter part of the cycle mass production and cost cutting efforts are used to make the product the lowest cost on the market. This is the mature or last stage of the market cycle.

In looking at the primary industries in our area, most like pulp and paper are in a mature or declining market. To remain cost competitive in a mature market, producers must increase productivity and seek out ways to drive down production costs. This type of management drives down costs by job elimination, and by putting downward pressure on wages. Compare that to a firm that has something new to offer. Because their product is in demand it is selling well, and they cannot keep up with demand. The company will be hiring more people to help with design and manufacture, and there is upward pressure on wages. In The United States and elsewhere, large urban centres rely on innovation and their critical mass to create new high tech jobs in finance, technology, medicine and science and so on. How can rural and remote regions compete? Often rural economies will gain companies that have matured in the urban market and are looking for a way to lower costs by moving to a rural location with lower wages. In Canada this is apparent when you look at banking in Halifax. Halifax has been able to draw some of the big banks of New York for three reasons. First digital technology means that a lot of banking does not need to be done at the hub of all the action. Secondly, banks such as ING chose Halifax because their airport services New York and North America as well as Europe with regular flights. Halifax had some infrastructure in place to make this work for them. Lastly living costs and wages are cheap in Halifax compared to New York City, and the quality of education is excellent.

Global trading has challenged rural areas core competitive advantage, low costs. Today instead of locating a call centre in some rural community technology has enabled businesses to locate to a developing country where costs are extremely low. This has happened with our forest industry where we must compete with product produced in other countries where resources, energy, health, employment, and environmental standards are not on the same level. For our industry to succeed we need to be innovative incubators.

Dr. Atkinson’s session offers some good ideas for regional growth. Broadband access in rural areas means residents will have the same access to information as urban centres. This is important for institutions, schools and business. Our region is well on the way to becoming broadband equipped. In a recent survey of Americans 36% would prefer small town life. As workers in urban centres approach retirement, they find that their pensions will go farther in a low cost mid- sized town that does not have the congestion of a large city. Housing is 70% more expensive in metro areas than in rural areas. There is room to market rural living as retirement living.

Atkinson points out metro and rural economies have different strengths and weaknesses and that balanced growth is good for the entire region. He states that critical mass matters, places that are too small or too remote will find it difficult to develop the critical mass needed to succeed. He suggests targeting communities that have the ability to anchor the economy in their area, there are not enough resources to assist every community. He suggests that we support programs that add college and university based technology to our economy. He feels that entrepreneurship should be encouraged and that we should make it possible for new and innovative ideas to find the capital that they need to start up.

Atkinson suggests that we support growth on the strengths of our region, such as tourism, forestry, mining in such a way that they become innovative in the market place through research and development. The new products developed in the region will need assistance to gain access the broader market. “Cluster Development” or a group of related industries in an area support each others growth. For example is there are several mines in an area then mining service companies will likely relocate to service their customers. We need to identify our industrial clusters and encourage more growth.

Dr. Atkinson’s last remarks were for education, saying “We need to tie education skills more closely to industry needs”. Our education institutions need to form strategic alliances with industry.

Bert Rowson for
LakeSuperiorNews.com