In this article, Kevin Deveaux, an NDP member of the Nova Scotia Legislative Assembly, suggests that "empowerment zones" -- a concept introduced with great success in many declining urban and rural areas in the United States -- may be an answer for chronic economic malaise in much of Atlantic Canada and many of Canada's First Nations communities.

Empowerment Zones: A New Approach to Economic Development

All levels of government in Canada have made ongoing attempts to re-invigorate the economies of economically depressed areas - with little success. The short-term answers provided by government to a long-term problem are destined to fail.

Typical government approaches involve an upfront financial grant to the private sector with few, if any, commitments for long-term job creation. In many cases, the grants go to out-of-province or international companies that have little commitment to community development.

Alternatively, the argument for community economic development involves community-based projects that are on a small business or micro enterprise level. In many cases, co-operatives are encouraged to ensure community control.

It is not hard to conclude that neither approach to development has resulted in a solution to the chronic economic and social problems these areas face, particularly regions such as rural Newfoundland, Cape Breton, northern New Brunswick, first nations and some inner cities.

In the United States, a third approach to community economic development was introduced in the early 90's. Empowerment Zones and their junior partner, Enterprise Communities, proved successful in revitalizing both the rural and urban communities facing chronic economic and social problems. The American approach could easily be applied to Canada.

The Concept

American Empowerment Zones provide a variety of economic incentives to allow self-identified communities to implement a "strategic vision" for the revitalization of the community, or zone. The community can encompass more then one state and can be rural or urban. If chosen, the zone would be entitled to $40 million in incentives. The smaller Enterprise Communities are entitled to $3 million.

Each community requesting assistance from the federal government must compete to become a designated zone. The communities were required to use a public consultation process to develop a holistic plan for the revitalization of their zone. If necessary, the federal government would provide facilitators and advisors to help develop a strategic plan.

The objective was for an innovative and realistic strategic vision to be driven by the residents of the community. Evaluation of the proposal was based on four benchmarks:

* Increased economic opportunities
* Sustainable community development
* Community-based partnerships to implement the strategic vision
* Citizen participation in the development of the strategic vision

In the past, economic development was limited to direct funding, such as a factory or office building, or indirect funding, such as sewer and water capacity or infrastructure. Empowerment Zones were meant to be holistic; communities were urged to develop social infrastructure as well, addressing issues like health, education and the local environment. The hope was that private sector investment is more likely to be attracted to a community that has assets such as health clinics, parkland, good schools and daycares.

The Federal Government, in turn, would provide assistance to help implement the vision developed by the community. This came in the form of:

* Direct grants to community-based groups to implement the vision (not the private sector)
* Tax incentives for long-term private sector investment
* Professional assistance from civil servants
* Reduction in regulatory "red tape" in the zones to help facilitate private sector investment
* Skills development funding for zone citizens

A key to this approach to economic development is leverage. The government uses its limited resources to help the community attract private sector funding. This also ensures the community does not become reliant on government funds, but is using the government incentives to build sustainability in the community.

There have been numerous evaluations of Empowerment Zones - both rural and urban. The vast majority of the reports have recognized that the zones have been a benefit to the communities. In many cases, the rate of new job growth and decrease in unemployment has been faster then the state average for that region.

Beyond the tangible statistics, however, the long-term investment in communities has had benefits that are less measurable. New health clinics, increased job skills of the residents of the zones and programs that help the chronically unemployed move back into the workforce on a permanent basis.

A New Approach in Canada

Empowerment Zones can work in Canada. The lack of private sector investment in economically depressed areas and the inability of the communities to build and maintain social infrastructure to meet the needs of the residents are two key reasons for the chronic problems faced by these areas. The problems in these communities are long-term and cannot be fixed overnight.

What has been lacking from previous economic development models in Canada has been one of two key components. For the traditional model, promoted by governments for decades, there is a lack of long-term investment by government and the private sector, tied to measurable goals, such as job creation targets or improved job skills. A rapid, but relatively brief, flow of funds into a community will not create a sustainable economy or a community that has the skills and motivation to turn the funds into long-term benefits.

Community-based economic development attempts to build long-term community infrastructure and empower the residents to take control of their economic destiny, but lacks the capital to provide the programs and leverage to build a sustainable economy.

Empowerment Zones address both these deficiencies. Government uses its limited funds in the most cost-effective means possible to rebuild the infrastructure of a community. The private sector is given incentives to invest in a community, but only in the long-term and it must be tied to key statistical goals. Communities become empowered because they are in control of the entire process. Citizens develop the plan to rebuild their community and ensure it is implemented properly.

Conclusion

It is time for a new economic development model in Canada. The two main models - direct government grants or community-based development - are unable to meet the needs of the economically depressed areas of the country. However, by learning from our earlier economic development mistakes and observing recent American initiatives, we can build a new model that will rebuild our communities, both economically and socially.

Empowerment Zones recognize that communities are only developed through a partnership between government, communities and the private sector. By bringing together government support, community control and long-term private capital investment, Enterprise Zones have proven to be recipe for success in the United States and can work in Canada. For residents of many communities in Canada that have seen economic development schemes come and go, it may be their only hope.

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