'We are facing more challenges than in recent decades, and I think it's time we be more thoughtful and focused on the longer term'
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As calls for economic diversification are renewed in Alberta amid work to recover from the economic toll of the COVID-19 pandemic, a Calgary researcher says traditional diversification may not be the answer to stabilizing the province’s economy.
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When things get tough in Alberta, people often say the province needs to diversify by stepping away from a reliance on oil and gas toward new or better industries, said Robert Mansell, a professor emeritus of economics at the University of Calgary and research fellow at the School of Public Policy.
The shocks of low oil prices and the COVID-19 pandemic have revived the discussion, Mansell said.
However, he argued that effective diversification is more likely to include increasing the range of goods and services produced by existing sectors in the province, promoting growth of markets for exports and creating competitive substitutes for imports.
“We can’t think there’s a quick fix to changing the industrial structure. There are things we can do, in terms of diversifying markets, expanding the range of products and improving the investment climate for new industries,” Mansell said Thursday.
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Mansell and his fellow researchers determined that Alberta’s rate of employment diversification is one of the best in the country, but is worse off when it comes to income diversification and value-added — or GDP — due to the size of the oil and gas industry.
Some of his suggestions for improving the stability of Alberta’s economy include reintroducing a heritage fund to save money, rebalancing federal procurement and repatriating the federal carbon tax.
“We do have a record of building strength in adversity,” said Mansell.
“We are facing more challenges than in recent decades, and I think it’s time we be more thoughtful and focused on the longer term. As opposed to looking for short-term fixes, let’s have a serious conversation about what we need to do over the next decade or more, and how we’re going to do it.”
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The paper concludes that the instability of the province’s oil and gas sector remains the highest risk to Alberta’s long-term prosperity. However, the province has the tools to adapt and innovate in a way “that will be critical in achieving a successful transition for this dominant sector.”
Mansell’s report is one of 24 research papers by the School of Public Policy, which will ultimately be grouped together to create three e-books published by the school. The research for the Alberta Futures Project is anticipated to form a basis for new policy to revitalize the province, with information on alternatives for Alberta’s fiscal, economic and policy future.
The reports touch on various topics — including financial planning and sustainability, Alberta’s energy sector and poverty — from a number of experts and researchers. And the project will also look at the future of Alberta’s health care, as the province transitions out of its pandemic response in the coming months.
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“This is to bring together thoughtful analysis of where we’ve been, where we are and what the future looks like, and what we should be doing to anticipate it,” said Mansell.
“Not everybody agrees and some talk about some of the hard choices that need to be made, like if we’re ultimately going to have a sales tax.”
Two of the reports — written by authors Mansell and Robert Ascah — were released Thursday as pre-publications.
Ascah’s research looks more closely at the province’s debt, the importance of addressing debt and how Alberta’s current fiscal crisis compares to those of the past.
sbabych@postmedia.com
Twitter: @BabychStephanie
Calgary researcher looks at what Alberta's economic diversification could look like - Calgary Herald
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