Local economists and builders of B.C. point to a wide range of milestones over the past quarter century that have had a profound impact on the province’s economy.
For Business Council of British Columbia’s executive vice-president and chief policy officer, significant trends and developments rather than events have been the real game-changers for B.C.’s economy and business community. China’s ascent in the global economy is atop the list for Jock Finlayson. It ranks, he said, “as the single most important ‘external’ development of the past two or three decades.”
Finlayson pointed out that “25 years ago China was a rounding error in global economic terms, accounting for just 2% to 3% of world output and hardly registering in the consciousness of business leaders in North America.”
Today, he said, it’s the world’s biggest national economy “when GDP is measured using purchasing power parity exchange rates.”
Finlayson said other significant developments in the past 25 years include “the courts’ recognition and affirmation of aboriginal rights and [in some cases] aboriginal title, which in turn has paved the way for the growing role of First Nations in natural resource and other land-based economic development” and the rise of the high-tech industry in B.C., which now represents 7% of the province’s GDP.
In the notable events category, he pointed to B.C.’s 2010 institution of the harmonized sales tax (HST) and the subsequent 2011 referendum vote to revert to the dual PST/GST regime, which has left the province “with a hugely uncompetitive sales tax system from the perspective of a majority of B.C. industries, but one that will be hard to fix because of the painful political legacy of the HST saga.”
Finlayson said other major events include the extension of North American Free Trade Agreement (NAFTA) to include Mexico in 1994, the outbreak of the mountain pine beetle infestation in 2000, the 2008-09 global recession and financial crisis, the opening of the new Vancouver Trade and Convention Centre in 2009 and the hosting of the 2010 Olympic Winter Games were other key events.
When he looks back 25 years, Scotiabank chief economist Warren Jestin said people were focused on problems in the housing markets and concerns about the United States, and there were few stories about China in the newspaper.
“I don’t think any one of us would have seen what the Internet or social media or the various types of technology shifts would have done globally,” he said. “We wouldn’t have seen the rise in the emerging world over that period of time. That has been absolutely extraordinary.”
In the early 1990s, the developed world accounted for two-thirds of global growth. Now the emerging markets do.
“That shift itself is remarkable and suggests to me that as income goes up in emerging economies – which it has very rapidly in this millennium and certainly in the last decade – that that will transform where we are exporting,” Jestin said.
B.C. has changed over that period, too. The province’s population has grown significantly and makes up more of its proportional share of the Canadian population. And economic growth has tended to be better in the West compared with rest of country, overtaking Ontario’s role as the engine of Canadian growth.
Jestin said the real story for B.C. will revolve around energy, especially liquefied natural gas (LNG).
But he said the window of opportunity could close for two reasons: the price differential between Asia and North America that is so attractive now will likely recede significantly and “everybody wants to be in on the game.”
But Jestin said B.C. has more than just LNG going for it. It also has the talents of its population. So jobs will be created by small and medium-size businesses that figure out the value-added products that get them in the market.
Tourism could also play a role.
The number of American tourists to Canada has gone down virtually every year since 1989, but as the U.S. economy rebounds, they might start coming back. And then there are the tourists from the emerging markets. Last year Chinese tourists outspent American tourists globally by $40 billion.
Vancouver and B.C. are well positioned to take advantage of the growing tourist class from China, who stay longer and spend more.More tourists are also coming from Mexico and South America.
“The big opportunity out there is the growth in middle class and in wealth in general in countries that didn’t have purchasing power before,” Jestin said.
Major builders in the province, meanwhile, point to strategic investment in infrastructure and the cultivation of the province’s ability to stage major international events that was seeded by Expo 86.
“While it occurred out of your 25-year horizon, Expo 86 placed B.C. on the world’s radar like no other event preceding it,” said Concert Properties Ltd. chairman and CEO David Podmore. “Most importantly, it resulted in the development of essential community infrastructure that provided a base for advanced development beyond Expo 86 that really began to materialize in 1989.”
Podmore added that government investment in major transportation projects like the Canada Line, the Coquihalla Highway and other infrastructure had a significant impact on the province’s development industry.
“I don’t think it mattered whether it was an NDP government or Social Credit or the Liberals, they all made big commitments to big infrastructure, and it really did shape the Lower Mainland and other parts of the province.”
