Regional development in Canada: Eras and evolution

Sarah-Patricia Breen, Sean Markey, and Bill Reimer


Regional development in Canada has undergone a variety of forms and levels of intervention in the post-WWII era. Each of these phases is a reflection of a complex interplay of political ideologies, development theory, policy goals, external forces, and regional conditions. Understanding the past context of regionalism in Canada provides an important basis for interpreting and improving current and future policies and practices.

The historical context of regional development in Canada was shaped predominantly by the culture, practices, and structures of two groups: Indigenous peoples and European settlers (predominantly English and French) (Hodge, Hall, & Robinson, 2016). While interaction between these two groups has been seen throughout Canadian history, it is important to note the fundamental differences in worldviews between them. Indigenous governance systems typically focus on a connection to land rooted in stories, places, and experiences and are characterized by communal rights (Hodge, Hall, & Robinson, 2016; Saul, 2009). This contrasts significantly with the European introduction of the Judeo-Christian perspective emphasizing human “dominion” over the earth, colonial assumptions of ownership and social hierarchy (including assessments of Indigenous peoples as “savages” and remote places as “wilderness”), the individualism of the industrial revolution and the equating of material accumulation with personal and social fulfillment. As noted in Chapter 1, owing to the scope of the project, the contextual differences between the two systems and the period of time considered, we focus here on the evolution and history of the European settler context. However, we recognize that the two systems are both different and intertwined. As our findings in the subsequent chapters show, there is increasing recognition of Indigenous perspectives, rights, title, and systems of governance (see Chapter 5).

Regional development as a formal policy intervention has a relatively recent history in Canada. Prior to WWII, many Canadian government initiatives were regionally relevant, but they were framed in the language of nation-building and national prosperity. It was only following WWII that regional development policy was formally articulated as a justification for programs. Our current focus on regional development policy as a way to assist economically lagging rural regions or to anchor regionalist investment with key projects emerged from this latter framework.

The purpose of this chapter is to present a framework for understanding the major historical events and concerns that have guided regional development policy in post-colonial Canada. Our intent is not to provide a detailed list of departments, programs, and initiatives, since this is well done in other volumes (e.g., Brodie, 1990; Hodge, Hall, & Robinson, 2016; Savoie, 1992, 1997). Rather, we propose a framework comprised of broad strokes to represent regional development eras. We also use these trends to organize and interpret our critique of regional development before the recent emergence of new regionalism perspectives, and to identify some key lessons to inform future policy decisions. For consistency throughout the volume, we define regional development as a purposeful and systematic intervention through public policy(ies), programs, projects, and a variety of practices in planning and management in order to influence the course of change within a large, but sub-national context, toward a set of desired development outcomes in order to enhance well-being (see Chapter 1).

Eras of regional development in Canada

Regional development policy in Canada emerged from a history of resource extraction and commodification built on colonization and mercantilism. The arrival of Europeans stimulated trade in fish, furs, timber, dairy products, agricultural produce, minerals, and energy in increasing quantities, paralleled by the emergence of a trade infrastructure that has structured the country’s economic system to the present day. Europeans arrived in North America to a territory already managed by an elaborate system of trade - organized by multiple Indigenous groups along the many waterways of the continent. This system was gradually co-opted by the newcomers for the extraction of natural resources according to shifting European market demands.

The Europeans also brought their political and mercantile interests that served to define and redefine the organization of the territories. Primary among these were the French and English conflicts and agreements that imposed formal rights over land, controlled by European jurisprudence, law, and power. With the American war of independence, these conflicts became a three-way struggle for territorial control. As a result, the early history of Canadian regional development was infused with two primary struggles: the protection of trade and control through the St. Lawrence River system (as opposed to the Hudson and Mississippi networks) and the normalization of relations between the predominantly French-speaking population of Lower Canada and the English-speaking population of Upper Canada.

Dealing with both of these challenges involved territorially based initiatives and policies, which heavily condition the Canadian approach to regional development today. Controlling the St. Lawrence route meant ensuring the

14 Breen, Markey, and Reitner

safe movement of goods to the east and the expansion of trade from the west. The former contributed to the Act of Union in 1867, and the latter to the inclusion of British Columbia in 1871 and Alberta in 1905. In these negotiations, the matter of regional fairness and equity was a major issue - first in the Confederation agreements and later in more formal system of equalization payments in 1957. The Canada Act of 1982 ensured that this issue was enshrined in the Canadian Constitution to respond to the different fiscal conditions of provinces that vary significantly in terms of size, population, resources, and economic activities.

Dealing with language issues in Upper and Lower Canada meant turning once again to territory-implicated solutions — this time with respect to language and culture. By providing provinces with the right of control over language, culture, education, health, and welfare in addition to natural resources, related social conflicts were managed by their institutionalization (Jackson, 1975), but it ensured that they would forever come under negotiation when territorial concerns occurred. As a result, regional issues became a part of the Canadian Constitution — with an initial focus on provinces, managing fiscal inequities, language, and natural resources. All of these issues involved territorial points of reference and structured the preoccupation with regional development.

Eras of development: anational framework

Our analysis begins with an examination of national-level regional development policies, their core themes, and the points at which we can observe relatively sharp shifts in policy direction. We identify four eras of relative stability during which federal regional development-related policies were fairly constant, and three shifts when major challenges emerged that transformed the policy orientation (see Figure 2.1). In some cases, the crises driving the shift were external to the policies, while in others they were largely generated by the limitations of the policy regimes themselves.

/ National eras and periods of crisis

Figure 2. / National eras and periods of crisis

We acknowledge that these phases are not exclusive, often overlap, and that there are other ways of dividing the temporal markers of different policy eras. However, our framework corresponds to critical phases of impact on regional development and restructuring at the federal level, as reflected in an extensive analysis of the Canadian regional development literature (see Sections 3.1—3.5). Using an examination of the literature, we identify phases and shifts that best represent the majority of those materials — recognizing that the results will be approximate at best. This trajectory often manifests differently at a provincial level according to institutional and historical legacies.

Era: nation-building

The first period (pre-WWII) reflects the many policies designed to build the nation from the Atlantic to the Pacific - largely driven by mercantilist policies and interests from Europe (Innis, 1930). The demand for raw materials drove the expansion of transportation routes by water, rail, and road. It also created conditions for massive immigration programs that helped to settle the prairies and feed the growth of cities. The urbanization of Canadian society began in earnest during this period and has continued unabated to the present. Most projections suggest that this trend will continue into the future - reinforcing the current preoccupation with urban-focused challenges and the reorganization of political power to urban populations (Bryant & Joseph, 2001; Reimer, 2013).

Shift: World War II

The demands of WWII for resources, manufactured goods, and labour created a level of industrialization that transformed this period by creating the physical and institutional infrastructure for sustained, and relatively independent, national growth. Under the influence of Cabinet Minister C.D. Howe, the entire country was put on a materials and foodstuffs production footing, and the level of industrial and corporate development was significantly increased in concert with the war effort. It was a transformation that brought the state and the corporate sector together in a way that created conditions for the next policy regime in our framework.

Era: intervention

The rapid industrialization of WWII and post-WWII patterns such as the return of veterans, a rapid increase in immigration, and the baby boom stimulated a period of state intervention that included both economic and social initiatives. It was dominated by the organization and reorganization of governments, state- supported infrastructure expansion in transportation, housing, and energy, and the emergence of welfare state policies that reorganized education, health, and labour legislation. Consumer goods became a more important element of the economy as the middle class grew in wealth and power (Douglas, 1994). The

Fordist approach to industrial organization reinforced the compromise among state, capital, and labour that had emerged during WWII to reorganize transportation, production, and the commodity industries to supply the growing urban markets. This period also witnessed a considerable expansion of regional development programs (Savoie, 1992).

Shift: 1980s recession

When major economic recessions occurred in the 1980s and again in the 1990s, the policies and programs of the earlier period came under attack. This coincided with the rise of neoliberal ideologies that were emerging in the USA and Britain, which led to the period of restructuring that spread among many industrialized nations (Young & Matthews, 2007). As industry and governments responded to the recession, there were fundamental shifts in the Fordist compromise that linked industry and government with labour and, indirectly, with rural regions during the intervention era (Barnes & Hayter, 1997). Hayter (2000) describes the economic crisis, particularly for rural regions, as being exacerbated by a variety of additional forces, including environmental debates, consumer demands for more specialized products and low cost goods, rising relative labour costs, and increasing competition from low cost global competitors.

Era: restructuring

The Canadian government began the process of dismantling the welfare state as it championed the individual-focused policies of neoliberalism. It was asserted that the state was becoming too great a burden, so spending less, privatizing more, and reducing sendees were the only ways to bring deficits and debts under control while letting the assumed superiority of market forces allocate public resources and set most priorities (Fairbairn, 1998; Savoie, 2003; Young & Matthews, 2007).

Using a “client” model of assessment, governments determined that the low density and long-distance qualities of rural places meant that many of their services were the first to be reduced. Education, health, postal services, labour, and rural development support programs were all affected. The federal government, with its rural-biased legacy of parliamentary representation, was faced with the dilemma of rural vulnerability in the face of fiscal restraints and urban challenges. The call for greater community and regional autonomy provided a convenient option for this dilemma and senior-level governments sought ways to download some of their responsibilities to local government and other local agencies (Harrison, 2006). However, this downloading was done without compensatory resources or capacity (Douglas, 2005). This strategy required initiatives to improve the economic and political capacity of those places, and a number of federal rural economic development agencies such as the Rural Secretariat emerged as a result.

Shift: global recession (2007-2008)

By the time the 2008 financial crisis occurred, there were signs that the restructuring-era strategies were not yielding the predicted results (e.g., documented failures of “New Public Management” approaches) (Aucoin, 1995; Hanlon & Rosenberg, 1998; Osborne & McLaughlin, 2002). The efforts by central governments to download responsibilities to local communities - in turn imposing market-oriented solutions — were often thwarted by the lack of capacity in many rural and small-town settings. In keeping with prevailing perspectives, mainstream policy responses often sought to encourage business development as opposed to social and organizational approaches. This approach had only modest success, especially where the distance from markets was long and basic skills were lacking. Neither the vision nor the resources were adequate to address issues of market failure, or the more fundamental issues of individual and community capacity.

The combined impacts of increasing urban demands, neoliberal-inspired reductions in government sendees, and the occurrence of the global recession meant that rural and northern places were largely left to fend for themselves with diminished supports. This shift in approach was exemplified by the Conservative government’s 2013 dismantling of the Rural Secretariat, a federal agency mandated to represent, convene, and support rural development across the country (Hall, Vodden, & Greenwood, 2017).

Era: reactionary negotiation

While there is considerable evidence of the continuation of post-recession policies of neoliberalism, there is also evidence of change. Halseth and Ryser characterize the current chaotic period as “reactionary”:

With the breakdown of a neoliberal policy approach, there has been an incoherent re-deployment of state support (usually debt and deficit-derived support), and a reconfiguration of industry roles relative to communities and regions to deal with the contradictions — and real life implications - of decades of neoliberal-inspired restructuring. In light of these shifts, the question is how we might characterize the current policy period for resource- dependent rural and small town places and regions? The blending of ongoing commitments to neoliberalism with a chaotic return to almost neo-Keynesian public investment policy, along with a downloading of governance responsibilities to industry and communities, is creating a different policy model or framework. But the actions are too chaotic and idiosyncratic to each circumstance or jurisdiction to be explained by the kind of logic or coherence implied by the terms “model” or “framework”. Instead, we would label this new public and corporate policy period or era as “reactionary”.

(Halseth and Ryser, 2017, p. 110)

We propose an added dimension to this reactionary phase: that it is accompanied by the necessity of negotiation. While this is not yet a clear departure from former federal policy approaches, there is evident pushback to neoliberalism. “Negotiation” suggests that this may manifest as a post-neoliberal phase or possibly an adaptation of neoliberalism to new circumstances. Regions, communities, and organizations are largely left on their own to negotiate their fates as best they can with federal, provincial, territorial, and regional governments (and industry) in largely bilateral, but occasionally multilateral, arrangements. Some communities and regions have done well at organizing themselves and their assets to negotiate successfully with both governments and industries, thereby enhancing the well-being of residents. However, others lack the necessary capacity to manage or sustain a more independent future. The current period of reactionary negotiation presents both challenges and opportunities for regions, depending upon their capacity, preparedness, vision, and available supports from upper-level governments. This is the era within which our project as a whole sought to find evidence of new regionalism in policy or practice. Such evidence could provide a strong basis for improving the nature and outcomes of regional strategies and outcomes.

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