Cape Breton island, located on Canada’s Atlantic seaboard, has a population of approximately 100,000 and in recent years has attempted to take back control of its economy through the development of community economic development, spearheaded by community development corporations such as New Dawn Enterprises Ltd.
The economy of Cape Breton was traditionally based upon steel and coal in the industrial east of the island and forestry/fisheries in the rest of the island. However, the industrial part of the economy has seen a slow decline in recent decades and with this decline has come unemployment (more than 50% in some areas) and the rapid depopulation of the area as people have left in search of employment elsewhere.
Whilst the story of Cape Breton’s economic decline is a familiar one, the area also has a very strong history and culture of self-help and community co-operation borne out of a strong tradition of trade union membership. This means that it is home to more than 100 community organisations, which demonstrate that whilst the area has been impacted by negative economic forces, it is still continues to exist as a social entity, an area to which people retain an attachment, with a strong sense of place, identity and culture. Two projects in particular demonstrate the effect of these positive social forces upon the local area and economy in recent years.
New Dawn Enterprise
New Dawn Enterprise Ltd is a community development corporation (CDC) founded out of the frustration of local residents in Cape Breton about by the failure of government to adequately tackle the area’s economic and social problems, particularly the poor quality of local housing stock. From these early beginnings, New Dawn Enterprises Ltd now runs a vocational college, a range of housing projects, home health care services and works co-operatively with a range of other community organisations. The CDC employs more than 100 people and has attracted more than $8million in investment during the last ten years. The development of community development corporations (CDCs) were strongly encouraged by the Economic Council of Canada in the 1980s and 90s in an effort to not only support economic activity but to strengthen and create community resources, human resource development, community self-reliance and community autonomy.
The BCA Group
The BCA Group was first established in 1989 as a not for profit company limited by guarantee with the idea of creating a pot of investment capital which would be used to invest in local businesses to encourage local economic growth. Its initial funding came from three individuals who helped set the fund up but in time, a range of private and public funding was invested in the fund with BCA offering investors a modest interest of 4%. Despite the challenging context in which the BCA Group operates it has never failed to pay interest to its contributors and, whilst it has had some failed investments, much has been achieved. Its successful projects include a food processing plant, a fish processing factory, two rope manufacturers, a radio station, an industrial park and a hardwood floor manufacturer. In order to operate in the economic conditions of Cape Breton, the BCA group has had to adapt the conventional model of venture capital investment to the area, so for example, the investment amounts are typically small, locally based and made by inexperienced investors. However, the results have been significant, including support for more than 500 jobs.
Key features of this approach
Cape Breton demonstrates mainstream economic development taking on community economic development approaches:
- Community-led strategy – community activists taking a thorough strategic approach regardless of local authority activity.
- Local economic investment – providing a focus for local investment which benefits both locally based investors and businesses;
- Support for locally owned businesses thereby encouraging and supporting existing and new entrepreneurship;
- Local multipliers – a strong focus upon locally based businesses and local investment maximises the use of existing money within the economy of Cape Breton.
- Support for people and social capital – the community and not for profit based mechanisms by which New Dawn Enterprises and the BCA Group operate help to support local employment and encourage community participation and co-operation which in turn help to support the development of local skills and confidence and greater community autonomy.
These types of project demonstrate the importance of a diversified approach to local economic development which supports a variety of approaches towards tackling local economic challenges.
To learn more
Hudson, R. (2006) From Carboniferous Capitalism to Call Centres: The case of Cape Breton. Durham University, Centre for the Study of Cities & Region
Johnstone, H. (2013) Business model innovation: a case study of venture capital in a depleted community, Venture Capital: An International Journal of Entrepreneurial Finance, 15:1, 77-90.
Mason, C. (1991) Community Development Corporations and local economic regeneration in Canada: The Cape Breton Experience. Regional & Federal Studies, 1:2, 115-139