Regional economic development based on major resource exploitation: Capital equipment sourcing for Hibernia hydrocarbon production.

• Main Author: Kwamena, Felix A.
• Format: Thesis
• Language: unknown
• Published: Université d'Ottawa / University of Ottawa 1989
• Subjects: Economics, General.; Canada; Newfoundland
• Online Access: https://dx.doi.org/10.20381/ruor-11034; http://www.ruor.uottawa.ca/handle/10393/5994

This thesis is concerned with the regional economic impacts of the Hibernia oil and gas development. With the intention of showing the linkage-leakage process of major resource development, I develop a conceptual framework which combines notions of interregional input-output, location quotient and capital availability ratio. The framework suggests how standard approaches to input-output analysis could be modified by concepts of capital constraints; and used as a basis to formulate policies on how to extract significant economic benefits from resource development. The study shows that the impact of resource development, particularly on Newfoundland, would be restricted to a few industrial sectors. Thus, extensive regional economic development could not be carried out based mainly on natural resource projects dictated by the operations of market forces. The main reason is that there are limited manufacturing establishments in Atlantic Canada. Also, a significant portion of the equipment would be sourced from outside Canada. The results of the empirical analysis also indicate that given the manufacturing linkages between the provinces regional economic development should not be viewed in isolation, but rather should be considered within a broader context of how the regions relate to the national economy. Therefore, there is a need to develop a sourcing policy based on the principle of government-industry cooperation if the high expectations regarding the industrial and employments benefits to be generated by the Hibernia oil and gas development are to be realized. The challenge facing policy makers in the coming years would be to nurture through their initiatives government-industry cooperation, as well as, develop operational policies that would balance regional interests with national objectives; while maintaining the "Single Window" concept through the Joint Offshore Management Boards (JOMB). Finally, I discuss the recently concluded Canada-United States Free Trade Agreement (FTA) which is expected to come into force on January 1, 1989. There are seven specific provisions of the Agreement which would have an impact on major oil and gas development projects and the federal regional economic development policies and programs. The implications of the FTA would present a challenge to decision makers and analysts in designing programs and policies to optimize oil and gas development related benefits.