Territory should invest in human, social capital, says economist

Nunavut was poised for unprecedented economic growth before "the world changed in an instant" when last fall's global economic crisis hit, economist Graeme Clinton told the Sivummut III Economic Development Conference in Iqaluit this week.

In 2007, Nunavut's best year for economic growth, the economy grew 13 per cent, he said. (Figures are not yet available for 2008.)

There was a 63 per cent increase in private-sector investment, and unemployment dropped below nine per cent in the 10 largest communities.

But the territory was not ready to take the best advantage of that growth, he said.

Clinton, who co-authored last fall's report Our Future to Choose: 2008 Nunavut Economic Outlook for the Nunavut Economic Forum, and worked on its 2001 predecessor, said that even though the report was completed before the meltdown, its data and analysis remain valid.

"The forecast is the only thing that has changed," he told the gathering, soldiering on in his presentation before an audience of 100 at the Frobisher Inn.

Organized by the Nunavut Economic Forum, Sivummut III brings together a broad cross-section of economic participants to hammer out the next steps for implementing the territory's economic development strategy. Sivummut II was held in Rankin Inlet in 2003

Nunavut does not have the organizational, regulatory and educational infrastructure in place to take advantage of a growth explosion in the private sector without suffering serious social problems, Clinton said.

Clinton asked the Sivummut III participants to recommend a focus on investing in the human, physical and organizational capital the territory will need to make sure that growth is both environmentally sustainable and benefits all Nunavummiut.

Nunavut has some immunity from the worst effects of the crisis, Clinton explained, because about $900 million of its $1.2 billion economy is provided by government activity.

That's "an economic stabilizer, not a saviour," he added. "It won't expand the economy." In fact, Clinton noted that "real government spending on goods and services has been flat for the last three years."

But Nunavut has done a good job of raising federal government awareness of the gaps in its physical infrastructure, and is well positioned to benefit from the upcoming federal government stimulus packages.

Nunavut missed out on the major infrastructure development the rest of Canada experienced throughout the 1960s and ‘70s, he said. With no roads, or ports, potential investors balk at committing to development projects. "We're playing catch-up."

So in other words, the global economic meltdown, while bad for Nunavut – just like for everywhere else – is not all bad.

In the short to medium term, Clinton said, Nunavut should still be able to maintain modest growth and could be back on track for "unprecedented growth" by 2015.