The Service Sector and Western Economic Growth
In: Canadian public policy: Analyse de politiques, Band 11, S. 354
ISSN: 1911-9917
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In: Canadian public policy: Analyse de politiques, Band 11, S. 354
ISSN: 1911-9917
In: Publication no. 1 in the Western studies in economic policy
Will greater diversification benefit our economy? While many think it will, few are explicit about what they mean by diversification or what an "ideal" level would be. Even fewer recognize that favoured policies to promote diversification could actually do more harm than good. There are many ways to measure diversification in Canada, and each measure tells a different story. Canada's GDP and employment, for example, are more diverse than many other countries, including the U.S. Employment is also more diversified today than at any point in its recent history, even in resource-rich provinces. Perhaps surprisingly, Alberta and Saskatchewan lead the country in employment diversity. Even accounting for non-resource jobs that are indirectly linked to resources does not reveal resource-rich provinces to be less diverse than others. To be sure, by other measures they are less diverse and more volatile, so we gather and analyze a wealth of data to paint a full, nuanced, and sometimes surprising picture of diversification in Canada. But does diversification even matter? Economists, for centuries, have found gains from specializing in areas where we have a comparative advantage. Subsidizing certain selected industries therefore risks causing economic damage by distorting activity and displacing workers and investment from more valuable uses. Policy-makers should therefore focus on neutral policies: create a favorable investment climate, facilitate adjustment and re-training, encourage savings (including by government), and so on. We discuss the pros and cons of various options. At the end of the day, responsible governments must define their objectives clearly, and recognize the costs of policies meant to achieve those objectives. We cannot hope to have a sensible debate on economic policy without full and complete information. If it matters, measure it.
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In: Canadian public policy: Analyse de politiques, Band 11, S. 455
ISSN: 1911-9917
In: Growth and change: a journal of urban and regional policy, Band 9, Heft 1, S. 23-30
ISSN: 1468-2257
In: Canadian public policy: Analyse de politiques, Band 18, Heft 2, S. 240
ISSN: 1911-9917
In: Canadian public policy: Analyse de politiques, Band 6, S. 229
ISSN: 1911-9917
Approximately 60 per cent of Alberta's oil sands production is non-upgraded bitumen which, after being mixed with a diluting agent (diluent) to allow transport, is exported. A popular view within Alberta — and particularly among Albertan politicians — is that a much larger share of oil sands bitumen should be upgraded in the province. However, without public subsidies or government underwriting, it is uneconomic to build and operate new facilities in Alberta to fully upgrade the bitumen into synthetic crude oil. But there are new partial upgrading technologies being developed that, subject to successful testing at a larger (commercial) pilot scale, can prove to be not only economic in Alberta, but also generate large social and economic benefits for the province. The advantages include a much smaller capital investment, a significant increase in the value of the product and market for the product and, even more importantly, a dramatic reduction in the need for large amounts of expensive diluent to transport the product to market. Indeed, the only diluent required will be that to move the bitumen from the production site to the partial upgrader and this can be continually recycled. The market for the synthetic crude oil produced by full upgrading is only getting tougher. Any Alberta bitumen fully upgraded here would compete closely with the rapidly expanding supply of light U.S. unconventional oil. Partial upgrading does not upgrade bitumen to a light crude, but to something resembling more of a medium or heavy crude, and at a lower cost per barrel than full upgrading. Unlike in the increasingly crowded light-crude market, the Alberta Royalty Review Advisory Panel recognized that currently there are gaps in several North American refineries that could be filled by this partially upgraded Alberta oil. A partial upgrader serving that less-competitive market not only appears to hold the potential for investors to make attractive returns in the long term, it would also provide important benefits to Alberta from a social perspective. Since partially upgraded crude can be shipped via pipeline without diluent (as bitumen requires), producing it in Alberta would free up pipeline capacity otherwise tied up by current volumes of diluted bitumen or dilbit (diluent typically represents about one-third of each barrel of dilbit). It also reduces the cost to shippers of paying tolls for diluent exported in the dilbit and recovering diluent at the U.S. pipeline terminal, where it is less valuable than if it were recovered in Alberta at the partial upgrader. The value of each barrel produced would also be higher, benefitting oil sands producers. Partial upgrading also seems to promise a lower emissions-intensity profile compared to other bitumen-processing technologies. Based on the model of a single 100,000-barrel-a-day partial upgrader, the value uplift could be $10 to $15 per bitumen barrel. Meanwhile, there could be an average annual increase to Alberta's GDP of $505 million, and as many as 179,000 person-years of employment created (assuming a 40.5-year operating period). The increase in taxable earnings would increase provincial revenues by an average of $60 million a year, not including additional federal tax revenues. If successful, there would be many such partial upgraders with corresponding multiplication of these benefits. But there remains the critical task of proving partial upgrading technology at a higher scale than current testing. This might also depend on the province helping sustain investors through the "death-valley" between successful research and initial testing and demonstration of full commercial viability. The province has stepped into help technologies cross that "death valley" before. The promise of partial upgrading may well justify, as manager and steward of Alberta's resources, helping bridge that valley again.
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