Alberta News and Views - February 12, 2007 - Issue 5

http://www.statcan.ca/Daily/English/070213/d070213c.htm

Study: Factors driving rural Canada's economy

Technology, prices and demography are key forces driving the economy in the nation's rural areas, according to a new study.

While not unique to rural Canada, these forces provide opportunities for rural areas relative to their urban counterparts, the study found.

The key factor is labour-saving technology, or the increasing value of human time. For example, in agriculture, the price of labour is rising relative to the price of machinery.

This means there is an on-going incentive to adopt labour-saving technology to substitute machines for labour. Consequently, regardless of the price of outputs, such as wheat, lumber or nickel, communities dependent on primary sectors will have fewer and fewer people working in primary industries.

In order to maintain their employment base, successful rural communities will be those that find new goods or services to sell on the market, the study suggests.

The study noted three long-term trends in terms of price — the cost of both transporting goods and transporting information is falling, while the cost of transporting people is rising.

Rural Canada has been gaining an increasing share of Canada's manufacturing employment over the past three decades. The study suggests that the declining price of transporting goods is helping rural Canada to be even more competitive in manufacturing.

This is occurring not only in jobs related to resource commodities, but in newer jobs that are part of the network of just-in-time delivery.

Successful rural communities of the future may be expected to have a manufacturing base, exceptions being those communities with a natural amenity attraction for tourism.

However, the falling price of transferring information can be a double-edged sword for rural areas. On the one hand, rural entrepreneurs can take advantage of new information technologies to sell their goods or services. On the other hand, rural consumers can choose to purchase from outside their local area.

In terms of demography, the study suggests a number of trends.

First, Aboriginal people will remain a driving force for parts of rural Canada. For example, in Saskatchewan, projections show that by 2017 Aboriginal people will account for 21% of the total population, compared with only 14% in 2001. Also, by 2017, Aboriginal children will represent 37% of all children in the province, up from 26%.

The study also noted that rural areas are competitive in attracting key demographic groups, such as young families and early retirees, as well as international immigrants.

The vast majority of new immigrants to Canada choose to live in large metropolitan centres. But 2001 Census data show that a small number of rural regions were competitive in attracting immigrants.

In fact, 9 of the top 30 regions attracting new immigrants in 2001 were predominantly rural regions. As natural population growth continues to decline across all Canadian regions, the ability of rural regions to attract immigrants will drive future growth.