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Journal cover: International Journal of Public Sector Management

International Journal of Public Sector Management

ISSN: 0951-3558

Online from: 1988

Subject Area: Industry and Public Sector Management

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Public management in an age of complexity: regional economic development in Canada


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DOI (Permanent URL): 10.1108/09513551211260649

Article citation: Charles Conteh, (2012) "Public management in an age of complexity: regional economic development in Canada", International Journal of Public Sector Management, Vol. 25 Iss: 6/7, pp.464 - 472


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The Authors

Charles Conteh, Department of Political Science, Brock University, St Catharines, Canada

Abstract

Purpose – This paper aims to analyze the opportunities and challenges of public policy governance in industrialized democracies in the context of a globally integrated economy on the one hand and institutional decentralization on the other. The implications of these transitions suggest the need for horizontal collaboration and coordination between policy stakeholders (domestic and international) as well as among agencies across various levels of government. The case of regional economic development policy governance in Canada over the past two decades illustrates some of the complexities of public, private and community partnerships in policy governance as the country seeks to maintain and enlarge its niche in the global economy.

Design/methodology/approach – Data were collected through content analysis of policy and program documents relating to regional economic development in Canada, as well as in-depth interviews of about 15 public officials directly involved in the administration of the policy.

Findings – The comparative analysis of regional economic development policy governance in two Canadian provinces over the past two decades illustrates some of the complexities of public, private and community partnerships in policy governance as the country seeks to maintain and enlarge its niche in the global economy.

Originality/value – The paper is based on an original research undertaken by the author and raises critical questions about the changing context of public management in an age of increasing globalization of economies and societies. It also addresses the distinct challenges of managing multi-level systems in the face of the added complexities brought about by global integration.

Article Type:

Research paper

Keyword(s):

Public management; Globalization; Decentralization; Innovation; Regional economic development; Public administration; Decentralized control; Canada.

Journal:

International Journal of Public Sector Management

Volume:

25

Number:

6/7

Year:

2012

pp:

464-472

Copyright ©

Emerald Group Publishing Limited

ISSN:

0951-3558

Introduction

The paper analyzes the transitions in the governance of public policy brought about by the emergent global economic integration over the past two decades. The implications of these transitions are illustrated by examining the institutional decentralization of regional economic development policy in Canada over the same period. In particular, the discussion analyzes the mandates and strategies of one of the federal agencies tasked with the responsibility of managing regional economic development in the province of New Brunswick.

Economic development policy governance within a globally integrated market system has come to reflect the new context of regional development (Cooke and Schwartz, 2007). This new focus makes a distinction between what are called the old and new paradigms of regional development in terms of policy rationale, key actors involved, strategy and tools of program intervention (OECD, 2009). While the old paradigm focused on providing advantages for domestic industries, the new paradigm tends to be non-discriminatory as attention shifts towards enhancing regions' global competitiveness.

For instance, under the old paradigm, governments used instruments of business development and industrial promotion that relied on protective trade practices such as tariffs and quotas against competing foreign companies and imports. Under the new paradigm, the focus has now shifted to leveraging the capital, technology and competitiveness of all companies, local or foreign-owned, to improve the global competitiveness of a particular region.

Moreover, the strategy of the old paradigm tended to focus on sectoral or, even, individual firm approaches, whereas the new paradigm is more integrated and cross-sectoral, seeking to position regions as niches within the global economy. For example, rather than focusing on the pulp and paper industry in isolation, the new paradigm is characterized by the building of a complex and intricate fabric of regional clusters of inter-sectoral innovation systems (OECD, 2007; Holbrook and Wolfe, 2002).

Furthermore, global trends over the past two decades have created certain apparent contradictions or paradox whereby a globalized world with integrated markets coexists with a greater desire on the part of local communities to find their own niche as the classical tools of the central state are proving inadequate to foster economic competitiveness and performance (Hilpert, 2003). Regional development policy has been reflecting these trends as discussions metamorphosed into preoccupation with local development in which communities and regions strive to become dynamic clusters of learning and innovation linked to global value chains (Roy, 2006).

The challenge for public management is to mitigate the threats of global economic integration while leveraging the opportunities for regions and sectors of a country's economy to successful adapt to the imperatives of exogenous and endogenous forces of change (Cohn, 2011; Goldstein, 2007; Wiarda, 2007). These global forces have implications for state restructuring (Doornbos, 2006). In particular, the capacity of states to actively intervene and regulate their economy has been somewhat diminished. Management of the new economy is, thus, characterized by the building of a complex and intricate fabric of national and regional innovation systems, thereby deepening the complexities of fiscal federalism in Canada and the US as well as the multi-level governance systems of most European countries (Anderson, 2010; Bosch and Duran, 2008; Krasnick and Royal Commission on the Economic Union and Development Prospects for Canada, 1986).

A significant corollary of these trends is the shift in the focus of regional development towards what is generally referred to as innovation policy (OECD, 2009). Innovations leading to economic growth and development are considered to thrive in systems where high levels of interaction and collaboration take place among economic and community stakeholders (Holbrook and Wolfe, 2002). Thus, the shift in emphasis towards innovation means more decentralized governance frameworks as the most conducive mechanism of public management.

The discussion in this paper illustrates this emerging context of regional economic development policy by analyzing the capacity and legitimacy of Canada's federalist architecture of public policy management in light of the increasingly global and local dimensions of economic development policy governance, examining the case of regional economic development in the province of New Brunswick.

Administrative model of the early years

The Canadian economy is a classic example of an industrialized country that underwent significant adjustments over the last 20 years, as evidenced in processes of regional economic development. Such change has posed real challenges to Canadian public administration across levels of authority. New Brunswick represents a good case of a province that was faced with this transformative challenge.

The Atlantic Canada Opportunities Agency (ACOA), one of four such organizations across the country, was created in 1987 to support and promote opportunities for the economic development of Atlantic Canada (including New Brunswick), with particular emphasis on small and medium-sized enterprises, through policy, program and project development and implementation. The agency's mandate also involved advocating for the interests of Atlantic Canada in national economic policy, program and project development and implementation (Government of Canada, 1987). ACOA's main program activity areas are enterprise development, community development and policy including advocacy and coordination.

Between 1987 and 2000, however, the agency's activities were mostly focused on enterprise and community development. The object of its enterprise development program was to foster competitive and sustainable Atlantic enterprises, emphasizing small and medium-size business. The community development program aimed to foster dynamic and sustainable communities in New Brunswick. Much of the agency's activities under it were intended to support community-based regional economic development (planning) organizations and funding for community business development corporations. During this time, ACOA's policy development, advocacy and coordination mandates were virtually latent.

Moreover, even though a central element of policy governance primarily involves addressing the challenges of program coordination among public agencies, the relationship between ACOA and the New Brunswick government during this period did not bear strong evidence of systematic program coordination. Rather than synchronizing the programs of the two levels of the government, the provincial government simply communicated its responses to federal development activities as they affected the economic interests of New Brunswick. Other than taking advantage of ACOA's funds, the extent to which the economic development policy priorities of the province were influenced by ACOA during this period remains unclear (Savoie, 1992).

In general, the results of the early models of regional economic development policy governance in Canada have been given mixed evaluation – and this perennial controversy has itself become a fixture of regional development management in the country (Bradford, 2010; Mintz and Smart, 2003; Savoie, 2003). The persistent controversy surrounding the effectiveness of regional economic development in Canada helped facilitate the shifts that eventually occurred starting in the late 1990s.

Shifts in Canada's regional development policy

By the latter part of the 1990s, developments were taking place that would provide opportunities for some transformation in the institutional configuration of regional economic development. In particular, ideational shifts in thinking about regional government were changing policy perspectives on regional development in Canada and around the world. Concurrently, global trends had moved towards an almost complete integration of economies around the world (OECD, 2009). These trends created an apparent paradox in Canada wherein the country witnessed the emergence of a greater desire on the part of provincial governments and, even, local communities to exercise more control over their socioeconomic destinies.

The result of the seismic shift towards globalization and the emergence of ideas sympathetic to international market forces was the rising importance of subnational jurisdictions as the centers of economic policy intervention and innovation (OECD, 2009). Thus, the shift in emphasis towards innovation meant more decentralized governance frameworks as the most conducive mechanisms for economic success.

Also, a major ideational shift during this time was the resurgence of neoliberal economics and its disapproval of discriminatory policies favoring domestic firms over their foreign competitors (Mintz and Smart, 2003). Such policies were increasingly viewed as intrinsically distortionary to natural market forces, and potentially damaging to full economic growth. Although generally uncomfortable with interventionist policies, neoliberalism, however, made a major concession to the role of the state in a knowledge economy. The state could systematically use policy instruments to encourage the development and application of knowledge across sectors in ways that could encourage to the adaptation or improvements of products, processes and services. This generally became known as innovation policy (Holbrook and Wolfe, 2002).

Moreover, a major development occurred in 1994 that further cemented the international context of public policy governance in Canada: the North American Free Trade Agreement (NAFTA) between Canada, the US and Mexico, which came into force that year. For the purpose of our present discussion, the goal of NAFTA is to eliminate trade and investment barriers between the signatory countries as well as abolish all discriminatory market inducement policies favoring domestic over foreign firms.

The emergent discourse of regional development in Canada began to manifest itself in provincial governments increasing willingness to take on more active leadership in directing the future course of their economies. By the turn of the millennium, the New Brunswick government, for instance, was defining its policy visions in bolder terms with longer-range planning. The centerpiece of the government's economic development strategies became innovation through the use of knowledge, technology and skills for generating growth.

Innovation policy in New Brunswick

In 2002, the New Brunswick government released its prosperity plan for the province (Government of New Brunswick, 2002). The plan set out a ten-year comprehensive strategic path to economic and social prosperity in the province. The key elements of the strategy focused on innovation, productivity, and export orientation – perceived determinants of success in a globally-integrated knowledge-based economy. Furthermore, in 2006, a new development plan for New Brunswick titled, Achieving Self-Sufficiency, was unveiled under a new government (Government of New Brunswick, 2006). The substance of the plan was similar in many respects to the 2002 plan, except that it has a longer time frame and pays greater attention to the inclusion of international investors as well as local and rural regions in the institutional infrastructure of innovation governance.

Another development occurring within New Brunswick during this time was a greater desire on the part of the private sector for less protectionist and discriminatory policies. Private sector actors sought to be part of a more inclusive and strategic governance framework rather than merely serve as passive beneficiaries of government grants and subsidies. The initial shift in mindsets within the New Brunswick private sector is evidenced in the Fredericton Chambers of Commerce's (FCC) published brief in 1994 laying out a policy framework consisting of a strategic long-term approach innovation in which the government and private sector were to work more closely (Fredericton Chambers of Commerce, 1994). Thus began a gradual shift in the policy instruments away from individual firm subsidies and towards longer-term, cross-sectoral accumulation of strategic resources in terms of knowledge (R&D) and expertise (skills training).

Another dimension of the ideational shift towards innovation policy in New Brunswick is the strategic importance of major cities as the critical loci of market governance in the province. In New Brunswick, cities such as Moncton, Saint John and Fredericton act as critical loci of market governance and thus enjoy strategic importance (Desjardins et al., 2009). In particular, the unique importance in a geographic context of Moncton, as a hub of complex networks of road and air transportation in the Atlantic region, and between the region and the eastern seaboard states in the US, in turn adds to the strategic significance in the new policy environment of the municipal level jurisdiction itself.

Leveraging the increasing strategic importance of cities in a knowledge-driven global economy requires equipping cities with a certain coordinative authority and the legitimacy to provide more active and strategic leadership. The coordination of knowledge clusters is viewed as best handled at the local level. The New Brunswick government in turn began to view its cities and other municipalities not as residual institutions for performing rudimentary tasks, such as road maintenance and garbage collection, but rather as indispensable partners in the search for local innovation and adaptation (Government of New Brunswick, 2006).

A related development in New Brunswick during this time was the expression of discontent in the rural and northern regions about the constraints of community or grassroots participation in the market governance processes in the province. Local communities became increasingly articulate about their desire to take responsibility for their own economic development. Part of the provincial government's response was to create community economic development agencies (CEDAs) in order to stimulate greater local participation in economic development (Government of New Brunswick, 2002). The provincial government also initiated a process that eventually led to some reform of local governance in New Brunswick.

What did all the above-mentioned developments mean for ACOA? The next section addresses this question.

Adapting to the new governance context

The aforementioned changes in New Brunswick meant that market governance was becoming more diverse, complex and internationally oriented. The private sector along with other interests and associations, as well as municipalities, have embraced the new concept of innovation and the need for networked forms of governance to nurture clusters of creativity and competitiveness. In this emerging context of economic development in the province, the collaborative policy governance is confronted with new local and international realities.

By the turn of the millennium, in the face of the aforementioned developments in New Brunswick, the focus of ACOA turned toward overcoming administrative boundaries and facilitating better networks with the provincial and municipal governments, as well as with non-state actors such as the private sector and community actors. In particular, ACOA was beginning to adjust its programs and service delivery models to the changing discourse of regional development and the transitions of local phenomena in New Brunswick.

The new approach of the federal agency, in turn, had significant administrative implications, since it required different kinds of governing institutions and capacities that lend themselves to principles of collaborative and horizontal management. It also required the capacity to facilitate joint action at the subnational level. From a public management standpoint, ACOA became focused on multilevel governance arrangements that could maximize the use of local assets, foster the interaction of local and international stakeholders and nurture synergies across various sectors of the economy.

For ACOA, the successful implementation of their policies was no longer a merely technical task of program design and delivery (as was the case in the 1990s), but also political negotiation, since it now had to synchronize its activities with emerging actors and ideas within their operating environment. The Community Adjustment Fund (CAF) administered by ACOA has seen one of the most radical redesigning of the agencies' governance model. Rather than disbursing funds to deserving beneficiaries as was prevalent before the turn of the millennium, each agency works closely with the provincial and municipal governments as well as the private sector and community groups in identifying and overseeing projects that will create jobs and employment opportunities in communities needing economic adjustment to the forces of globalization.

Even ACOA's flagship Atlantic Innovation Fund (AIF) has allowed for considerable provincial input and local direction in its delivery. The AIF encourages export-oriented partnerships among private sector firms, universities, colleges and other research institutions to develop new or improved products and services. Another important characteristic of the AIF program is that it does not discriminate between domestic and international firms.

Other examples of the new orientation to regional economic development in an age of global complexity include programs such as Canada-Atlantic Provinces Agreement on International Business Development (IBDA), the Innovative Communities Fund (ICF) and the Sector Export Strategies (SES) (Government of Canada, 2009). What these programmes share in common is a delivery mechanism that emphasizes collaborative policy governance that transcends institutional boundaries. The focus is on jointly working across institutional levels and sectors to increase the number of exporting firms, diversify the market base and sector product lines, and raise the level of international investment and innovation activities in the regions. They also emphasize the promotion of regional development through non-discriminatory partnerships with domestic and international members of the private sector and community groups.

One major challenge, however, remains. The challenge of managing regional economic development policies (and most other policies) in the new context of a globally integrated but locally-driven economy is to configure Canada's institutions for a more logical consistency with the imperatives of bottom-up and horizontal governance. This means, for instance, that supra-national models like international trade agreements alluded to earlier in the discussion may still remain viable but only as part of the macro-institutional framework of economic development policy. While NAFTA and the EU, for instance, provide the legal framework for the technical, financial, and commercial linkages between countries, regional innovation systems presuppose a geographical concentration of local linkages and dynamic interactions among key actors within an innovation ecosystem.

Discussion and conclusion

The complexity of modern political and economic environments means that public management could be better viewed as a process of navigating institutional boundaries rather than simply optimizing program output (O'Toole, 2000; Klijn, 1996). The effectiveness of policy governance in such settings requires the ability of managers to make connections across levels of government and outside government, and share ideas, resources and power with public and non-state actors (domestic and international) (Gow, 2009; Brooks and Miljan, 2003).

The paper has analyzed the transitions in regional economic development policy in Canada with a focus on developments in the province of New Brunswick. The present context of regional economic development in the province can be referred to as moving towards collaborative governance of innovation policy involving various levels of jurisdiction, along with the inclusion of domestic and international non-governmental stakeholders. The case illustrates how policy governance in a globally integrated and knowledge-based economy can be increasingly viewed as strategic rather than merely operational.

Global economic integration is creating new opportunities and threats for nations (Bhagwati, 2004). Alongside the globalization of markets is the persistence and even increasing significance of geographical proximity within domestic borders in the creation of dynamic knowledge clusters. There is thus an inextricable link between localized learning and global connectedness. Exploiting the opportunities of integrated global economic systems through innovation requires political oversight and public engagement (Roy, 2006). However, political oversight and public management do not presuppose top-down directives. The endogenous nature of dynamic clusters is more conducive to community-based adaptation with bottom-up processes of policy governance. Transitions towards collaborative policy governance could thus be further enhanced by more devolution of authority and resources for policy coordination whereby municipalities and regional councils are empowered to identify and pursue new opportunities and confront the challenges of economic adaptation.

Finally, the contribution of the present discussion is to illustrate, using the case of regional economic development policy governance in Canada, how public management in globally integrated societies and economies primarily involves addressing the perennial challenges of facilitating coordination among agencies and the navigation of institutional boundaries between the public and the private as well as the domestic and the international. Public management in the age of a highly integrated global economy and its attendant complexity, therefore, is not only technical, but also political.

The discussion focuses our attention on public management as being, more than ever, about synchronizing the activities of public agencies, not only with those of agencies from other levels of government and also with international and domestic non-state actors as well as local community groups. In this regard, public management in the context of the new economy is significantly about building complex and intricate fabric of national and regional networks of co-production that could address the complexities of multi-level governance in a globally integrated economy. The emergent challenge for public management would be to institutionalize the new mechanisms of policy engagement in ways that leverage the potential strengths of multilevel governance while at the same time navigating its political landmines.

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Corresponding author

Charles Conteh can be contacted at: cconteh@brocku.ca