The Greater Vancouver area is expected to produce more than half of the province’s total output of goods and services in 2005
Derrick Penner
Sun
CREDIT: Glenn Baglo, Vancouver Sun Greater Vancouver’s ports are a major factor in the region’s — and the province’s — well-being. A sound economy attracts more people, who spur demand for housing and increase the market for other services.
CREDIT: Glenn Baglo, Vancouver Sun Greater Vancouver’s ports are a major factor in the region’s — and the province’s — well-being. A sound economy attracts more people, who spur demand for housing and increase the market for other services.
For the sheer size of its population and weight of its industries, the Lower Mainland truly is the engine of British Columbia‘s economy, and it appears to just be getting revved up.
With a population touching 2.4 million, the Lower Mainland — stretching from Hope in the east to Bowen Island in the west — accounts for some 57 per cent of B.C.’s population.
And Greater Vancouver is expected to produce more than half of all B.C.’s output of goods and services in 2005, according to the Conference Board of Canada.
“Vancouver is obviously the dog that wags the tail, especially in terms of the sorts of industries looked at as leaders of growth into the future,” says Robert Helsley, economist and associate dean of the Sauder School of Business at the University of British Columbia.
As the biggest population centre, Helsley said the Lower Mainland is B.C.’s biggest beneficiary of the inexorable shift towards service-based economies that are less dependent on resource extraction and manufacturing.
POPULATION MAGNET
The Vancouver area is also the biggest magnet for the province’s population growth, which pushes demand for the housing and retail sales that have helped fuel B.C.’s economy over the past two years.
The Conference Board of Canada predicts that the area defined as the Vancouver census metropolitan area — roughly the Greater Vancouver Regional District — will churn out $72 billion in economic output during 2005 compared with a total provincial economy in 2004 of $138 billion as measured by B.C. Stats.
And while Vancouver is clearly the economic powerhouse in the Lower Mainland, Abbotsford is posting strong growth rates, with the Conference Board saying it had the fastest growing economy in Canada last year.
Mario Lefebvre, an economist with the Conference Board of Canada, defines Vancouver as “one of the four big engines of [Canada‘s] overall economic activity.” Toronto, Montreal and Alberta‘s Calgary-Edmonton corridor are the other key business generators.
DRIVING FORCES
“City regions are the driving force of this economy,” Lefebvre said. “They are our window on the world, and with the expression ‘globalization’ being so highly recognized, we know how city regions are playing a role in terms of putting Canada on the map internationally.”
And while it is sometimes a hard sell, Lefebvre argued that initiatives that increase economic activity in the big cities bring about benefits for the entire economy.
They are where innovations are developed that spill over into the general economy, and often benefit the regions surrounding big cities. In Vancouver, innovation itself is pretty big business: the University of British Columbia, with some 10,000 employees, and Simon Fraser University, with 2,500 workers, rank as two of the Lower Mainland’s biggest employers.
AGGLOMERATIONS
Helsley said that economists study these effects in a branch they call “agglomeration economics.”
More simply, he added, the effect of “agglomeration” can be thought of as the formation of business clusters. Companies involved in a particular activity are increasingly drawn together in “clusters” as the talent pool and support services for their businesses grows.
Vancouver‘s biotechnology sector, for example, is drawn to the Lower Mainland’s universities and the talent they can draw from institutions such as Genome B.C. and the Michael Smith Foundation for Health Research.
“It’s like a scale economy,” Helsley says, adding that biotechnology or other technology endeavours are still small in relation to the overall economy.
Helsley added that people “should not lose sight of the fact that traditional business service industries: financial services, business consulting in addition to software development and engineering, are places where one can have this kind of critical mass and clusters.”
Helsley said the Lower Mainland’s construction industry is not typically considered a cluster, because the market is local and so dependent on local conditions.
However, he added that there “definitely are agglomeration effects” in the city’s financial services sector. Employment in Greater Vancouver’s finance, insurance, real estate businesses, for instance, was 90,300 people in 2004, as measured by Statistics Canada’s labour force survey. That’s up 15 per cent since 1996.
Helsley said the region’s ports — Port of Vancouver and Fraser River Port — are also catalysts to form such clusters in the transportation sector.
Vancouver, he said benefits from: “its location on the Pacific Rim, growth of the Asian economies, the fact that we’re a transshipment point where we can move freight from water to rail, even air.”
“All these things create an advantage firms that locate in the Lower Mainland can take advantage of.”
RESOURCES STILL KEY
Dave Park, chief economist for the Vancouver Board of Trade, said it is important not to overlook the importance of B.C.’s resource industries to the economic health of Vancouver.
He added that as late as the late 1990s, the forest industry made up one-quarter of the province’s total economy, and accounted for one-in-five jobs in the Lower Mainland.
Park didn’t have an up-to-date assessment, but estimated that the proportion of forest industry has probably shrunk, not necessarily because the number of jobs has declined, but because employment in other sectors has grown more.
“Yes, there has been shrinkage in direct manufacturing jobs, but there has been huge growth in employment,” Park said.
He added that it is surprising how strong the region’s economic growth has been, and it looks like it will stay strong through the 2010 Olympics and beyond.
CONSTRUCTION BOOM
“Construction is red hot,” he said. “Residential started sooner, but non-residential construction is going to be so strong right past 2010. Some of it is Olympics-related but there is a lot of other stuff coming as well.”
Lefebvre said Vancouver‘s status as “one of the large hosts” for immigrants drives a lot of Greater Vancouver’s growth.
“Give or take a few, in the area of 30,000 to 40,000 international migrants arrive in the city annually,” he added. “That is like a medium-sized city [every year].”
And like in a medium-sized city, the new arrivals require housing, which drives residential construction. New people also demand adequate services, driving the need for new bank branches, grocery stores and shopping malls, which boosts commercial construction and employment in retail trade and other service sectors.
“In terms of future growth, the prospects of [B.C.] are intimately tied to the prospects for the Lower Mainland,” Helsley said.
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TOP SECTORS
The top 10 industry sectors in Greater Vancouver, by employment.
1. Trade (retail and wholesale): 183,400
2. Health care and social assistance: 124,100
3. Manufacturing: 118,500
4. Professional, scientific and tech: 107,900
5. Accommodation and food services: 95,100
6. Finance, insurance, real estate and leasing: 94,700
7. Educational services: 85,900
8. Construction: 85,800
9. Transportation and warehousing: 71,400
10. Information, culture and recreation: 68,100
Total: 1,034,900 or 85% of total employment in the region
ECONOMIC WAVE
The Lower Mainland
– Generated $70 billion of B.C.’s 2004 economic output of $139 billion gross domestic product.
– Accounted for 1.22 million of the economy’s 2.059 million jobs.
© The Vancouver Sun 2005