Leading Economic Change: Local and Global Trade


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Leading Economic Change: Local and Global Trade

  1. 1. Local and Global Trade Leading Economic Change Number 4, May 2012Why is global trade so important tolocal economies?If Nova Scotia were a big business, our accountants Thought leaders in community economicwould be worried. We sell over $7.4 billion in goods and development, such as the UK’s New Economyservices to the outside world. But this “revenue” is Foundation and Nova Scotia’s own Coady Institute,offset by over $8.7 billion in “expenses” (imports). have a common analogy for the complexities of local and global trade. The leaky bucket is aAnd these numbers might be drastic underestimates of concept used around the world to help localour province’s role in the global supply chain. communities understand and develop healthyConventional trade focuses on finished goods, forgeting trade patterns.services and FDI. The Conference Board of Canadaestimates that, in 2007, our total integrative trade was Imagine your community is a bucket. Water is yourover $13.7 billion outward, and $33.9 billion inward. currency. New water flows into your bucket when someone in the community sells goods or servicesAs you can imagine, the economists are really the ones outside your boundaries. Other in-flows includewho are worried. Nova Scotia is only able to manage government transfers and outside businesssuch a staggering trade deficit thanks to federal investment. These sources of income will help yougovernment transfers and spending. fill your bucket.Our exports have doubled over the past quarter But buckets can have leaks: money is spent outsidecentury, but we are still less likely to be exporters than the community to buy imported goods or services,businesses from other provinces. Unfortunately this and to invest in outside ventures (eg. retirementreality is not widely understood at the local level. Trade savings). When more money is leaving thestatistics are “all greek” to local business and community than entering it, the bucket starts tocommunity leaders – those who can take action to empty.resolve the problem. NSARDA is the link between the Nova Scotia RDAs, providing support and collective strength. Since 1999, the Association has helped the Nova Scotia RDAs in improving the economy of communities across Nova Scotia. For more information about NSARDA and the Nova Scotia RDAs please visit www.nsarda.ca. Leading Economic Change: A Discussion Paper Series from NSARDA
  2. 2. How Can Community EconomicDevelopers Respond?We often think of globalization as a dominant, looming There is no question that helping our businessespressure on communities. It can result in jobs and diversify their markets will contribute to economicinvestment moving offshore toward lower-cost markets. development. The challenge is to help local businessesIn turn, globalization can also flood developed countries see beyond their immediate markets and becomewith cheap material goods. export-ready. Wherever possible, we must look to emerging markets like Brazil, Russia, India and ChinaThe leaky bucket analogy helps us see two ways that (the BRIC countries).local communities can develop their economies bymanaging their trade patterns. First, they can focus on Community Economic Developers can also encouragefilling the bucket with new export revenues. Then, they import substitution. This approach to CED emerged incan work to “plug the leaks” by replacing imports with international development over 60 years ago, and thenlocally produced goods & services. found its way into North American regional development circles in the 1970s. It involves connectingThe opportunities to develop new exports are local demand with local supply. A resurgence of importtremendous. Nova Scotia’s principal exports are natural substitution in CED is currently underway, through Buygas (26% of exports by dollar value), fish & seafood Local campaigns, local currencies (“local exchange(17%), tires (14%), and paper (10%). There is great trading systems”), and the food security movement.potential to diversify these goods exports, and also to The latter received a boost when Dr.Vandana Shiva, anexpand a very promising service-export industry. international expert on sustainable agriculture, recently visited Nova Scotia to speak about local, sustainable,Meanwhile, North American firms are looking for near- small-scale food production.shore trade partners to replace less successful (andpolitically unpopular) offshore out-sourcing. And Community Economic Developers have a clear role inEuropean firms are looking for North American helping their communities establish healthy local andbeachheads. Nova Scotia has historically played an global trade relationships.intermediary role between the continents.Transportation and logistics may be the field where we Ryan MacNeil, EcD, PhD(s), is Principal of Ryan MacNeil & Co., aregain prominence in global supply chains. company that helps development leaders & organizations become focused and effective. Reach him at ryan@ryanmacneil.com. Who is working on it? Nova Scotia’s Regional Development Authorities (RDAs) are all engaged in local and global trade issues, particularly through the Business Retention & Expansion program. In one of many examples, the Pictou RDA helped its local agriculture community create an asset-based development strategy and establish a brandmark so that local residents are better able to identify locally grown food. One of the three pillars in Nova Scotia’s jobsHere strategy is, “Helping businesses be more competitive globally.” As part of JobsHere, a comprehensive new International Commerce Strategy is soon to be released. A variety of departments are involved in trade development, with programming leadership coming from Nova Scotia Business Inc. and Economic and Rural Development and Tourism. Since its formation, the Atlantic Canada Opportunities Agency has made a priority of encouraging businesses to export. ACOA is the lead federal agency in the Canada-Atlantic Provinces Agreement on International Business Development 2011-2016, and offers a number of export support programs for business. Leading Economic Change: A Discussion Paper Series from NSARDA