Author: Todd Hirsch
If one country in the developed world has proven that it is possible to re-invent its economy, it is Ireland. Within the span of twenty years, it has lifted itself out of the poorest backwater of the EU to among the region’s wealthiest members, earning the nickname “the Celtic Tiger.” Today it stands among the leaders in the fiercely competitive global economy.
Ireland’s turnaround was a result of a number of coincident factors. Some of these factors were craftily designed public policy measures, while others were external forces. Indeed, some of the factors were purely luck—being in the right place at the right time.
Comparing Ireland to western Canada, there are far more differences than similarities. Very little about the structure or industrial base of the two jurisdictions is similar, either before or after the Irish transformation. On the surface, it would seem that western Canada has little to learn from Ireland’s experience.
Certainly western Canada should not simply attempt to replicate what Ireland did. Nonetheless, there are several themes and principles that can be noticed within the Irish experience, and it is within these themes that western Canada has much to learn:
Tax cuts alone were not responsible for Ireland’s turnaround—it was a complex interaction of several concurrent factors.
A strictly laissez-faire approach is not necessarily the best.
A strong emphasis on education is essential. In the long-run, creativity and innovation matter more than resource endowment.
Managing an economic downturn, and the expectations surrounding years of strong growth, require fiscal prudence during good economic times.
Following from these themes and principles, there are several key public policy recommendations that could help western Canada achieve a much higher and more competitive status in the global economy.
Pick winners: The idea of governments “picking winners” has fallen terribly out of fashion, and for good reason. In the 1970s, picking winners involved governments artificially subsidizing, and even owning, businesses that were thought to represent the waves of the future. A better approach is to identify growing sectors within the global economy that complement western Canada’s key strengths and create the right business conditions for them to flourish.
Establish a Western Canadian Investment Commission: dedicate funds and efforts to attract foreign direct investment.
Focus on education: place a much greater emphasis on the importance of a highly educated, creative and innovative work force.
Accentuate western Canada’s attributes: emphasize the unique features of the region that would be desirable to foreign investment, such as the promotion of the region as a safe and stable political environment.